<PAGE>
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, 1996
----------------------------------
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition from ___________________ to ________________________
Commission file number 0-4979
------------
SQUARE INDUSTRIES, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
NEW YORK 13-2610905
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
921 Bergen Avenue, Jersey City, New Jersey 07306
- ------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 798-0090
--------------
Not Applicable
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
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 issuer was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes X No
----- -----
Shares of Common Stock outstanding at March 31, 1996: 1,171,556
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PART I.
Page No.
Consolidated Balance Sheets -
March 31, 1996 (unaudited) and December 31,
1995 (audited) 2-3
Consolidated Statements of Operations - for
the three months ended March 31, 1996
and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for
the three months ended March 31, 1996 and 1995
(unaudited) 5-6
Notes to Consolidated Financial Statements 7-10
Management's Discussion and Analysis of Results of
Operations and Financial Condition 11-13
PART II.
Other Information 14
SIGNATURES 15
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,977,000 $ 1,533,000
Trade and other receivables 1,151,000 1,346,000
Prepaid expenses 2,237,000 2,804,000
Other current assets 509,000 479,000
Prepaid and refundable income tax 26,000 135,000
------- --------
Total current assets 5,900,000 6,297,000
---------- ----------
Property, Equipment and Improvements, Net 24,908,000 24,633,000
----------- -----------
Other Assets:
Deferred tax asset 1,601,000 1,401,000
Deferred expenses 2,468,000 2,571,000
Security deposits and other assets 2,389,000 2,320,000
---------- ----------
6,458,000 6,292,000
---------- ----------
$37,266,000 $37,222,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
-2-
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,540,000 $ 1,449,000
Accrued expenses 4,069,000 4,347,000
Accrued local rent tax (Note 4) 1,267,000 1,252,000
Current portion of long-term debt (Note 2) 1,289,000 785,000
Deferred tax liability 333,000 333,000
Other liabilities 41,000 465,000
---------- ----------
Total current liabilities 8,539,000 8,631,000
---------- ----------
Deferred Rent 3,456,000 3,247,000
---------- ----------
Long-Term Debt-less current portion (Note 2) 18,134,000 18,474,000
----------- -----------
Security Deposits - Customers 296,000 292,000
---------- ----------
Stockholders' Equity:
Common stock, $.01 par value;
authorized 2,000,000 shares;
issued 1,223,589 shares and 1,218,389 shares 12,000 12,000
Additional paid-in capital 3,295,000 3,278,000
Retained earnings 3,979,000 3,768,000
Less:
Treasury stock at cost, 52,033 shares 236,000 236,000
Cumulative translation adjustment 209,000 244,000
----------- -----------
6,841,000 6,578,000
----------- -----------
$37,266,000 $37,222,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
-3-
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three Months Ended
March 31,
---------------------------
1996 1995
------ -----
<S> <C> <C>
Revenues:
Parking $15,026,000 $15,332,000
Gasoline station 1,002,000 959,000
----------- -----------
16,028,000 16,291,000
----------- -----------
Cost and Expenses:
Operating Costs - parking 12,465,000 12,712,000
- gasoline station 1,014,000 975,000
Provision for local rent tax (Note 4) 15,000 15,000
General and administrative expenses 1,993,000 1,849,000
Interest - net 490,000 488,000
----------- -----------
15,977,000 16,039,000
----------- -----------
Earnings from parking and
service station operations 51,000 252,000
(Benefit) Provision for Income Taxes (Note 6) (160,000) 146,000
----------- -----------
Net Income $ 211,000 $ 106,000
=========== ===========
Earnings per share (Note 5): $ 0.15 $ 0.09
=========== ===========
Computation of Shares -
Weighted average of common stock
outstanding (Note 5) 1,476,316 1,188,175
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
-4-
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three Months Ended
March 31,
--------------------------
1996 1995
---------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 211,000 $106,000
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Amortization of:
Deferred expenses 8,000 9,000
Lease acquisition costs 4,000 4,000
Depreciation and amortization 325,000 417,000
Deferred tax asset (200,000) -0-
Equity adjustment for foreign currency translations 35,000 1,000
Increase (decrease) in cash from
changes in assets and liabilities:
Trade and other receivables 195,000 221,000
Prepaid expenses and other current assets 533,000 (127,000)
Prepaid and refundable income taxes 109,000 (133,000)
Deferred expenses, net 95,000 (1,006,000)
Security deposits and other assets (69,000) (81,000)
Accounts payable, accrued expenses,
accrued local rent tax, deferred tax liability
and other liabilities (596,000) 173,000
Deferred rent 209,000 141,000
Security deposits - customers 4,000 9,000
------- -------
Net cash provided by (used in) operating activities 863,000 (266,000)
-------- --------
</TABLE>
-5-
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three Months Ended
March 31,
---------------------------
1996 1995
----------- --------
<S> <C> <C>
Cash Flows From Investing Activities:
Additions to land, buildings, equipment
and improvements $ (600,000) $(388,000)
---------- ---------
Net cash used in investing activities (600,000) (388,000)
--------- --------
Cash Flows From Financing Activities:
Proceeds from borrowings 200,000 1,700,000
Payments and current maturities on long-term debt (36,000) (328,000)
Proceeds from exercise of stock options and warrants 17,000 1,000
---------- ---------
Net cash provided by financing activities 181,000 1,373,000
---------- ---------
Net Increase in Cash 444,000 719,000
Cash, Beginning of Period 1,533,000 1,226,000
---------- ---------
Cash, End of Period $1,977,000 $1,945,000
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest 462,000 495,000
Income taxes, net of refunds received 198,000 255,000
</TABLE>
Supplemental Schedule of Noncash Financing Activities:
In March 1995, an officer/stockholder agreed to satisfy the balance of his note
receivable to the Company including accrued interest of $57,637 by transferring
as of March 16, 1995, 39,196 shares of common stock to the Company. The market
value of the stock at the date of the transfer was $176,382. As a result of this
payment, the Company issued to the officer/stockholder 12,500 shares of common
stock.
See accompanying notes to financial statements
-6-
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - The accompanying consolidated balance sheet as of March 31, 1996 and
the consolidated statements of operations for the three months ended
March 31, 1996 and 1995 and the consolidated statements of cash flows
for the three months ended March 31, 1996 and 1995, respectively, are
unaudited, but in the opinion of the Company, all adjustments
(consisting of normal recurring accruals) necessary to present fairly
the results of operations for such periods have been made. The
financial statements should be read in conjunction with the Annual
Report on Form 10-K of the Company, for the year ended December 31,
1995.
The accompanying consolidated financial statements include the accounts
of a foreign subsidiary and all domestic subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
The results of operations for the three months ended March 31, 1996 and
1995 are not necessarily indicative of the results to be expected for
the full year.
NOTE 2 - Long-term debt consisted of the following:
Interest Rate March 31, 1996
------------- --------------
Credit Agreement:
Facility I Prime + 2% $11,730,000
Facility II Prime + 2% 1,688,000
Notes payable 8.5% - 10.25% 1,330,000
Notes payable to officers Prime + 2% 500,000
Mortgages payable 7% - 11% 4,175,000
-----------
19,423,000
Less current portion 1,289,000
-----------
$18,134,000
===========
-7-
<PAGE>
NOTE 2 - (continued)
Facility I provides for a line of credit of $12,800,000, and is subject
to the aggregate face amount of outstanding letters of credit plus
unpaid drawings not exceeding $1,500,000. Borrowings under the letter
of credit facility reduce amounts available for borrowings under the
line of credit. Facility II is a term loan that was payable in
consecutive quarterly payments of $225,425. On October 31, 1995,
Amendment No. 10 to the Company's bank loan agreement was executed. The
amendment provides for an extension of the maturity dates of the
Facility I principal to June 30, 1998 with respect to $61,900, to
September 30, 1998 with respect to $150,000 and to December 31, 1998
with respect to $11,518,208 and extends the quarterly installment
payment dates for Facility II to calendar quarters ending in the period
June 30, 1996 to June 30, 1998. The amendment provides for prepayment
of principal to the extent of 50% of the Company's cash flow above
designated levels. The amendment also provides that commencing November
1, 1995 interest is to be paid at the rate of 4% per annum with the
balance of the interest rate (the Bank's prime plus 2% per annum) to be
accrued and deferred. The portion deferred will be paid or forgiven
depending on the Company achieving reductions in its operating expenses
from those for the year ended December 31, 1994 as follows: if the
amount of the reduction as of December 31, 1995 is at least $500,000,
the amounts deferred following the end of November and December 1995
will be forgiven; if the amount of the reduction as of December 31,
1996 is at least $600,000, the amounts deferred during 1996 will be
forgiven; and if the amount of the reduction as of December 31, 1997 is
at least $700,000, the amounts deferred during 1997 and 1998 will be
forgiven. The failure to achieve the designated level of reduction for
any period will result in the obligation to pay the amount deferred
during the applicable period. The Company achieved the targeted
reduction as of December 31, 1995 resulting in forgiveness of
interest of $145,000 for the two months ended December 31, 1995. The
amount of the deferral for the three months ended March 31, 1996 was
$210,000.
In July 1995, the Company entered into a one-year agreement with
another bank providing for a $1,000,000 line of credit, of which
$200,000 was borrowed during the three months ended March 31, 1996.
On June 28, 1995 two officers loaned the Company $500,000 with interest
payable at the same rate as the Facility I loan. As a condition of
Amendment No. 10, the officers agreed to a revision of their loans,
changing the terms from demand loans to loans to be repaid following
the payment of the credit agreement loans with provisions for
prepayment to the extent of 50% of the principal payments paid to the
-8-
<PAGE>
Bank under the credit agreement after the Bank has received post -
October 31, 1995 principal payments of at least $1,000,000 and for the
deferral of the interest in excess of 3.99% per annum (the loan
interest rate to December 31, 1995 is 10.25% and prime plus 2%
thereafter) until the Facility loans have been paid in full. Under
their amended loan agreement, the officers surrendered their rights to
collateral which was to be provided under the original loan agreement
and subordinated their loans to the Company's obligations under the
Credit Agreement. In consideration of the original extension of the
loans and the foregoing amendment, the Company issued to each of the
officers a five year non-transferable Warrant to purchase 75,000 shares
of the Company's Common Stock at a price of $6.40 per share, the
average of the closing sales prices of the Common Stock on NASDAQ for
June 28, 1995, and the two immediately prior days in which trades were
effected in the stock.
Certain subsidiaries of the Company periodically acquire land/or
buildings with a view to their future use in whole or in part as
parking facilities. The properties are generally purchased subject to
long-term mortgages. The mortgages vary in their payment terms and
interest rates, some requiring only the payment of interest during the
first five years.
The mortgages payable are collateralized by the underlying assets which
have a book value of $6,057,400. The two facility loans are
collateralized by the stock of subsidiaries of the Company, except
those whose stock may not be pledged because of prohibitions in leases
and mortgages.
Debt covenants under the Credit Agreement, as amended, include a
limitation on indebtedness under mortgage obligations and financial
covenants as to maintenance of minimum net worth, total liabilities to
net worth and operating cash flow ratios. The Company is in compliance
with its debt covenants. The Company believes that the funds available
under Facility I, additional mortgage loans with respect to properties
acquired or developed and funds generated from its operations will be
sufficient to finance its capital and operating requirements through
December 31, 1996.
Aggregate maturities on long-term debt are as follows:
Year Ending March 31,
1997 $1,289,000
1998 928,000
1999 13,081,000
2000 3,837,000
2001 21,000
Remainder 267,000
-----------
$19,423,000
===========
-9-
<PAGE>
NOTE 3 - FOREIGN OPERATIONS (CANADA)
Summarized information relating to the Canadian operation is as
follows:
March 31, 1996 December 31, 1995
-------------- -----------------
Total assets $1,134,000 $ 769,000
Total liabilities 2,021,000 1,672,000
Deficiency in assets (887,000) (903,000)
For the three month periods ended March 31, 1996 and March 31, 1995,
net loss for the Canadian operation was $20,000 and $55,000,
respectively.
NOTE 4 - The Company received notices of determination from a municipal local
authority assessing the Company an aggregate of approximately $480,000
of local taxes for the periods of June 1, 1981 through May 31, 1987
plus interest. The Supreme Court of the State of New York in one
proceeding upheld in February, 1996 assessments of $207,000 for
commercial rent tax by the Finance Department of the City of New York
for the period of June 1, 1981 through May 31, 1984. No determination
of the amount of the interest payable on the claim, other than it will
materially exceed, possibly to the extent of being a multiple of the
principal amount, has been made. The Company believes that the
accrued amount of $1,217,160 which covers these assessments, possible
future assessment, and related expenses through May 31, 1996 is
adequate.
NOTE 5 - For the three month periods ended March 31, 1996 and March 31, 1995,
earnings per share has been computed using the weighted average number
of shares of common stock outstanding and the dilutive effect of common
stock equivalents.
NOTE 6 - INCOME TAXES
The benefit for income taxes of $160,000 for the three month period
ended March 31, 1996 is based on the effective tax rate expected for
the year and includes (i) the partial realization of deferred tax
assets, (ii) federal income taxes, (iii) income taxes of state and
local jurisdictions for which the Company's operations were profitable
and for which no net operating loss benefit is available and (iv)
minimum corporate taxes for certain subsidiaries. The realization of
the deferred tax assets relates directly to the Company's ability to
generate taxable income for Federal, state, and foreign tax purposes.
Management has concluded that partial realization of these deferred tax
assets is more likely than not as a result of the Company's earnings
history for the past two years, and has thus reduced the valuation
accordingly. Additional reductions to the valuation allowance will be
recorded when, in the opinion of management, the utilization of such is
more likely than not.
-10-
<PAGE>
The income tax provision of $146,000 for the three month period ended
March 31, 1995 is based on the effective tax rate for the year and
includes (i) federal income taxes, (ii) income taxes of state and local
jurisdictions for which the Company's operations were profitable and
for which no net operating loss benefit is available and (iii) minimum
corporate taxes for certain subsidiaries.
NOTE 7 - CONTINGENCIES
Litigation:
Various lawsuits against the Company have arisen in the course of the
Company's business. In certain of these matters, large and/or
indeterminate amounts are sought. In the opinion of the Company, any
uninsured ultimate liability which could result from such litigation
would not have a material adverse effect on the Company's financial
position or the results of its operations.
Letters of Credit:
As of March 31, 1996, the Company's contingent debt amounted to
approximately $1,025,500 under standby Letters of Credit issued
pursuant to terms of its line of credit (Facility I).
-11-
<PAGE>
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
- ---------------------
The Company's operating results for the three months ended March 31,
1996 (the "First 1996 Quarter") were impacted by record snowfalls in the
Company's areas of operations. As a result, despite the increase in parking
capacity when compared with the capacity during the three months ending March
31, 1995 (the "1995 First Quarter") and the continued success of the Company's
promotion and discount programs, parking service revenues were $306,000, or
2.0%, less for the First 1996 Quarter than those for the First 1995 Quarter.
Parking service operating costs were almost correspondingly lower for
the First 1996 Quarter, $247,000, or 1.9%, from those for the First 1995 Quarter
but as a percentage of revenues slightly higher - 83.0% vs. 82.9%. The reduction
reflects a reversal of a $300,000 provision for additional labor and occupancy
costs which was no longer required in view of a new collective bargaining
agreement and a final tax determination; the lower parking revenues and
operating economies, offset partially by an increase of costs resulting from
additional locations and the new collective bargaining agreement.
The Company's gasoline station operations remain marginal as a result
of intense competition -- the station experienced operating losses of ($12,000)
for the First 1996 Quarter and ($16,000) for the First 1995 Quarter. The
increase in revenues of $43,000 and in costs of $39,000 for the First 1996
Quarter over those for the First 1995 Quarter were due to increased patronage
and higher wholesale gasoline prices.
General and administrative expenses increased by $144,000, or 7.8%, and
as percentage of parking service revenues (gasoline station operations require
an insignificant amount of such expenses) increased from 12.1% to 13.3% between
the comparative quarters. The increase is principally the result of higher
health care claims and professional fees and the expenses related to the
Company's operations in Atlanta and Indianapolis, both of which commenced after
the First 1995 Quarter.
The same level of interest expense for both the First 1996 Quarter and
First 1995 Quarter, ($490,000 vs. $488,000) reflect a lower level of
indebtedness during the First 1996 Quarter and lower interest rates during the
First 1995 Quarter.
As a result of the foregoing, earnings from parking and service station
operations were $51,000 for the First 1996 Quarter as compared with $252,000 for
the First 1995 Quarter.
-12-
<PAGE>
The tax benefit of ($160,000) for the First 1996 Quarter despite the
earnings is due to the Company realizing an additional $200,000 of the net
deferred tax assets as of March 31, 1996 in view of the continued improvement in
the Company's operating results. Additional realizations of the balance of the
net deferred tax assets at March 31, 1996 will be recorded when, in the opinion
of management, the realization of such is more likely than not.
The comparatively large provision of $146,000 for income taxes for the
First 1995 Quarter, a rate of 57.9%, is principally the result of (i) the
exclusion of the approximately $55,000 loss from the Company's Canadian
operations in the determination of the provision for federal income taxes, and
(ii) minimum corporate taxes imposed by the States of New York, Pennsylvania and
New Jersey and the City of New York.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1996, the Company had a working capital deficit of
($2,639,000) as compared to a working capital deficit of ($2,334,000) as of
December 31, 1995. The $305,000 increase in the deficit was primarily due to:
(i) increases of $504,000 in the current portion of long term debt and $91,000
in accounts payable, and (ii) a reduction of $567,000 in prepaid expenses,
partially offset by an increase of $444,000 in cash and a reduction of $278,000
in accrued expenses.
The Company's Credit Agreement with its principal bank lender has been
amended several times to avoid or cure defaults in the agreement. An amendment
on June 14, 1993, as of February 28, 1993 modified financial covenants as to the
maintenance of minimum net worth, total liabilities to net worth and operating
cash flow as of and for the period ended the latter date and through February
28, 1994. A June 13, 1994 amendment, effective as of February 28, 1994, extended
the maturity to June 30, 1995, increased the interest rate as of July 31, 1994
by an additional 1/2% per annum, modified the financial covenants retroactive to
December 1, 1994 and provided for the payment to the lender of a $50,000 fee.
The retroactive modification of the covenants permitted the Company to be in
compliance with the covenants as of February 28, 1994 and through June 13, 1994.
On October 11, 1994, the Company's agreement was further amended to, among other
things, extend the maturity to May 31, 1997, increase the interest rate as of
October 11, 1994 to prime plus 2%, modify certain financial covenants
retroactive to August 31, 1994, and provide for the payment of an additional
$50,000 fee to the lender. The covenant modifications permitted the Company to
comply with the covenants as of August 31, 1994 and through May 1995. A further
amendment was effected on October 31, 1995 to provide more favorable terms with
respect to principal, interest payments and the financial covenants. The
maturity dates of the Facility I credit loan principal were extended to June 30,
1998 with respect to $61,900, September 30, 1998 with respect to $150,000 and
December 31, 1998 with respect to the balance, which as of September 30, 1995,
amounted to $11,518,208, and the quarterly installment payment dates for the
Facility II term loan in the aggregate principal amount of $1,688,100 were
deferred to the calendar quarters ending in the period June 30, 1996 to June 30,
1998. The amendment provides for prepayment of principal to the extent of 50% of
the Company's cash flow above designated levels and that commencing November 1,
-13-
<PAGE>
1995 interest is to be paid at the rate of 4% per annum, with the balance of the
interest rate (the Bank's prime plus 2% per annum) to be accrued but deferred.
The portion deferred will be paid or forgiven depending on the Company achieving
reductions in its operating expenses from those for the year ended December 31,
1994 as follows: if the amount of the reduction as of December 31, 1995 is at
least $500,000, the amounts deferred during November and December 1995 will be
forgiven; if the amount of the reduction as of December 31, 1996 is at least
$600,000 the amounts deferred during 1996 will be forgiven; and if the amount of
the reduction as of December 31, 1997 is at least $700,000, the amounts deferred
during 1997 and 1998 will be forgiven. The failure to achieve the designated
level of reduction for any period will result in the obligation to pay the
amount deferred during the applicable period at the end of such period. The
Company achieved the targeted reduction as of December 31, 1995 resulting in
forgiveness of interest of $145,000 for the two months ended December 31, 1995.
The amount of the deferral for the First 1996 Quarter was $210,000.
On June 28, 1995, the Company borrowed $500,000 in the form of demand
loans from the Chairman and Assistant Chairman of the Company. The loans, which
bear interest at the equivalent rate to the Facility loan, were amended at, and
as a condition to, the execution of the October 31, 1995 amendment to the Credit
Agreement, to provide for deferral of the payment of principal and interest in
excess of 3.99% per annum until certain principal and interest payments are made
to the bank lender.
In July 1995 the Company entered into a one year agreement with another
bank providing for a $1,000,000 line of credit, of which $200,000 was borrowed
during the First 1996 Quarter.
Net cash provided by operating activities was 863,000 for the First
1996 Quarter principally as a result of a substantial reduction in prepaid
expenses, partially offset by a material reduction in accrued expenses and other
liabilities. For the First 1995 Quarter, the Company had net cash of ($266,000)
used in operating activities, primarily due to a substantial increase in
deferred expenses.
Cash used in investing activities, consisting of additions to land,
buildings, equipment and improvements, amounted to $600,000 for the First 1996
Quarter, $212,000 more than amounts expended or accrued during the First 1995
Quarter for this purpose. The Company anticipates capital expenditures of not
more than $1,500,000 for the year ended December 31, 1996 to be financed from
the Company's operations, borrowings and joint ventures with equity
co-venturers.
The Company derived net cash from financing activities of $181,000 for
the First 1996 Quarter as compared with $1,373,000 for the First 1995 Quarter,
with the difference resulting principally from greater borrowings under the
credit facility during the 1995 period.
As a result of the foregoing, the Company increased its cash balances
by $444,000 and $719,000 for the First 1996 Quarter and the First 1995 Quarter,
respectively.
-14-
<PAGE>
As of May 1, 1996, the Company had borrowed the full amount under its
line of credit. It believes that the funds which are available from time to time
under its bank loan facility, additional mortgage loans with respect to
properties acquired or developed and funds generated from its operations will be
sufficient to finance its capital and operational requirements for the 12 months
ended March 31, 1997. The Company anticipates the receipt of approximately
$1,700,000 from the settlement of its claim for damages resulting from the
disruption of its operations in Center City in Philadelphia from a fire in a
major office building.
PART II - OTHER INFORMATION
Item 6. -- Exhibits and Report on Form 8-K
(a) None
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 1996.
-15-
<PAGE>
SIGNATURES
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.
SQUARE INDUSTRIES, INC.
/s/ Sanford Harwood
------------------
Sanford Harwood
Assistant Chairman
/s/John Kowal
------------
John Kowal
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE UNAUDITED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE
UNAUDITED STATEMENT OF INCOME FOR THE THREE MONTHS THEN ENDED CONTAINED IN THE
REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 OF SQUARE
INDUSTRIES, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,977,000
<SECURITIES> 0
<RECEIVABLES> 1,151,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,900,000
<PP&E> 31,411,000
<DEPRECIATION> 6,503,000
<TOTAL-ASSETS> 37,266,000
<CURRENT-LIABILITIES> 8,539,000
<BONDS> 19,423,000
0
0
<COMMON> 12,000
<OTHER-SE> 6,829,000
<TOTAL-LIABILITY-AND-EQUITY> 37,266,000
<SALES> 0
<TOTAL-REVENUES> 16,028,000
<CGS> 0
<TOTAL-COSTS> 13,479,000
<OTHER-EXPENSES> 2,008,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 490,000
<INCOME-PRETAX> 51,000
<INCOME-TAX> (160,000)
<INCOME-CONTINUING> 211,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211,000
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
