U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended -- December 31, 1997
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 0-24242
PRODUCTIVITY TECHNOLOGIES CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 13-3764753
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
509 Madison Avenue, New York, New York 10022
(Address of Principal Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (212) 843-1480
----------------------------
Not Applicable
Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report
Indicate by check 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 No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 12, 1998 -- 2,125,000 shares $ .001 par value
common stock.
1
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TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
PART I: FINANCIAL INFORMATION...........................................................................3
ITEM 1. INTERIM FINANCIAL STATEMENTS....................................................................3
Consolidated Balance Sheets.......................................................................................4
Consolidated Income Statement.....................................................................................6
Consolidated Statement of Stockholders' Equity of Productivity Technologies Corp..................................7
Consolidated Statement of Cash Flows..............................................................................8
Notes to Financial Statements (Unaudited).........................................................................9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.....................................................................11
PART II: OTHER INFORMATION..............................................................................13
ITEM 2. LEGAL PROCEEDINGS..............................................................................13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................................................13
SIGNATURES.......................................................................................................14
</TABLE>
2
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PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARY
PART I: FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with instruction to Form 10-Q and Article 10 of Regulation S-X.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted from the accompanying interim financial statements. The
information furnished in the accompanying balance sheets, statements of
operations, stockholders' equity and cash flows, reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
aforementioned financial statements for the interim periods. Operation results
for the six months ended December 31, 1997, are not necessarily indicative of
the results that may be expected for the year ending June 30, 1998.
The aforementioned consolidated financial statements should be read in
conjunction with Productivity Technologies Corp. and Subsidiary's Form 10-K for
the fiscal year ended June 30, 1997. Information provided includes the
consolidated audited financial statements, including footnotes for the year
ended June 30, 1997 and Management's Discussion and Analysis of Financial
Condition and Results of Operations.
3
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Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Unaudited Audited
December 31, June 30,
1997 1997
- ------------------------------------------------------------------------------------- ------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $49,308 $843,709
Short-term investments and accrued interest 1,493,256 929,204
Contracts receivable 14,153,748 9,199,302
Notes Receivable -- -- 160,631
Costs and estimated earnings in excess of
billings on uncompleted contracts 5,466,163 8,640,731
Inventories 575,711 619,242
Prepaid expenses and other 67,081 675,070
Deferred income taxes 616,618 622,000
Assets held for sale -- -- 937,549
Total Current Assets 22,421,885 22,627,438
- ------------------------------------------------------------------------------------- ------------------------
Property and Equipment
Land 591,514 591,514
Buildings and improvements 4,843,617 1,329,113
Construction in progress -- -- 4,142,725
Machinery and equipment 3,149,613 1,909,879
Transportation equipment 31,500 31,500
Total Fixed Assets 8,616,244 8,004,731
Less accumulated depreciation 581,217 337,350
- ------------------------------------------------------------------------------------- ------------------------
Net Property and Equipment 8,035,027 7,667,381
- ------------------------------------------------------------------------------------- ------------------------
Other Assets
Goodwill, net of accumulated amortization 2,439,362 2,490,842
of $165,363 and $10,923
Non-competition agreement, net of amortization 202,583 211,083
Other assets 718,725 412,988
Total Other Assets 3,360,671 3,114,913
- ------------------------------------------------------------------------------------- ------------------------
Total Assets $33,817,582 $33,409,732
- ------------------------------------------------------------------------------------- ------------------------
</TABLE>
4
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Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Unaudited Audited
December 31, June 30,
1997 1997
- ------------------------------------------------------------------------------------- ----------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $1,891,779 $2,472,828
Accrued expenses
Executive bonus agreement 1,498,000 1,254,842
Commission payable 671,904 437,185
Payroll and related withholdings 188,108 271,930
Other 831,281 968,220
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,694,360 1,165,271
Current maturities of long-term debt 712,216 714,140
- ------------------------------------------------------------------------------------- ----------------------
Total Current Liabilities 7,487,648 7,284,416
Deferred Income Taxes 832,000 832,000
Long Term Debt less current maturities 14,941,794 15,327,253
- ------------------------------------------------------------------------------------- ----------------------
Total Liabilities 23,261,442 23,443,669
- ------------------------------------------------------------------------------------- ----------------------
Stockholders' Equity
Preferred Stock, .001 par value, 1,000,000 authorized
and none outstanding
Common Stock, .001 par value, 20,000,000
shares authorized and 2,125,000 outstanding 2,125 2,125
Additional paid-in capital 9,177,488 9,177,488
Retained earnings 1,376,527 786,450
Total Stockholders' Equity 10,556,140 9,966,063
- ------------------------------------------------------------------------------------- ----------------------
Total Liabilities and Stockholders' Equity $33,817,582 $33,409,732
- ------------------------------------------------------------------------------------- ----------------------
</TABLE>
See accompanying notes to financial statements.
5
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Productivity Technologies Corp. and Subsidiary
Consolidated Income Statement
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $11,336,341 $9,386,486 $20,688,827 $17,812,784
Cost of sales 7,873,789 7,156,886 14,508,869 13,482,236
- ---------------------------------------------------------------------------------------------------------------------
Gross profit 3,462,552 2,229,600 6,179,958 4,330,548
Selling, general and administrative
expenses, excluding officers' bonuses 2,268,355 1,819,752 4,280,843 3,662,010
Officers' bonuses 404,758 65,755 659,824 136,115
- ---------------------------------------------------------------------------------------------------------------------
Income from operations 789,439 344,093 1,239,291 532,423
- ---------------------------------------------------------------------------------------------------------------------
Other income ( expenses)
Interest income 36,954 17,877 62,452 37,034
Interest expense (282,335) (208,174) (574,186) (396,027)
Miscellaneous 52,175 14,516 145,020 33,715
- ---------------------------------------------------------------------------------------------------------------------
Total other expenses (193,206) (175,781) (366,714) (325,278)
- ---------------------------------------------------------------------------------------------------------------------
Income before income taxes 596,233 168,312 872,577 207,145
Income taxes 172,000 60,500 282,500 85,000
- ---------------------------------------------------------------------------------------------------------------------
Net income $424,233 $107,812 $590,077 $122,145
- ---------------------------------------------------------------------------------------------------------------------
Net income per share of
common stock $0.20 $0.05 $0.28 $0.06
Weighted average number of
common shares outstanding 2,125,000 2,125,000 2,125,000 2,125,000
</TABLE>
See accompanying notes to financial statements.
6
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Consolidated Statement of Stockholders' Equity of Productivity Technologies
Corp. (Unaudited)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-In Retained Stockholders'
Shares Amount Capital Earnings Equity
-------------- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1997 2,125,000 $2,125 $9,177,488 $ 786,450 $9,966,063
Net Income, July 1 -
December 31, 1997 $ 590,077 $590,077
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 2,125,000 $2,125 $9,177,488 $1,376,527 $10,556,140
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
7
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Productivity Technologies Corp. and Subsidiary
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
December 31, December 31,
1997 1996
-----------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $590,077 $122,148
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation 243,867 194,926
Amortization 59,980 59,980
Deferred income tax 5,382 (109,647)
Changes in operating assets and liabilities
Contract receivable (4,954,446) 779,827
Inventories, prepaid expenses and other 651,520 96,343
Costs and estimated earnings in excess of
billings on uncompleted contracts 3,703,657 (853,279)
Accounts payable, accrued expenses and other (323,933) (1,138,796)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $(23,896) $(848,498)
- -----------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Collection of notes receivable $160,631 $38,992
Maturity of US securities in deposited trust fund (564,052) (3,240,476)
Expenditures for property and equipment 326,036 (2,084,379)
Increase in notes receivable (305,737) (253,818)
- -----------------------------------------------------------------------------------------------------------------
Net cash Provided by (used in) investing Activities $(383,122) $(5,539,681)
- -----------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
(Payments) borrowings on long-term debt,
capital leases and notes payable (1,924) (193,181)
Proceeds from additional long-term debt (385,459) 6,517,150
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by (used In) financing activities $(387,383) $6,323,969
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $(794,401) $(64,210)
Cash and cash equivalents at the beginning of the period 843,709 512,179
Cash and cash equivalents at the end of the period $49,308 $447,969
- -----------------------------------------------------------------------------------------------------------------
Supplemental cash flow information
Cash paid during the period for
Interest $574,186 $396,027
Income Taxes $105,000 $85,000
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
8
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Notes to Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements for the second quarter ended
December 31, 1997 have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The consolidated balance
sheet at June 30, 1997 has been derived from the audited consolidated financial
statements at that date. Operating results for the second quarter ended December
31, 1997 are not necessarily indicative of the results that may be expected for
the year ending June 30, 1998 or any other interim period. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report for the period ended June 30,
1997.
2. Summary of Significant Accounting Policies
Formation of the Company and Basis of Presentation
Production Systems Acquisition Corporation (PSAC) was incorporated in June 1993
with the objective of acquiring an operating business engaged in the production
systems industry. PSAC originally selected March 31 as its fiscal year-end. PSAC
completed an initial public offering ("Offering") of common stock in July 1994
and raised net proceeds of approximately $9.0 million. In May 1996, PSAC changed
its name to Productivity Technologies Corp. (PTC or the Company), and acquired,
through a merger, Atlas Technologies, Inc. (Atlas) as a wholly owned subsidiary.
The accompanying financial statements presented for the second quarter ended
December 31, 1997 include the consolidated accounts of PTC and Atlas. All
significant inter-company accounts and transactions have been eliminated upon
consolidation.
Nature of Business
Atlas, PTC's sole operating subsidiary, is a leading designer and manufacturer
of quick die change, robotic transfer and stacking/destacking equipment for
automation of metal stamping operations, primarily in the automotive and
appliance industries. Atlas operates three manufacturing plants and has sales
offices in Michigan, Georgia, Europe and China. Two plants are owned by Atlas
and are located in Fenton, Michigan, including a new 59,000 square foot facility
which started up in June 1997. Atlas leases back a portion of a third plant in
nearby Linden, Michigan, which it recently sold.
Sales of products have principally been to automobile and automotive parts
manufacturers and appliance manufacturers. Other customers include manufacturers
of garden and lawn equipment, office furniture, heating, ventilation and air
conditioning equipment and aircraft. Sales to automotive related customers have
accounted for the majority of sales during the past three years.
Revenue and Cost Recognition
Contract revenues from fixed price contracts are recognized using the
percentage-of-completion method. Under that method, during the applicable
accounting period, the percentage of completion is developed for each contract
by comparing the cost incurred with the projected total cost of the completed
contract. The resulting percentage is applied to the total contract price to
provide commensurate revenue recognition. For these purposes, the projected
total cost of each contract is
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assumed to be the estimated cost upon which the contract price was quoted until
contract work has progressed to a point at which cost of remaining work can be
estimated with reasonable accuracy.
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance, such as indirect labor, supplies, repairs
and depreciation costs. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined. Changes in job
performance, job condition, estimated profitability, and final contract
settlement may result in revisions to costs, revenue recognition and income, and
are recognized in the period the revisions are determined.
Revenues from time-and-material contracts are recognized currently as the work
is performed.
Net Income Per Common Share
Net income per common share for the second quarter ended December 31, 1997 has
been computed based on the weighted average number of common and diluted common
equivalent shares outstanding.
3. Commitments
In connection with the merger agreement, Atlas entered into employment
agreements which established the compensation of the two senior executive
officers of Atlas. The employment agreements in regard to annual base
compensation are identical, except that one agreement expires on December
31,1998, and the other expires on December 31, 2001. Each agreement requires the
executive to devote substantially all of his business time and attention to the
affairs of PTC. Annual base compensation under each agreement is currently
$198,588, subject to cost of living increases annually after December 31, 1998.
The employment agreements also provide for two bonus arrangements based on the
earnings of Atlas before interest and taxes (as defined). Under one of the bonus
arrangements, each of the two executives mentioned in the above paragraph will
be paid $208,333 for each of the six years beginning January 1, 1996 in which
the "Adjusted Earnings" of Atlas (as defined in the related agreements) exceeds
$2,000,000. Under the second bonus arrangement, if during the five years
beginning January 1, 1996, the "Average Adjusted Earnings" (as defined in the
related agreements) are at least $2,626,000, each executive will be paid an
amount equal to the amount by which such average earnings exceed $2,626,000. In
essence, under the second bonus arrangement each executive will be entitled to a
payment equal to 20% of the amount, if any, by which Atlas' accumulated Adjusted
Earnings for the five-year period exceed $13,130,000. Both bonus arrangements
are also subject to various conditions described in the related agreements. The
bonus arrangements do not terminate in the event of death of the executive, but
payments will be reduced by the amount of insurance benefits paid to the
executive's estate pursuant to life insurance in effect. For periods through
December 31, 1997, a total of $1,498,000 has been accrued under the two bonus
arrangements.
4. Contingencies
Atlas is undergoing an Internal Revenue Service audit for the fiscal year ended
June 30, 1995. The primary area of review relates to research and
experimentation tax credits claimed for the 1990 through 1995 fiscal years.
Atlas had applied $383,000 of credit towards Federal taxes due for the fiscal
period ended June 1995 and had carried forward $481,400 with the intention of
applying the credits in payment of alternative minimum taxes for 1996 and 1997.
In the event that the IRS should seek a reduction in the amount of eligible
credits, and prevail upon appeal, there would be an adverse effect upon the
financial statements of PTC.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Effective May 23, 1996, PTC entered into a Merger Agreement with Atlas
Technologies, Inc. whereby Atlas became a wholly-owned subsidiary of PTC.
Financial statements after that date are those of the new reporting entity and
are not fully comparable to pre-merger periods.
Results of Operations
Net consolidated income for the quarter ended December 31, 1997 was $424,233
compared with $107,812 for the quarter ended December 31, 1996. Net income was
$590,077 for the six months ended December 31, 1997 compared with $122,145 for
the six months ended December 31, 1996. Net income consisted of $513,078 from
operations and extraordinary income of $31,500 after tax from a gain on the sale
of a plant in Linden, Michigan, during the prior quarter.
Sales (Revenue Recognition)
Unaudited sales revenues for the quarter ended December 31, 1997 were
$11,336,341, up 21% from the quarter ended December 31, 1996 revenues of
$9,386,486. Revenues for the six months ended December 31, 1997 were $20,688,827
up 16% from the six months ended December 31, 1996 revenues of $17,812,784.
Increased sales resulted primarily from Atlas' ability to process more orders
because of its increased capacity. The order backlog as of December 31, 1997 was
$18.2 million, essentially the same as the December 31, 1996 backlog.
Gross Margin
For the quarter ended December 31, 1997, gross margin was 30.5% compared with
23.8% for the quarter ended December 31, 1996. For the six months ended December
31, 1997, gross margin was 29.9% compared with 24.3% for the six months ended
December 31, 1996. The improvement in margins over comparable periods a year ago
reflects, primarily, non-recurrence of costs incurred in 1996 for launching the
new destacker product line, a more profitable product mix and improved product
standardization efficiencies.
Gross profit for the quarter ended December 31, 1997 was $3,462,552, an increase
of 55% compared with $2,229,600 for the quarter ended December 31, 1996.
Similarly, gross profit for the six months ended December 31, 1997 increased 43%
to $6,179,958, compared with $4,330,548 for the six months ended December 31,
1996.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative (SG&A) expenses during the
quarter ended December 31, 1997, were $2,268,355, up 25% from the quarter ended
December 31, 1996 of $1,819,752. SG&A expenses of $4,280,843 for the six months
ended December 31, 1997 increased by 17% compared with $3,662,010 for the six
months ended December 31, 1996. Primary factors for the SG&A increase were
higher foreign travel, international office expenses not present in early fiscal
1997, increased volume-related sales commissions, increased legal expenses
related primarily to an arbitration proceeding filed by SWVA, Inc. which was
settled in January 1998, and relocation expenses incurred in the opening of the
new facility.
Officers' bonuses during the quarter ended December 31, 1997, were $404,758, up
515% from the quarter ended December 31, 1996 of $65,755. Officers' bonuses for
the six months ended December 31, 1997 of $659,824 increased 385% compared with
$136,115 for the six months ended December 31, 1996. The employment agreements
provide for two bonus arrangements based on the
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earnings of Atlas before interest and taxes (as defined). See Interim Financial
Statement Footnote C (Commitments) above for details.
Earnings from operations (net income before interest and income taxes) for the
quarter ended December 31, 1997 were $789,439, up 129% from $344,093 for the
quarter ended December 31, 1996. For the six months ended December 31, 1997,
earnings from operations of $1,239,291 increased 133% compared with $532,423 for
the six months ended December 31, 1996. Increased earnings from operations
resulted from the same factors as discussed above relative to gross margin
improvements.
Interest expense for the quarter ended December 31, 1997 was $282,335, up 36%
from $208,174 for the quarter ended December 31, 1996. For the six months ended
December 31, 1997, interest expense of $574,186 increased by 45% compared with
$396,027 for the six months ended December 31, 1996. The increase in interest
expense was caused by higher utilization of the line of credit to finance
increased work in process, and higher accounts receivable, primarily as a result
of increased volume and the financing of the new facility in Fenton.
Liquidity and Capital Resources
Atlas believes its principal long-term capital requirement has been and will
continue to be the funding of working capital and asset expenditures.
During the fiscal year ended June 30, 1997, Atlas entered into a new debt
financing agreement with First of Chicago NBD. The bank consolidated all of
Atlas' long- and short-term borrowings, bundling the various notes and lines of
credit into one new two-year committed line of credit, with increased maximum
debt of $14,500,000 based on collateral of the Company's accounts receivables,
work-in-process inventory, and other assets. Interest rates were reduced to the
bank prime rate and the amortization schedule of certain asset based debt was
modified to quarterly payments of $62,500. These changes reduced the overall
annual principal payments requirements, improving the Company's current ratio
and working capital.
Atlas also entered into an agreement with First of Chicago NBD to fund the
construction of the new facility and equipment through the sale of $4,500,000 in
tax exempt Industrial Revenue Bonds (IRB). The proceeds were used for the
construction, furnishing and equipping of the new 59,000 sq. ft. manufacturing
and office building. The IRBs are state and federal tax exempt, which results in
the floating interest rate paid by Atlas being significantly lower than
conventional construction or real-estate financing. IRB terms are as follow:
1997 Interest only
1998 $400,000 annual payment plus quarterly interest payments
1999 $400,000 annual payment plus quarterly interest payments
2000 $400,000 annual payment plus quarterly interest payments
2001-2011 $300,000 annual payment plus quarterly interest payments.
IRB closing costs of $184,409 were incurred in 1996 and booked as a long term
asset. These are being amortized over the 15 year life of the IRBs.
At December 31, 1997, Atlas had debt of $10,944,716 under the line of credit,
$4,500,000 under the IRBs payable over 15 years, and other debt of $209,294 for
a total long term debt balance of $15,654,010. Total combined long-term debt and
line of credit balance was $16,041,393 at December 31, 1996. PTC believes that,
as a result of the new loan facility, its credit availability is adequate to
support operations at current and near-term anticipated sales levels.
12
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Working capital at December 31, 1997 was $14,934,237 and the current ratio was
3.0 to 1, compared with $15,343,022 and 3.1 to 1, respectively, at June 30,
1997.
Forward-Looking Statements
When used in this and in future filings by the Company with the SEC, in the
Company's press releases and in oral statements made with the approval of an
authorized executive officer of the Company, the words or phrases "will likely
result," "expects," "plans," "will continue," "is anticipated," "estimated,"
"project'" or "outlook" or similar expressions ( including confirmations by an
authorized executive officer of the Company of any such expressions made by a
third party with respect to the Company) are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, each of which
speaks only as of the date made. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, among others, the following; (a) an adverse
outcome from the IRS audit for the year ending June 30, 1995; (b) competitive
pressures in the production systems industry; and (c) general economic
conditions. The company has no obligation to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances.
PART II: OTHER INFORMATION
ITEM 2. LEGAL PROCEEDINGS
On January 9, 1998, settlement was reached in the dispute
between Atlas and SWVA, Inc. SWVA's initial claim was for $15,300,000. The
settlement provided for a payment of $700,000 to SWVA, of which $200,000 has
been paid from insurance proceeds.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 Financial Data Schedule (filed electronically only).
B. Reports on Form 8-K
None
13
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PRODUCTIVITY TECHNOLOGIES CORP.
Date: February 12, 1998 By: /s/ Samuel N. Seidman
-------------------------------------
Samuel N. Seidman, President
Date: February 12, 1998 By: /s/ Jesse Levine
-------------------------------------
Jesse Levine, Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 49,308
<SECURITIES> 1,493,256
<RECEIVABLES> 14,153,748
<ALLOWANCES> (45,500)
<INVENTORY> 575,711
<CURRENT-ASSETS> 22,421,885
<PP&E> 8,616,244
<DEPRECIATION> (581,217)
<TOTAL-ASSETS> 33,817,582
<CURRENT-LIABILITIES> 7,487,648
<BONDS> 0
<COMMON> 2,125
0
0
<OTHER-SE> 10,554,015
<TOTAL-LIABILITY-AND-EQUITY> 33,817,582
<SALES> 20,688,827
<TOTAL-REVENUES> 20,688,827
<CGS> 14,508,869
<TOTAL-COSTS> 14,508,869
<OTHER-EXPENSES> 4,940,667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 574,186
<INCOME-PRETAX> 872,577
<INCOME-TAX> 282,500
<INCOME-CONTINUING> 558,577
<DISCONTINUED> 0
<EXTRAORDINARY> 31,500
<CHANGES> 0
<NET-INCOME> 590,077
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.09
</TABLE>
