SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File No. 0-916-3
PLENUM PUBLISHING CORPORATION
-----------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 13-5648711
-------- -----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
233 Spring Street, New York, New York 10013
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 212-620-8000
Securities registered pursuant to Section 12(b) of the Act
Name of each Exchange
Title of each class on which Registered
------------------- ---------------------
None
------------------- ----------------------
Securities registered pursuant to Section 12(g) of the Act
Common Stock, $.10 par value
----------------------------
(Title of Class)
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
Cover page (cont'd)
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
X
---
The aggregate market value of the voting stock held by
non-affiliates of the Registrant as of March 16, 1995 was
$101,610,750.
The number of shares outstanding of the Issuer's common stock, as
of March 16, 1995, was 3,944,069 shares.
PART I
Item 1. Business
--------
The Registrant is and for many years has been engaged in the
business of publishing and distributing advanced scientific and technical
material. The Registrant publishes and distributes books and journals and
creates and maintains databases for which it receives royalties from
unrelated organizations providing access to such materials throughout the
world under the imprints of Plenum Press, Consultants Bureau, DaCapo Press,
IFI/Plenum Data, J.S. Canner & Company, and Human Sciences Press. The
Registrant and its subsidiaries maintain offices in New York, New York;
Wilmington, Delaware; Needham Heights, Massachusetts; Wilmington, North
Carolina; London, England; and Moscow, Russia; and warehouse facilities in
Edison, New Jersey.
The Registrant's principal markets are public and private
libraries, technically oriented corporations, research organizations and
individual scientists, engineers, research workers, other professionals and
graduate students throughout the world. Except as to the sale of reprints
and tradebooks, the Registrant does not generally sell to book stores. The
Registrant's principal methods of marketing are by direct mail and by
advertising in scientific publications, including its own journals. The
Registrant makes a wide distribution of its catalogs of published material,
as well as plans for new publications. In certain foreign markets, the
Registrant utilizes the services of independent distributors and agents.
The Registrant generally secures copyrights on its publications in its
own name or in the name of its subsidiaries. In some cases, pursuant to
written agreement, the copyright is secured in the name of the author of the
publication or a learned society or other organization. Copyrights on
translations of foreign journals are limited to English language translations
and do not cover the original foreign language works. Those translations of
Russian journals as to which the Registrant is the distributor but not the
publisher are copyrighted in the name of the publisher. Most publications
printed by the Registrant's DaCapo Press subsidiary are reprints of works in
the public domain which are not subject to copyright protection or are works
published by others who have sold to the Registrant certain rights for
publication, either for a fixed payment or under a royalty agreement.
The Registrant does not perform any printing operations. It uses
outside printing and binding services, with much of the material being
prepared by the Registrant for printing. Preparations by the Registrant
include editing, creation of a suitable design and typesetting.
The following table sets forth the total revenues contributed by each
class of similar products and services, and the income (loss) generated from
securities owned by the Registrant.
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Subscription Journals $32,241,873 $33,297,585 $31,812,705 $31,342,821 $29,820,962
Outside Journals (a) 1,645,623 2,461,775 3,104,347 2,782,940 2,818,477
Books 13,917,674 13,317,503 14,191,600 14,953,336 15,011,957
Database Products 4,122,123 4,210,802 4,202,308 3,831,838 3,885,351
Miscellaneous sales 549,062 810,581 415,039 463,664 467,927
Interest income 446,401 544,780 3,020,543 3,522,592 4,266,980
Dividend income 1,592,837 2,136,989 1,636,462 1,546,865 2,649,325
Net realized gain (loss)
on sales of marketable
securities 2,160 801,387 2,476,916 19,714 (3,575,870)
Net unrealized gain
(loss) on marketable
securities 2,523,173 (1,713,197) - 6,544,417 (4,574,670)
Equity in net income
(loss) of Gradco
Systems, Inc. 102,986 4,565 ( 100,430) ( 91,300) (4,168,681)
--------- ---------- ---------- ---------- ----------
$57,143,912 $55,872,770 $60,759,490 $64,916,887 $46,601,758
----------- ----------- ---------- ---------- ----------
----------- ----------- ---------- ---------- ----------
<FN>
Notes:
(a) In April 1993, an American learned society with which the Company had a
contract to produce English translations of 11 Russian language journals for
publication by that society gave formal notice that it would not exercise the
option of renewing the contract beyond the term ending with the 1993 volume
year.
Subscription Journals
---------------------
During 1994, the Registrant published a total of 222 journals. 74
were translations of Russian language scientific journals, 100 were published
in the English Language Journal Program, and 48 were published by the
Registrant's subsidiary, Human Sciences Press, Inc. The Registrant also
distributed translations of 21 Russian scientific journals (see below).
Translations of Russian Language Journals
-----------------------------------------
The translation journals are in the fields of physical sciences,
mathematics, engineering and life sciences. In December 1993, the Registrant
entered into a Journal Production and Distribution Agreement (the "Distrib-
ution Agreement") with the Russian Academy of Sciences (the "Academy") and
other interested parties pursuant to which litigation then pending, relating
to the translation of Russian scientific journals, was ended, and
Registrant's role as publisher and distributor of certain of such journals
was altered. The Distribution Agreement extends from 1994 through 2006.
Pursuant to the Distribution Agreement, in 1994 the Registrant distributed
for MAIK Nauka ("MN"), an entity owned in part by Pleiades Publishing, Inc.
and the Academy, 21 Russian scientific journals in English (the "MN
Journals"). MN became the exclusive publisher of such journals. Prior
thereto, the Registrant had translated, published and distributed these
journals under a contract with the Copyright Agency of the former Soviet
government, and under contracts with the individual institutes publishing the
journals. It paid royalties based in part upon the number of subscribers.
Under the Distribution Agreement, the Registrant continues to promote and
distribute these journals throughout the world, and continues to deal with
and collect from subscribers to the journals, retaining a portion of such
revenues for performing its function. In 1994, the Registrant retained 35%
of the revenue. The portion retained is included in subscription revenue.
The amount will gradually be reduced to 30% in 1999 and will remain at that
level for the balance of the term of the Distribution Agreement.
Under the Distribution Agreement, in 1995 MN has under taken the publication
of the English translations of 14 additional Russian journals, to be promoted
and distributed by the Registrant. In 1996, MN will undertake the
publication of the English translations of 3 additional Russian journals, and
may elect to publish the English translations of up to 14 additional Russian
journals, to be promoted and distributed by the Registrant. As to each
additional journal which is published by MN and distributed by the Registrant
under the Distribution Agreement, the Registrant will retain 35% of the
revenue in the initial year of distribution, with the amount gradually being
reduced to 30% over a six-year period.
The journals published by MN are translated and published in
Russia. The Registrant expects to continue its activities in translating,
publishing and distributing both the journals subject to the Distribution
Agreement until they are published by MN and the 43 English Translation
Russian Journals not subject to the Agreement. These activities are
undertaken pursuant to the Registrant's existing English translation and
publication contracts with the individual entities publishing the Russian
language journals which generally extend through 2001.
The journals published by MN are distributed by the Registrant
under the MAIK Nauka/Interperiodica imprint, and it is indicated in each
journal that it is distributed worldwide by Plenum/Consultants Bureau. Those
journals translated and published by the Registrant continue to be published
under the Registrant's "Consultant's Bureau" imprint.
In 1994, revenues from subscription journals decreased as a result
of the Registrant's altered status with respect to the translation journals
covered by the Distribution Agreement, and also as a result of the political
and economic situation in Russia and in the other republics of the former
Soviet Union. Management expects further decreases to occur hereafter as a
result of the same factors. See Item 7, "Management's Discussion and
---------------------------
Analysis of Financial Condition and Results of Operations."
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The translation work required for the publication of the
Registrant's non-MN Journals is done primarily by scientists and technical
persons in the United States and elsewhere who have other principal
occupations. The Registrant maintains relationships with approximately 130
such persons, most of whom have been rendering translation services to the
Registrant for several years. The Registrant has been able to obtain the
required translators to enable it to meet its needs. The number of trans-
lators reflects a reduction from previous years since the Registrant, under
the Distribution Agreement, translates fewer journals.
Plenum Press Journals
---------------------
The Registrant published 100 journals in its English Language
Journal Program in 1994. The journals are published under the Registrant's
"Plenum Press" imprint, and include titles in chemistry, physics,
mathematics, computer science, engineering, biology, medicine, psychiatry,
social sciences and law. Each journal is published under the direction of an
editorial board composed of professionals specializing in the fields of
research covered by the journal.
Human Sciences Press Journals
-----------------------------
The Registrant's subsidiary, Human Sciences Press, Inc., publishes
48 journals, under the "Human Sciences Press" imprint. These journals are
primarily in the health, behavioral and social science fields.
Outside Journals
----------------
In April 1993, an American learned society with which the
Registrant had a contract to produce English translations of 11 Russian
language journals for publication by that society gave notice that it would
not exercise the option of renewing the contract beyond the term ending with
the 1993 volume year. For 1994, the amount of revenue generated from the
production of these 11 journals was approximately $527,000. Such revenue
ceased during the second quarter of 1994.
The Registrant, through its Boston-based J.S. Canner & Company,
Inc. subsidiary, engages in the purchase and sale of backissue periodicals to
libraries, colleges, universities and other users.
Books
-----
The Registrant's Plenum Press division publishes scientific,
technical and medical books for use by scientists, engineers, research
workers, other professionals and graduate students, and their supporting
libraries, research laboratories and institutions. During 1994, the division
published 263 new titles as part of this program, and had an active backlist
of approximately 3,800 titles as of December 31, 1994. During 1993, 288 new
titles were published. Titles include comprehensive treatises, monographs
and other advanced text-reference works, as well as proceedings of meetings
reporting original scientific research, works surveying the state of the art
in various scientific fields and specialized bibliographies and data
compilations. In recent years, a number of books treating scientific topics
of interest to the general reader have also been published.
The Registrant's DaCapo Press, Inc. subsidiary publishes a line of
academic/trade paperbacks in the arts, biography and history. During 1994,
this subsidiary published 62 titles compared to 40 titles in the prior year.
As of December 31, 1994, this subsidiary had an active backlist of
approximately 1,400 titles, of which approximately 500 titles were
academic/trade paperbacks, and 900 were hardcover reprints of books in music,
dance, visual arts and the social sciences, which were published by DaCapo in
prior years.
The Registrant's Human Sciences Press, Inc. subsidiary had an
active backlist of approximately 400 titles as of December 31, 1994. The
Registrant has no immediate plans to publish new titles under the Human
Sciences imprint, but will continue to publish the backlist under such
imprint. The Human Sciences books are primarily in the health, behavioral
and social science fields, and are sold mainly to libraries and professionals
in these fields.
Database Products
-----------------
The Registrant's IFI/Plenum Data Corporation subsidiary ("IFI") is
primarily involved in providing to major industrial users on-line access to
the IFI Comprehensive Data Base of Patents, a computerized index file
containing references to all United States chemical and chemical related
patents issued since January 1950. The Registrant's customers generally use
terminals at their own facilities to obtain the information through several
international database networks. The file is further utilized by IFI in its
performance of patent searches for law firms and other customers. IFI
produces other on-line databases for searching chemical, general, electrical
and mechanical United States patents, and publishes in book format the
Patent Intelligence and Technology Report. IFI also offers other online
database products including Mental Health Abstracts and Information Science
Abstracts.
The Registrant's subsidiary, Career Placement Registry, Inc.
("CPR"), which had developed a database system of information concerning
college graduates and experienced personnel who are seeking employment
opportunities, discontinued business due to insufficient use of the system
and was dissolved during 1994. Since its creation in 1981, the operations of
CPR did not have a significant impact on the Registrant's earnings, nor did
its discontinuance.
Other Publishing Activities
---------------------------
Plenum Publishing Company Limited, the Registrant's English
subsidiary, provides sales representation for the Registrant in the United
Kingdom and European markets. Plenum Publishing Company Limited also
performs editorial procurement services for the scientific book and journal
publishing programs of the Registrant.
Competition
-----------
The market in which the Registrant operates both for the
procurement of manuscripts and the sale of its products is highly
competitive. The Registrant is one of the leading publishers and
distributors of English translations of Russian scientific journals.
However, several other companies with English translation capabilities have
relationships with individuals and entities responsible for the publication
of scientific and technical material in the former Soviet Union. In
addition, other publishers in the United States and abroad with greater
financial resources than the Registrant are engaged in the publication of
original English language scientific materials and database products, as well
as the reprint of out-of-print books and other books generally not available.
Export Sales
------------
The Registrant's sales derived from customers outside the United
States aggregated approximately $20,590,000 in 1994 (approximately 39% of
consolidated sales). Sales derived from customers outside the United States
were approximately $23,217,000 in 1993 and $21,214,000 in 1992 (approximately
43% and 39%, respectively, of consolidated sales). The Registrant generally
prices its products sold abroad in U.S. dollars.
Investments in Securities
-------------------------
In 1994, the Registrant's dividends, interest income, net realized
and unrealized gains/losses on marketable securities, and equity in the net
income (loss) of Gradco Systems, Inc. (the foregoing items net of interest
expense and other investment-related expenses) represented 21% of the
Registrant's pre-tax income. In 1993, such items (net of interest expense
and other investment-related expenses) represented 3.2% of pre-tax income.
The Registrant's excess cash is invested principally in a portfolio
of marketable securities. Market conditions and the nature of the
investments have an impact on the performance of the portfolio. Excess cash
is also invested in part, from time to time, in short-term investments such
as time deposits, money market funds and commercial paper, and in the past
has been invested in U.S. Government securities. The investments of excess
cash are available for corporate purposes, and have been so used periodically.
The Registrant owns 913,000 shares of Common Stock of Gradco
Systems, Inc. ("Gradco"), an office automation company, which were acquired
by the Registrant during the period October, 1989 through August, 1991. The
acquisitions by the Registrant have been reported in a Statement on Schedule
13D and amendments thereto filed jointly with the Securities and Exchange
Commission by the Registrant and by its Chairman, Martin E. Tash, and his
wife, who as of the date hereof had acquired a total of 250,672 shares. Mr.
Tash also has currently exercisable options to purchase 50,000 additional
shares. The filings are required because the Registrant and Mr. and Mrs.
Tash as a group (the "Group") beneficially own more than 5% of the
outstanding shares of Gradco (11.7% by the Company and 3.8% by Mr. and Mrs.
Tash, inclusive of his currently exercisable options, as of the date hereof,
for a total of 15.5%).
In October 1990, in a proxy contest, a five-person slate of
directors was nominated by the Group in opposition to the nominees of
Gradco's then current management. The slate consisted of Martin E. Tash
(Registrant's Chairman of the Board and Chief Executive Officer), Bernard
Bressler (Secretary and a director of Registrant) and three other individuals
not affiliated with Registrant. Three nominees of the Group (including
Messrs. Tash and Bressler) were elected to directorships, constituting a
majority of the Board. The newly named Board named Mr. Tash as Gradco's
Chairman and Chief Executive Officer.
The Group may be deemed to have obtained control of Gradco in
October 1990, as a result of the fact that its nominees were elected as a
majority of Gradco's Board of Directors. Gradco's current five-person Board,
elected without any opposing nominees at its September 1994 Annual Meeting,
consists of Messrs. Tash and Bressler, and three other persons. All of the
nominees were designated as such at the request of the Group, which therefore
may be deemed to continue to have control of Gradco.
Registrant has not undertaken any obligations in connection with
Gradco's operations or advanced any funds to it and does not otherwise engage
in business through Gradco.
The Registrant's investment in Gradco is reflected in the Financial
Statements included herein using the equity method of accounting.
Gradco, the Registrant and Mr. Tash were defendants in a lawsuit
which had been brought by certain former management employees of Gradco. In
March 1995, this lawsuit was settled with all but one of the plaintiffs by
the exchange of general releases. See Item 3, Legal Proceedings.
-----------------
In view of the securities investments described above, the
Registrant evaluates its status under the Investment Company Act of 1940, as
amended (the "Company Act"), on an annual basis. The Company Act requires
the registration with the Securities and Exchange Commission of, and imposes
various substantive restrictions on, any "investment company." The Company
Act defines the term "investment company" to include a company that engages
primarily, or proposes to engage primarily, in the business of investing,
reinvesting or trading in securities. An "investment company" may also
include a company which engages or proposes to engage in the business of
investing, reinvesting, owning, holding or trading in securities and which
owns or proposes to acquire investment securities (which for this purpose
excludes U.S. Government securities) having a value that exceeds 40% of the
value of such company's total assets (excluding cash items and U.S.
Government securities), unless the company is primarily engaged in a business
or businesses other than that of investing, reinvesting, owning, holding or
trading in securities.
The Registrant's principal business continues to be publishing and
distributing advanced scientific and technical material, and the Registrant
is not primarily engaged in investing, reinvesting or trading in securities.
As of December 31, 1994, investment securities represented less than 40% of
the value of the Registrant's total assets (exclusive of cash items), and in
any event the Registrant continued to be exempt from status as an investment
company pursuant to Rule 3a-1 under the Company Act because less than 45% of
the value of its total assets (exclusive of cash items) consisted of, and
less than 45% of its net income after taxes for the last four fiscal quarters
combined was derived from, securities.
Miscellaneous Information
-------------------------
The Registrant currently employs approximately 285 full time
employees.
Backlog is not significant in the Registrant's business because
orders are filled on a current basis. The Registrant does receive payments
and on occasion records receivables from journal subscribers in advance of
the issuance of journals, and the amounts appearing on the Registrant's
Consolidated Balance Sheets as "Deferred Subscription Income" represent these
items. See Note 1 of Notes to Consolidated Financial Statements.
The business of the Registrant is not seasonal. No material
portion of the business of the Registrant is subject to renegotiation of
profits or termination of contracts at the election of the Government.
Compliance with the provisions enacted regulating the discharge of materials
into the environment or otherwise relating to the protection of the
environment does not have an effect upon the Registrant.
Item 2. Properties
----------
As of December 31, 1994, the Registrant had leases at the following
principal locations:
Expiration Annual
Address Size Date of Lease Rent
------- ---- ------------- ------
233 Spring Street 61,650 sq. ft. 2007 $270,336 in 1995,
New York, NY and increasing to a
maximum of $340,512
in 2006.
150 Bay Street 10,000 sq. ft. 1997 $49,400 in 1995
Jersey City, NJ and thereafter
10 Charles Street 20,800 sq. ft. 1996 $125,073 in 1995
Needham Heights, MA and thereafter
90 Middlesex Street 2,400 sq. ft. 1996 $46,000 in 1995
London, U.K. and thereafter
Various of the leases referred to above provide for additional
payments or increases in rent over the base rental specified above under
different circumstances. In addition to the leases referred to above, the
Registrant or its subsidiaries have leases on space at various locations with
a total annual rental of approximately $17,000.
The Registrant's warehouse operations are conducted at a 69,000
square foot warehouse in Edison, New Jersey which is owned by the Registrant.
Item 3. Legal Proceedings
-----------------
(a) Stewart, et al. v. Gradco Systems, Inc., Plenum Publishing
-----------------------------------------------------------
Corporation, et al.
-------------------
This litigation, which was previously reported in the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1993, was agreed
to be settled in March 1995 by Keith Stewart, and by all but one of the other
remaining plaintiffs. The settlement will involve a release of all claims
and cross-claims, without any payment by any of the parties. The settlement
documents have not yet been filed with the Court, but this is expected to
occur imminently.
Management of the Registrant, after consultation with counsel,
believes that the pending action by the non-settling plaintiff will not
result in a material loss to the Registrant and intends to vigorously defend
against it. Pre-trial discovery is being conducted, and the discovery cutoff
date is April 30, 1995. The trial date has been set for May 30, 1995.
(b) Waterman v. Calt and DaCapo Press, Inc.
---------------------------------------
This civil action was filed by an individual residing in Oxford,
Mississippi, by Complaint dated January 5, 1995. DaCapo Press, Inc. (a
wholly-owed subsidiary of the Registrant) published a book entitled
I'd Rather be the Devil: Skip James and the Blues
--------------------------------------------------
about a deceased blues singer (the "Book"). The plaintiff, the singer's
former manager, has alleged that he was libeled by the Book. He seeks
compensatory damages in the amount of $1,500,000 and punitive damages in the
amount of $1,500,000 against DaCapo and the book's author, Stephen Calt.
Plaintiff also seeks $20,000 in damages for the alleged unauthorized use of
a photograph.
The case was removed to the United States District Court for the
Western District of Tennessee, from Tennessee State Court where it had been
filed. Defendants have filed an answer, and intend to defend the case
vigorously.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related
-----------------------------------------------------
Stockholder Matters
-------------------
The Common Stock of the Registrant is traded on the NASDAQ National
Market System. The following table sets forth, for the calendar quarters
indicated, information furnished by the NASD, Inc. as to the high and low
sale prices for the Registrant's Common Stock as reported on the NASDAQ
National Market System under the symbol PLEN. The table also sets forth
dividends declared during such periods. There were approximately 573 record
holders of the Registrant's Common Stock on March 16, 1995. The number of
holders as so stated does not include individual participants in security
position listings.
Dividends
Calendar Year Ended December 31, High Low Per Share
-------------------------------- ---- --- ---------
1994
----
First Quarter.................... 27-1/2 25 $ .28
Second Quarter................... 27 22-1/4 .28
Third Quarter.................... 27-1/4 23-1/2 .28
Fourth Quarter................... 32-1/4 24-3/4 .28
Dividends
Calendar Year Ended December 31, High Low Per Share
-------------------------------- ---- --- ---------
1993
----
First Quarter.................... 30-1/2 25-3/4 $ .27
Second Quarter................... 30 25-1/2 .27
Third Quarter.................... 27-3/4 22-3/4 .27
Fourth Quarter................... 26-1/4 22-1/2 .27
The Registrant has paid cash dividends on its Common Stock in each
year since 1974. The payment and amount of future dividends are dependent
upon the Registrant's earnings, general financial condition and the
requirements of the business and upon declaration of the dividend from time
to time by the Board of Directors.
Item 6. Selected Financial Data
------------------------
Year Ended December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Subscriptions, books,
outside journals and
other sales, net $52,476,355 $54,098,246 $53,725,999 $53,374,599 $52,004,674
Income (loss) from interest
and dividends, and net
realized and unrealized
gain/loss on marketable
securities 4,564,571 1,769,959 7,133,921 11,633,588 (1,234,235)
Equity in net income (loss)
of Gradco Systems, Inc. 102,986 4,565 (100,430) (91,300) (4,168,681)
Income before extraordinary
items and cumulative
effect on prior years of
accounting change 12,719,118 10,928,707 12,148,883 17,235,054 1,917,329
Extraordinary (loss)
gain(a) - (1,319,794) 394,823 100,638 196,659
Cumulative effect on
prior years of accounting
change(b) - - 1,179,950 - -
Net income 12,719,118 9,608,913 13,723,656 17,335,692 2,113,988
Per share of Common Stock
-- primary:
Income before extraordinary
items and cumulative
effect on prior years of
accounting change 2.87 2.37 2.57 3.43 .35
Extraordinary (loss)
gain(a) - (.29) .08 .02 .04
Cumulative effect on
prior years of accounting
change(b) - - .25 - -
Net income 2.87 2.08 2.90 3.45 .39
Per share of Common
Stock -- fully diluted(c):
Income before extraordinary
items and cumulative
effect on prior years of
accounting change 2.30 2.28 2.92
Extraordinary (loss)
gain(a) (.26) .06 .02
Cumulative effect on prior
years of accounting
change(b) - .19 -
Net income - 2.04 2.53 2.94
-
Total assets 84,913,166 88,605,160 125,852,355 128,364,118 122,853,925
Long-term debt - - 40,827,000 47,635,000 48,935,000
Dividend declared per
share of Common Stock 1.12 1.08 1.04 1.00 .92
<FN>
Footnotes to Table of Selected Financial Data
(a) Extraordinary loss in 1993 resulted from the early retirement of 6 1/2%
Convertible Subordinated Debentures on April 30, 1993.
(b) Effective January 1, 1992, the Registrant made an accounting change for
deferred taxes as a result of the application of the Statement of Financial
Accounting Standards No. 109.
(c) Fully diluted net income per share is not presented for the periods where
the result of the computation is antidilutive.
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
---------------------
1994 Compared to 1993
---------------------
Revenues from the Company's publishing operations decreased by 3%.
Revenues from subscriptions and outside journals decreased by 5.2% primarily
due to the following: (a) cessation of the publication of 11 Russian
language journals under a contract with an American learned society (which
ended with the 1993 volume year - see below); (b) the decrease in revenues
from the translation journals resulting from the Company's altered status
with respect to the journals covered by the Journal Production and
Distribution Agreement (see below); (c) non-renewals of subscriptions
partially attributable to the reduced buying power of libraries and to
changes in the market for the Company's translation of Russian language
journals, offset by higher selling prices; (d) fewer journal issues being
published.
In December 1993, the Company entered into a Journal Production and
Distribution Agreement (the "Distribution Agreement") with the Russian
Academy of Sciences (the "Academy") and other interested parties pursuant to
which litigation then pending, relating to the translation of Russian
scientific journals, was ended, and the Company's role as publisher and
distributor of certain of such journals was altered. The Distribution
Agreement extends from 1994 through 2006. The new arrangement resulted in
decreased revenues from subscription journals for fiscal 1994, since the
publication of most of the affected journals for the 1994 volume year
commenced during the second quarter of fiscal 1994.
Management expects that in 1995 and thereafter, further decreases in
the Company's revenues from subscription journals will occur as a result of
the Company's altered status with respect to the journals covered by the
Distribution Agreement, and also as a result of the political and economic
situation in Russia and in the other republics of the former Soviet Union.
In April 1993, an American learned society with which the Company had
a contract to produce English translations of 11 Russian language journals
for publication by that society gave formal notice that it would not exercise
the option of renewing the contract beyond the term ending with the 1993
volume year. The amount of revenue generated from the production of these 11
journals was approximately $527,000 for fiscal 1994, compared to
approximately $1,261,000 for fiscal 1993. Such revenues ceased during the
second quarter of fiscal 1994.
Despite the reduction in the number of book titles being published,
revenues from book sales increased by 4.5%, primarily due to an increase in
backlist sales.
The cost of sales as a percentage of revenues increased from 40.1% to
40.4%, principally due to a lower gross margin on certain Russian scientific
journals published by the Russian Academy of Sciences under the Distribution
Agreement and the cessation of the publication of 11 Russian language
journals under a contract with an American learned society, which had an
above average gross margin, offset by increased sales of backlist books. The
Company provides for obsolescence by writing down the inventory values of
backlist books, resulting in higher gross margins on backlist sales, as
compared to frontlist sales. Under the Distribution Agreement, there were no
royalties payable on certain Russian scientific journals published by the
Academy of Sciences, resulting in decreased royalty expenses. The decrease
in selling, general and administrative expenses was primarily due to
decreased professional fees, advertising expenditures and mailing expenses.
The decrease in interest income was principally due to lower interest
rates and decreased investment in U.S. Government securities, arising mainly
because of the decrease in investment assets utilized for redemption of the
Company's 6 1/2% Convertible Subordinated Debentures (the "Debentures") on
April 30, 1993. The decrease in dividend income was due to decreased
investment in marketable securities. The Company had a net realized gain of
$2,160, and an unrealized gain of $2,523,173 on marketable securities for
fiscal 1994, as compared to a net realized gain of $801,387 and an unrealized
loss of $1,713,197 on marketable securities for fiscal 1993. The decrease in
interest expense was primarily due to the redemption of the Debentures on
April 30, 1993.
The increase in net income in fiscal 1994 was principally
attributable to the increase in investment income as discussed in the
preceding paragraph, and the extraordinary loss from early retirement of the
Debentures for fiscal 1993, offset by decreased income from publishing
operations in fiscal 1994.
1993 Compared to 1992
---------------------
Revenues from the Company's publishing operations increased by 0.7%
to $54,098,246. Revenues from subscriptions and outside journals increased
by 2.4%, primarily attributable to more journal issues being published and
higher selling prices, offset by non-renewals of subscriptions partially due
to the reduced buying power of libraries. Revenues from book sales decreased
by 6.2% primarily due to fewer book titles being published.
In December 1993, the Company entered into the Distribution Agreement
regarding translation journals. This modified arrangement began to take
effect in 1994 (see above).
The cost of sales as a percentage of revenues increased from 39.82%
to 40.08%, primarily due to higher salaries and employee benefit costs,
offset by a more favorable mix of revenues from subscriptions and outside
journals, and book sales. The increase in royalty expenses was principally
due to increased royalty rates. The decrease in selling, general and
administrative expenses was primarily attributable to decreased professional
fees and bad debt expense, offset by higher salaries, employee benefit costs
and sales commissions.
The decrease in interest income was principally due to lower interest
rates and decreased investments in Government securities, time deposits and
money market funds, arising in large part because of the decrease in
investment assets utilized for redemption of the Debentures on April 30,
1993. The increase in dividend income resulted from the increase in average
investment in marketable securities in 1993. The Company had a net realized
gain of $801,387 on marketable securities and recorded a provision of
$1,713,197 for net unrealized losses on marketable securities for 1993, as
compared to a net realized gain of $2,476,916 on marketable securities for
1992. The decrease in interest expense was primarily due to the redemption
of the Debentures.
The decrease in net income was principally attributable to the
decrease in investment income as discussed in the preceding paragraph and the
extraordinary loss from early retirement of the Debentures. The provision
for income taxes as a percentage of income decreased in 1993 as compared to
1992 because in 1992 the Company recorded an additional provision for state
and local income taxes for assessments of such taxes expected with respect to
prior years.
Liquidity and Sources of Capital
--------------------------------
The ratio of current assets to current liabilities is 5.1 to 1 at
December 31, 1994 compared to 6.3 to 1 at December 31, 1993.
Management anticipates that internally generated funds will exceed
the requirements of the operations of the business. The Company also has
funds of approximately $56,066,000 at December 31, 1994 invested in
marketable securities and in cash and cash equivalents, which are available
for corporate purposes.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Response to this Item is contained in Item 14(a).
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
---------------------------------------------------
(a) The following table sets forth the name of each director and
executive officer of the Registrant, the date on which his present term as a
director will expire, and the nature of all positions and offices with the
Registrant held by him at present. The term of office of all executive
officers expires at the next Annual Meeting of Stockholders of the
Registrant, which is to be held in June 1995.
Present Term
as Director
Name Expires Position
---- ------------- --------
Martin E. Tash 1996 President and
Chairman of the Board
of Directors
Mark Shaw 1996 Executive Vice
President and Director
Bernard Bressler 1996 Secretary and Director
Earl Ubell 1995 Director
N. Bruce Hannay 1995 Director
Howard F. Mathiasen 1995 Director
Ghanshyam A. Patel ---- Treasurer and Chief
Financial Officer;
Assistant Secretary
The Registrant's Board of Directors is divided into two classes.
Each class currently consists of three members, and is elected in alternate
years for a term of two years. The term of one class (consisting of Dr.
Hannay and Messrs. Mathiasen and Ubell) expires at the 1995 Annual Meeting of
Stockholders. In March 1995, the Board amended the By-laws, effective as of
the 1995 Annual Meeting, to increase this class to four members, thereby
increasing the total number of directors to seven. Dr. Hannay will be
retiring from the Board and, accordingly, will not stand for re-election.
The Board has designated Messrs. Mathiasen and Ubell, together with Nathan
Tash and Dr. Israel Gitman, as the four nominees for election at the 1995
Annual Meeting. The term of office of the other class (consisting of Messrs.
Shaw, Bressler, and Martin E. Tash) expires in 1996.
(b) The following is a brief account of the recent business
experience of each director and executive officer, each nominee to serve as
a director, and directorships held with other companies which file reports
with the Securities and Exchange Commission.
Name Director Since Business Experience
---- -------------- -------------------
Martin E. Tash, 1972 Mr. Tash has been actively
age 54 engaged in the Registrant's
business since 1971. He has
been Chairman of the Board and
President since July 15, 1977,
and served as Treasurer and
Chief Financial Officer from
1971 until September 29, 1986.
Mr. Tash is also Chairman of
the Board and Chief Executive
Officer of Gradco Systems, Inc.
Mark Shaw, 1977 Mr. Shaw has been actively
age 56 engaged in the Registrant's
business since 1963. He has
been Executive Vice President
since July 15, 1977, and man-
ages the Registrant's book and
journal publication program.
Bernard Bressler, 1962 Mr. Bressler has been a
age 67 practicing attorney since 1952,
and is presently a member of the
firm of Bressler, Amery & Ross,
counsel to the Registrant.
Mr. Bressler is also a director
of Gradco Systems, Inc.
Earl Ubell, 1972 Mr. Ubell has been the Health
age 68 and Science Editor of WCBS-TV
since September 11, 1978.
Between August 1976 and September
1978, Mr. Ubell was the Producer
of Special Events and Document-
aries for NBC News.
For more than three years prior
to that time, Mr. Ubell was the
Director of News of WNBC-TV.
N. Bruce Hannay, 1977 Dr. Hannay is retired. From
age 74 1982 - 1994, Dr. Hannay was a
business and technical consultant.
Prior thereto, he had been
employed by Bell Laboratories,
Incorporated since 1944 and served
as Vice President - Research and
Patents from 1972 - 1982.
Dr. Hannay is a director of a
group of mutual funds sponsored by
Alex. Brown & Sons, Inc.
Howard F. Mathiasen, 1978 Mr. Mathiasen is retired.
age 57 From July 1982 to June 1987
Mr. Mathiasen was Senior Vice
President of National Westminster
Bank U.S.A. (formerly known as The
National Bank of North America).
Between June 1979 and July 1982 he
was Vice President of that Bank.
Between May 1, 1978 and April
1979, Mr. Mathiasen was Senior
Vice President of Nassau Trust
Company. Between January 1975
and May 1978, Mr. Mathiasen
was Vice President of Chemical
Bank.
Ghanshyam A. Patel, -- Mr. Patel has been Treasurer
age 58 and Chief Financial Officer of
the Registrant since September
29, 1986. Prior to that he was
with the accounting firm of
Ernst & Whinney (predecessor to
Ernst & Young) from April 1970
and served in the capacity of
Senior Manager commencing
June 1977.
Israel Gitman, -- Dr. Gitman is a nominee to
age 55 serve as a director of the
Registrant. For the past twenty
years, he has been a consultant
to Fortune 500 companies in the
development of advanced commun-
ications systems and technology
and in the formulation of systems
strategies. From 1979 to 1994,
he was Chairman and President of
DVI Communications, Inc., a
systems engineering and consulting
company that he co-founded. Prior
thereto, he was active in research
and development in the areas of
computer communications and artif-
icial intelligence. Dr. Gitman
has published widely in scientific
and technical journals, and has
been a speaker and chairman in
national and international
conferences.
Nathan A. Tash, -- Mr. Tash is a nominee to serve as
age 32 a director of the Registrant.
From 1990 through 1992, Mr. Tash,
who is an attorney, was associated
with the law firm of McKenna &
Cuneo in Washington, D.C. From
1993 to the present, he has been
engaged in private business,
providing legal and investment
advice to private clientele
regarding real estate matters.
(c) Nathan Tash is the son of Martin E. Tash, the Company's Chairman and
President.
Item 11. Executive Compensation
----------------------
(a) Summary Compensation Table. The following table sets forth all
compensation awarded to, earned by or paid to the following persons through
March 16, 1995 for services rendered in all capacities to the Registrant and
its subsidiaries during each of the fiscal years ended December 31, 1994,
1993 and 1992: (1) the Registrant's Chief Executive Officer, and (2) each of
the other executive officers whose total compensation for the fiscal year
ended December 31, 1994 required to be disclosed in column (c) and (d) below
exceeded $100,000.
SUMMARY COMPENSATION TABLE
--------------------------
(a) (b) (c) (d)1 (e)2
Name and All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($)
------------------ ---- ---------- --------- ----------------
Martin E. Tash 1994 305,000 353,525 27,657
Chairman of the 1993 290,000 295,400 30,000
Board and President 1992 275,000 335,650 30,000
(Chief Executive
Officer)
Mark Shaw 1994 305,000 252,375 27,657
Executive Vice 1993 290,000 211,000 30,000
President 1992 275,000 239,750 30,000
Ghanshyam A. Patel 1994 143,000 40,000 23,173
Treasurer and Chief 1993 136,000 33,000 22,868
Financial Officer 1992 130,000 37,500 20,839
Footnotes to Summary Compensation Table
---------------------------------------
1-Represents amounts paid to the named executive officer, for the applicable
fiscal year, under the Registrant's Incentive Compensation Plan. For each
fiscal year an amount equal to 5% of the Registrant's Income from Operations
as reported in the Registrant's year-end financial statements (together with,
when applicable, 5% of the excess of cumulative Investment Profit over
cumulative Investment Loss) is distributed to key employees. Thirty-five
percent of such amount is distributed to the chief executive officer and 25%
is distributed to the next senior officer. The balance of such amount is
distributed as determined by the chief executive officer. Since cumulative
Investment Profit (as defined) earned after 1990, through December 31, 1992,
exceeded Investment Loss (as defined) incurred in 1990, the excess was added
to Income from Operations for the purpose of calculating incentive
compensation for 1992. Since there was Investment Profit (as defined) in
1993 and 1994, the amount of such Profit was added to Income from Operations
for the purpose of calculating incentive compensation for 1993 and 1994.
2-Represents amount of contribution made to or accrued for the account of the
named executive officer, in respect of the applicable fiscal year, in the
Registrant's Profit Sharing Plan (a defined contribution plan qualified under
the Internal Revenue Code). The Plan is maintained for all full-time
employees who have completed certain minimum periods of service. The
Registrant contributes to the Plan specified amounts based upon its after tax
income as a percentage of gross revenue. The Registrant's contribution to
the Plan for each employee is determined by his salary level and length of
service. Contributions are invested by the Plan Trustee in stock of the
Registrant and/or in a variety of other investment options, depending upon
the employee's election. Interests in the Plan become vested to the extent
of 20% after three years of service and vest at the rate of an additional 20%
for each year of service thereafter and in any event become 100% vested at
death or at the "normal retirement age" of 55 as specified in the Plan.
Each employee (or his beneficiary) is entitled to receive the value of his
vested interest upon his death or retirement. He may also receive the value
of such interest upon prior termination of his services with the Registrant,
or if he elects at any time to withdraw his interest. The interests of
Messrs. Tash, Shaw and Patel are fully vested.
The aggregate contributions made or accrued by the Registrant
through the end of fiscal 1994 for Messrs. Tash, Shaw and Patel under this
Plan are $433,307, $453,182 and $132,867, respectively; these contributions
have been invested in the manner set forth above, and (as to Mr. Shaw) a
portion of the investments was transferred from the Plan into a private
profit sharing plan of which Mr. Shaw is the beneficiary.
(b) Compensation of Directors.
-------------------------
Directors fees for Dr. N. Bruce Hannay and Messrs. Earl Ubell
and Howard F. Mathiasen are currently at the rate of $10,000 per annum each.
Directors of the Registrant who are also officers of the Registrant receive
no additional compensation for their services as directors.
(c) Termination of Employment and Change of Control
Arrangements Regarding Named Executive Officers.
------------------------------------------------
(i) See footnote (2) to table in Item 11(a) for
information as to entitlement of Messrs. Tash, Shaw and Patel to receive
certain distributions under the Registrant's Profit Sharing Plan upon
termination of their employment.
(ii) On September 22, 1989, the Registrant adopted Amended
Contingent Compensation Agreements with Martin Tash and Mark Shaw (executive
officers of the Registrant named in the table in item 11(a)) and with Harry
Allcock and Marshall Lebowitz (officers of subsidiaries of the Registrant).
The Amended Agreements supersede the Contingent Compensation Agreements,
adopted on October 8, 1986, and provide that if (a) during the officer's
employment or within six months after his employment terminates, there is a
sale of 75% of the book value of the Registrant's operating assets (as
defined), or if any person or group becomes the owner of over 25% of the
Registrant's outstanding stock, and (b) the officer's employment is
terminated at or prior to the end of the sixth month after such event, then
the Registrant or a successor in interest to the Registrant shall pay the
terminated officer cash equal to 290% of the officer's average annual taxable
compensation over the preceding five calendar years.
On December 14, 1993, the Registrant entered into Contingent
Compensation Agreements with Ghanshyam Patel (an executive officer of the
Registrant named in the table in item 11(a)) and Ken Derham (an officer of a
subsidiary of the Registrant) on the same terms as the Amended Agreements
described above.
(d) Indemnification Agreements.
---------------------------
In September 1987, the Registrant's liability insurance for its
directors and officers expired and was not renewed due to the significantly
increased cost. In light of this development, and to provide increased
protection, the Registrant's By-Laws were amended on November 18, 1987 to
require the Registrant to advance expenses of directors or officers in
defending a civil or criminal action as such expenses are incurred, subject
to certain conditions. Furthermore, on that date the Registrant entered
into a contract with each of its directors and executive officers, requiring
indemnification for expenses, judgments, fines and amounts paid in
settlement, in accordance with the By-Laws as amended, or any future By-Laws
which provide greater indemnification. (On December 14, 1993, the Registrant
entered into a substantially identical contract with an officer of one of its
subsidiaries.) The present By-Laws provide for such indemnification, in
connection with claims arising from service to the Registrant, or to another
entity at Registrant's request, except where it would be prohibited under
applicable law.
(e) Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Registrant's Board of Directors has no compensation
committee (or other Board committee performing equivalent functions);
compensation policies applicable to executive officers are determined by the
Board. During the fiscal year ended December 31, 1994, the officers of the
Registrant participating in the Board's deliberations concerning executive
compensation were Martin E. Tash, Mark Shaw and Bernard Bressler (who are
members of the Board).
During the fiscal year ended December 31, 1994, Martin E. Tash
(an executive officer of the Registrant) served as a member of the Board of
Directors of Gradco Systems, Inc. ("Gradco"). Gradco has no compensation
committee (or other Board committee performing equivalent functions);
compensation policies applicable to executive officers are determined by its
Board. Mr. Tash is an executive officer of Gradco and is the only such
executive officer who also served on Registrant's Board. Bernard Bressler
(Secretary and a director of Registrant) is an officer and director of Gradco,
but he is not an executive officer of either entity.
During the period since January 1, 1994, there were no
transactions between the Registrant and Gradco of the type required to be
disclosed under Item 13, Certain Relationships and Related Transactions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
---------------------------------------------------------------
(a) The following table sets forth information regarding persons
known to the Registrant to be the beneficial owners of more than 5% of the
Registrant's voting securities as of March 16, 1995, based on 3,944,069 shares
of Common Stock, $.10 par value, outstanding as of such date.
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
-------------- ------------------- ---------- ----------
Common Stock Martin E. Tash 423,402
$.10 par value 233 Spring Street shares(1) 10.7%
New York, NY 10013
Arlene S. Tash 298,229
17049 Northway Circle shares(2) 7.6%
Boca Raton, FL 33496
Southeastern Asset 321,000
Management, Inc. shares(3) 8.1%
860 Ridgelake Boulevard
Memphis, TN 38120
Quest Advisory Corp. 411,450
and Quest Management shares(4) 10.4%
Company as a Group
1414 Avenue of the
Americas New York,
NY 10019
Mellon Bank Corp. 284,449 7.2%
One Mellon Bank Center shares(5)
Pittsburgh, PA 15258
Footnotes
---------
(1) Includes 112,253 shares held by the Registrant's Profit Sharing
Plan, as to which Mr. Tash has voting and investment power. Of the aggregate
of 423,402 shares shown, Mr. Tash has sole voting and investment power as to
125,173, and shared voting and investment power with his wife as to 298,229.
(2) Shares are owned jointly by Mrs. Tash with her husband, Martin E.
Tash, and she shares voting and investment power with him. Shares are
included in the 423,402 shares shown as owned by Mr. Tash.
(3) Number of shares as shown in beneficial owner's Amendment No. 3 to
Schedule 13G dated January 31, 1995, filed with the Securities and Exchange
Commission, reporting ownership as of December 31, 1994. According to such
Schedule 13G, South eastern Asset Management, Inc. is an Investment Adviser
registered under the Investment Advisers Act of 1940. It has sole voting and
dispositive power as to 211,000 of the shares shown, and shared voting and
dispositive power as to 110,000 of said shares. According to the Schedule
13G, all of the aforesaid securities "are owned legally by Southeastern's
investment advisory clients and none are owned directly or indirectly by
Southeastern. As permitted by Rule 13d-4, the filing of this statement shall
not be construed as an admission that Southeastern is the beneficial owner of
any of [such] securities." The Schedule 13G was also filed by O. Mason
Hawkins, Chairman of the Board and President of South eastern "in the event
he could be deemed to be a controlling person of that firm as the result of
his official position with or ownership of voting securities. The existence
of such control is expressly disclaimed. Mr. Hawkins does not own directly
or indirectly any securities covered by this statement for his own account.
As permitted by Rule 13d-4, the filing of this statement shall not be
construed as an admission that Mr. Hawkins is the beneficial owner of any of
the securities covered by this statement." The Schedule 13G reflects that
Mr. Hawkins has voting or dispositive power as to none of the Registrant's
shares.
(4) Number of shares as shown in beneficial owner's Amendment No. 2 to
Schedule 13G dated February 10, 1995, reporting ownership as of December 31,
1994. According to such Schedule 13G, each of Quest Advisory Corp. ("Quest")
and Quest Management Company ("QMC") is an Investment Adviser registered
under the Investment Advisers Act of 1940. Quest has sole voting and
dispositive power as to 386,950 of the shares shown above, representing 9.8%
of the outstanding Common Stock, and QMC has sole voting and dispositive
power as to 24,500 of the shares shown above, representing .6% of the
outstanding Common Stock. The Schedule 13G also includes Charles M. Royce as
part of the Group and indicates that he may be deemed to be a controlling
person of Quest and QMC, and as such may be deemed to beneficially own the
shares of the Registrant beneficially owned by Quest and QMC. Mr.
Royce owns no shares of the Registrant outside of Quest and QMC and has
disclaimed beneficial ownership of the shares reported above.
(5) According to Schedule 13G dated February 7, 1995, the Dreyfus
Trust Company, a wholly-owned subsidiary of Mellon Bank Corporation, as
trustee of the Registrant's Profit Sharing Plan (the "Plan"), was the record
owner of 252,449 shares of the Registrant's Common Stock as of December 31,
1994. Each employee participating in the Plan is entitled to instruct
the Trustee as to the voting and disposition of all shares of Common Stock
allocated to the employee's account. To the extent that the voting right is
not exercised or shares are held by the Trustee which are not allocated to
participant accounts, the Trustee votes these shares in the same proportion
as those shares for which the Trustee receives voting instructions from
employees. Mellon Bank Corporation (including shares held by its
subsidiaries) reported that, excluding Plan shares, it held an aggregate of
32,000 other shares of Common Stock of the Company, as to which such
entities had sole or shared voting and dispositive power.
(b) The following table sets forth information regarding the
voting securities of the Registrant beneficially owned by each director of
the Registrant, each nominee for director, each of the executive officers
named in the Summary Compensation table in item 11, Executive Compensation,
and all executive officers and directors as a group, without naming them (7
persons), as of March 16, 1995.
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
-------------- ------------------- ---------- ----------
Common Stock Martin E. Tash 423,402
$.10 par value 233 Spring Street shares (1) 10.7%
New York, NY 10013
Mark Shaw 80,667
233 Spring Street shares (2) 2.0%
New York, NY 10013
Earl Ubell 1,000
WCBS-TV shares *
524 West 57th Street
New York, NY 10019
Howard F. Mathiasen 28,125
10276 Totem Run shares *
Littleton, CO 80125
Bernard Bressler 12,809
Bressler, Amery & shares (3) *
Ross
90 Broad Street
New York, NY 10004
N. Bruce Hannay 1,000
201 Condon Lane shares(4) *
Port Ludlow, WA 98365
Israel Gitman (5) --
12 West 72nd Street
New York, NY 10023
Nathan Tash (5) --
3303 Pine Heights
Drive N.E.
Atlanta, GA 30324
Ghanshyam A. Patel 10,041
233 Spring Street shares(6) *
New York, NY 10013
All Executive 557,044 14.1%
Officers and Directors
shares as a Group
(comprising 7 of the
persons shown above)
* Less than 1%.
(1) See footnote (1) to table in Item 12(a).
(2) Includes 50,625 shares held in trust for adult children. Of the
aggregate of 80,667 shares shown, Mr. Shaw has sole voting and dispositive
power as to 67,085 and shared voting and dispositive power with his wife as
to 13,582.
(3) Includes 572 shares held by a trustee for Mr. Bressler under an
Individual Retirement Account. Does not include 12,497 shares held by Mr.
Bressler's wife as to which he disclaims beneficial ownership.
(4) Shares are held in the name of Dr. Hannay's wife and comprise
community property. Dr. Hannay therefore has a direct beneficial
ownership interest in the shares. He and his wife have shared voting and
dispositive power.
(5) Not currently a director; has been nominated (together with
Messrs. Mathiasen and Ubell, who are currently directors) to stand for
election at 1995 Annual Meeting of Stockholders, to be held in June 1995.
(6) Includes 4,691 shares held by the Registrant's Profit Sharing
Plan, as to which Mr. Patel has sole voting and dispositive power. As to
the balance of 5,350 shares, Mr. Patel shares voting and dispositive power
with his wife.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Bernard Bressler, Secretary and a director of the Registrant, is a
member of the law firm of Bressler, Amery & Ross, counsel to the Registrant.
During the 1994 fiscal year, the Registrant paid legal fees of $92,701, to
such firm.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a) See index to financial statements and financial statement
schedules. See list of exhibits in paragraph (c) below.
(b) 8-K reports - None.
(c) Exhibits -
3.1 Certificate of Incorporation of the Registrant has
been filed as part of Exhibit 3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1986.
3.2 (a) By-Laws of the Registrant, as amended November
18, 1987, have been filed as Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987.(1)
(b) Section 2.1 of By-Laws, as amended March 10, 1995 -
filed herewith.
10.1 Journal Production and Distribution Agreement dated
November 29, 1993 among the Registrant, MAIK Nauka,
Interperiodica, Pleiades Publishing, Inc., the Russian
Academy of Sciences and Vo Nauka, has been filed as
Exhibit 99 to the Registrant's Report on Form 8-K dated
December 13, 1993.(1)
10.2 Incentive Compensation Plan for Executive Officers
and Key Employees of Registrant as amended on June 18,
1985 has been filed as part of Exhibit 10 to the
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1985.(1)
10.3 Amendment adopted on December 5, 1990 to Plan
referred to in Item 10.3 has been filed as exhibit 10.4 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990.(1)
10.4 Amended Contingent Compensation Agreements dated
September 22, 1989 between the Registrant and Martin Tash,
Mark Shaw, Harry Allcock and Marshall Lebowitz have been
filed as Exhibit 10.4 to the Registrant's Annual Report on
form 10-K for the fiscal year ended December 31, 1989.(1)
The Registrant has entered into identical agreements as of
December 14, 1993, with Ghanshyam Patel and Ken Derham.
To avoid unnecessary duplication, such additional
agreements have been omitted from the exhibit filing.
10.5 Indemnification Agreement dated as of November 18,
1987 between the Registrant and Martin E. Tash has been
filed as Exhibit 10.6 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987.(1)
The Registrant has entered into identical agreements as of
the same date with each of the following persons: Howard
F. Mathiasen, Mark Shaw, Earl Ubell, Dr. N. Bruce Hannay,
and Bernard Bressler. The Registrant entered into a
substantially identical agreement dated March 9, 1988 with
Ghanshyam A. Patel and dated December 14, 1993 with Ken
Derham. To avoid unnecessary duplication, such additional
agreements have been omitted from the exhibit filing.
10.6 Amendment dated March 9, 1988 to Indemnification
Agreements referred to in Item 10.6 between the Registrant
and Martin E. Tash has been filed as Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987.(1) The Registrant has
entered into identical amendments of the same date with
Mark Shaw and Bernard Bressler. To avoid unnecessary
duplication, such identical amendments were omitted from
the exhibit filing.
11 Statement re: computation of per share earnings - filed
herewith.
21 Subsidiaries of Registrant
(i) Plenum Publishing Co., Ltd.
(United Kingdom)
(ii) Da Capo Press, Incorporated
(New York)
(iii) J.S. Canner & Company, Inc.
(Massachusetts)
(iv) Plenum International Sales
Corporation (Virgin Islands)
(v) IFI/Plenum Data Corporation
(Delaware)
(vi) Human Sciences Press, Inc.
(Delaware)
27 Financial Data Schedule - filed herewith
Signatures
----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PLENUM PUBLISHING CORPORATION
(Registrant)
By: /s/ Martin E. Tash
-------------------
Martin E. Tash
Chairman of the Board of Directors
and President
Dated: March 29, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
By: /s/ Martin E. Tash
-------------------
Martin E. Tash
Chairman of the Board of Directors and
President (Principal Executive Officer)
Dated: March 29, 1995
By: /s/ Mark Shaw
-------------------
Mark Shaw
Executive Vice President and
a Director
Dated: March 29, 1995
By: /s/ Ghanshyam A. Patel
-----------------------
Ghanshyam A. Patel
Treasurer and Chief Financial Officer
(Principal Financial and Accounting
Officer)
Dated: March 29, 1995
By: /s/ Bernard Bressler
---------------------
Bernard Bressler
Secretary and a Director
Dated: March 29, 1995
By: /s/ Earl Ubell
---------------------
Earl Ubell
Director
Dated: March 29, 1995
By: /s/ N. Bruce Hannay
---------------------
N. Bruce Hannay
Director
Dated: March 29, 1995
By: /s/ Howard F. Mathiasen
-----------------------
Howard F. Mathiasen
Director
Dated: March 29, 1995
Plenum Publishing Corporation
and Subsidiary Companies
Form 10-K Item 14(a)(1) and (2)
Index to Financial Statements
and Financial Statement Schedules
The following consolidated financial statements of Plenum Publishing
Corporation and subsidiary companies are included in Item 8:
Report of Independent Auditors......................... S- 1
Consolidated Balance Sheets--December 31, 1994 and 1993 S- 2
Consolidated Statements of Income--Years ended
December 31, 1994, 1993 and 1992....................... S- 4
Consolidated Statements of Stockholders' Equity--Years ended
December 31, 1994, 1993 and 1992 S- 6
Consolidated Statements of Cash Flows-Years ended
December 31, 1994, 1993 and 1992 S- 7
Notes to Consolidated Financial Statements S- 9
The following consolidated financial statement schedule of Plenum Publishing
Corporation and subsidiary companies is included in Item 14(d):
Schedule:
II Valuation and Qualifying Accounts S-23
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore, have been omitted.
Report of Independent Auditors
Stockholders and Board of Directors
Plenum Publishing Corporation
We have audited the accompanying consolidated balance sheets of Plenum
Publishing Corporation and subsidiary companies as of December 31, 1994
and 1993, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1994. Our audits also included the financial statement schedule
listed in the Index at Item 14(a). These financial statements and schedule
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Plenum Publishing Corporation and subsidiary companies at December 31,
1994 and 1993, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
New York, New York
March 20, 1995
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Balance Sheets
December 31
1994 1993
----------------------------
Assets
Current assets:
Cash and cash equivalents ($30,981,399 and $1,441,576)
in 1994 and 1993 $ 31,775,618 $ 5,030,060
Marketable securities, at aggregate market value (Note 10) 24,290,875 48,825,213
Interest and dividends receivable 154,654 224,568
Receivables-substantially all trade, net of allowances for doubtful
accounts ($181,000 and $179,000) and sales returns ($740,000
and $669,000) in 1994 and 1993 6,018,648 8,698,080
Advance under the Distribution Agreement (Note 12) - 750,000
Inventories (Note 3) 3,636,301 4,179,185
Deferred income tax benefits (Note 6) 2,074,818 2,930,691
------------ ------------
Total current assets 67,950,914 70,637,797
------------ ------------
Costs applicable to deferred subscription income 720,370 657,950
------------ ------------
Property, plant and equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of $433,306 and $330,826 3,100,471 3,202,951
Furniture, fixtures, equipment and leasehold improvements, net
of accumulated depreciation and amortization of $882,829
and $760,100 384,219 454,850
Plate costs, net of accumulated depreciation of $4,634,308
and $4,656,154 3,246,892 3,393,917
------------ ------------
7,421,582 7,741,718
------------ ------------
Deferred income taxes (Note 6) 863,128 1,070,309
------------ ------------
Deferred charges and other assets:
Cost of subscription lists of Human Sciences Press and Agathon
journals, net of accumulated amortization of $1,708,970 and
$1,433,699 2,993,595 3,268,866
Royalties 1,755,394 2,075,189
Investment in Gradco Systems, Inc. (Note 4) 2,074,829 1,971,843
Other 277,813 272,476
------------ ------------
7,101,631 7,588,374
------------ ------------
Excess of cost of assets acquired over book amount thereof, net of
accumulated amortization of $1,283,309 and $1,229,838 855,541 909,012
------------ ------------
Total assets $ 84,913,166 $ 88,605,160
============ ============
See accompanying notes.
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Balance Sheets (continued)
December 31
1994 1993
----------------------------
Liabilities and stockholders' equity
Current liabilities:
Due to customers $ 451,231 $ 612,460
Accounts payable 1,792,874 1,508,098
Income taxes payable 2,145,872 2,184,797
Royalties payable 2,911,685 3,162,734
Other accrued expenses and sundry liabilities (Notes 8 and 9) 4,819,105 2,534,040
Dividends payable 1,127,726 1,219,267
------------ ------------
Total current liabilities 13,248,493 11,221,396
Deferred subscription income 26,333,855 25,153,027
------------ ------------
Total liabilities 39,582,348 36,374,423
------------ ------------
Commitments and contingencies (Notes 7, 8, 12 and 13)
Stockholders' equity:
Preferred Stock, par value $1 per share: authorized--
1,000,000 shares; none issued
Common Stock, par value $.10 per share: authorized--
12,000,000 shares, issued--5,847,241 shares 584,724 584,724
Paid-in additional capital 3,951,526 3,951,526
Retained earnings 83,983,599 76,165,428
------------ ------------
88,519,849 80,701,678
Less 1,862,983 and 1,331,436 shares of Common Stock held
in treasury--at cost 43,189,031 28,470,941
------------ ------------
Total stockholders' equity 45,330,818 52,230,737
------------- ------------
Total liabilities and stockholders' equity $ 84,913,166 $ 88,605,160
============= ============
See accompanying notes.
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Statements of Income
Year ended December 31
1994 1993 1992
------------------------------------------
Subscriptions, books, outside journals and
other sales, net $ 52,476,355 $ 54,098,246 $ 53,725,999
------------------------------------------
Costs and expenses:
Cost of sales 21,216,799 21,684,878 21,393,355
Royalties (Note 12) 4,257,729 4,659,246 4,432,006
Selling, general and administrative expenses 11,051,469 11,425,943 11,583,992
-------------------------------------------
36,525,997 37,770,067 37,409,353
-------------------------------------------
Income from operations 15,950,358 16,328,179 16,316,646
Dividend income 1,592,837 2,136,989 1,636,462
Interest income 446,401 544,780 3,020,543
Net realized gain on sales of marketable securities 2,160 801,387 2,476,916
Net unrealized gain (loss) on marketable securities (Note 10) 2,523,173 (1,713,197) --
Equity in net income (loss) of Gradco Systems, Inc. (Note 4) 102,986 4,565 (100,430)
Interest expense (20,320) (998,060) (2,945,187)
Other investment--related expenses (412,477) (239,936) (406,067)
-------------------------------------------
Income before items shown below 20,185,118 16,864,707 19,998,883
Income taxes (Note 6) 7,466,000 5,936,000 7,850,000
-------------------------------------------
Income before extraordinary items and cumulative effect on
prior years of accounting change 12,719,118 10,928,707 12,148,883
Extraordinary items (Note 5):
Gain on repurchase of 6-1/2% Convertible Subordinated
Debentures due April 15, 2007, less applicable income taxes
of $2,400 and $264,000 -- 3,656 394,823
Loss from early retirement of 6-1/2% Convertible Subordinated
Debentures due April 15, 2007, net of income tax
benefit of $674,900 -- (1,323,450) --
-------------------------------------------
Extraordinary (loss) gain -- (1,319,794) 394,823
-------------------------------------------
Cumulative effect on prior years of accounting change (Note 2) -- -- 1,179,950
-------------------------------------------
Net income $ 12,719,118 $ 9,608,913 $ 13,723,656
===========================================
Per share of Common Stock-primary (Note 9):
Income before extraordinary items and cumulative effect
on prior years of accounting change $ 2.87 $ 2.37 $ 2.57
Extraordinary (loss) gain -- (.29) .08
Cumulative effect on prior years of accounting change -- -- .25
-------------------------------------------
Net income $ 2.87 $ 2.08 $ 2.90
===========================================
Per share of Common Stock--fully diluted (Note 9):
Income before extraordinary items and cumulative effect
on prior years of accounting change $ 2.30 $ 2.28
Extraordinary (loss) gain (.26) .06
Cumulative effect on prior years of accounting change -- .19
-------------------------------------------
Net income $ 2.04 $ 2.53
===========================================
See accompanying notes.
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Statements of Stockholder's Equity
Common Stock Issued Paid-In Total
--------------------
Par Additional Retained Treasury Stock Stockholder's
----------------
Shares Value Capital Earnings Shares Cost Equity
----------------------------------------------------------------------------------------------
Balance at December 31, 1991 5,844,681 $584,468 $3,871,782 $62,642,417 878,819 $18,554,084 $48,544,583
Net income for the year ended
December 31, 1992 - - - 13,723,656 - - 13,723,656
Dividend declared, $1.04 a share - - - (4,845,333) - - (4,845,333)
Acquisition of Common Stock for
treasury - - - - 338,842 7,264,648 (7,264,648)
----------------------------------------------------------------------------------------------
Balance at December 31, 1992 5,844,681 584,468 3,871,782 71,520,740 1,217,661 25,818,732 50,158,258
Net income for the year ended
December 31, 1993 - - - 9,608,913 - - 9,608,913
Dividend declared, $1.08 a share - - - (4,964,225) - - (4,964,225)
Acquisition of Common Stock for
treasury - - - - 113,775 2,652,209 (2,652,209)
Conversion of 6-1/2% Cumulative
Subordinated Debentures into
shares of Common Stock 2,560 256 79,744 - - - 80,000
----------------------------------------------------------------------------------------------
Balance at December 31, 1993 5,847,241 584,724 3,951,526 76,165,428 1,331,436 28,470,941 52,230,737
Net income for the year ended
December 31, 1994 - - - 12,719,118 - - 12,719,118
Dividend declared, $1.12 a share - - - (4,900,947) - - (4,900,947)
Acquisition of Common Stock for
treasury - - - - 531,547 14,718,090 (14,718,090)
----------------------------------------------------------------------------------------------
Balance at December 31, 1994 5,847,241 $584,724 $3,951,526 $83,983,599 1,862,983 $43,189,031 $45,330,818
==============================================================================================
See accompanying notes.
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Statements of Cash Flows
Year ended December 31
1994 1993 1992
-------------------------------------------
Cash flows from operating activities
Net income $ 12,719,118 $ 9,608,913 $ 13,723,656
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation of plate costs 1,620,375 1,802,526 1,673,233
Depreciation and amortization of building, furniture,
fixtures, equipment and leasehold improvements 313,233 320,158 311,748
Amortization of deferred charges and excess of cost of assets
acquired over book amount thereof 2,626,442 2,461,451 2,021,932
Realized gain on sales of marketable securities (2,160) (801,387) (2,476,916)
Net unrealized (gain) loss on marketable securities (2,523,173) 1,713,197 -
Purchase of marketable securities (a) (30,183,628) (23,389,658) (36,467,060)
Proceeds from sale of marketable securities (a) 57,243,299 24,326,944 30,908,928
Equity in net (income) loss of Gradco Systems,Inc. (102,986) (4,565) 100,430
Extraordinary loss (gain), net of income taxes - 1,319,794 (394,823)
Decrease (increase) in deferred income tax benefits 1,063,054 (1,141,279) (1,285,696)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 2,749,346 (3,125,394) 70,435
Advance under the Distribution Agreement 750,000 (750,000) -
Inventories 542,884 306,510 188,153
Prepaid income taxes - - 642,542
Other assets (1,983,242) (2,000,985) (1,824,571)
Increase (decrease) in:
Accounts payable, accrued expenses and
sundry liabilities 1,226,688 (165,240) 756,372
Income taxes payable (38,925) 1,048,636 1,305,945
Deferred subscription income and costs applicable
thereto-net 1,118,408 113,726 1,529,857
-------------------------------------------
Net cash provided by operating activities 47,138,733 11,643,347 10,784,165
===========================================
Cash flows from investing activities
Additions to plate costs $ (1,473,350) $ (1,821,035) $ (1,757,235)
Additions to furniture, fixtures,
equipment and leasehold improvements (140,122) (200,654) (219,086)
Purchase of U.S. Government securities - - (11,896,181)
Proceeds from sale and redemption of U.S.
Government securities - 32,858,033 20,890,856
-------------------------------------------
Net cash (used in) provided by investing activities (1,613,472) 30,836,344 7,018,354
-------------------------------------------
Cash flows from financing activities
Repurchase of 6-1/2% Convertible Subordinated Debentures - (41,755,663) (5,976,605)
Acquisition of treasury stock (13,787,215) (2,652,209) (7,264,648)
Dividends paid (4,992,488) (3,744,958) (6,078,177)
-------------------------------------------
Net cash used in financing activities (18,779,703) (48,152,830) (19,319,430)
-------------------------------------------
Net increase (decrease) in cash and cash equivalents 26,745,558 (5,673,139) (1,516,911)
Cash and cash equivalents at beginning of year 5,030,060 10,703,199 12,220,110
-------------------------------------------
Cash and cash equivalents at end of year $31,775,618 $ 5,030,060 $10,703,199
===========================================
<FN>
(a)The 1993 and 1992 balances have been reclassified from investing activities
to conform to the 1994 presentation.
Acquisition of treasury stock is net of $930,875 payable at December 31, 1994
(see Note 9).
See accompanying notes.
Plenum Publishing Corporation
and Subsidiary Companies
Notes to Consolidated Financial Statements
December 31, 1994
1. Summary of Significant Accounting Policies
---------------------------------------------
Basis of Presentation
---------------------
The accompanying financial statements include the accounts of the Plenum
Publishing Corporation (the "Company") and its domestic and foreign
subsidiaries, which are wholly-owned. The accounts of the foreign subsidiaries
are not material. Intercompany items and transactions are eliminated in
consolidation.
The Company accounts for its investment in Gradco Systems, Inc. under the
equity method (see Note 4).
The Company and its subsidiaries are engaged in the publishing and
distribution of advanced scientific and technical materials in the United
States and in foreign countries. Export sales aggregated approximately
$20,590,000 (1994), $23,217,000 (1993) and $21,214,000 (1992).
Inventories
-----------
Inventories are stated at the lower of cost (principally average cost or
specific invoice cost) or market (based on selling market).
Depreciation and Amortization
-----------------------------
Depreciation is provided for by the straight-line method or by the declining-
balance method over estimated useful lives ranging from 4 to 35 years.
Amortization of leasehold improvements is provided for by the straight-line
method generally over the terms of the related leases or the estimated useful
lives of the improvements, whichever period is shorter.
The excess of cost of assets acquired over book amount thereof (which arose
in connection with various acquisitions by the Company in prior years, other
than Gradco Systems, Inc.) is being amortized by the straight-line method
principally over forty years.
Deferred expenses relating to issuance of long-term debt were being amortized
by the straight-line method over the term of the related debt (see Note 5).
The cost of the subscription lists of Human Sciences Press and Agathon
journals is being amortized by the straight-line method over estimated useful
lives ranging from 12 to 20 years.
Other assets include the cost of rights to produce and distribute certain
journals, which is being amortized by the straight-line method, primarily
over a period of fifteen years.
Deferred Subscription Income
----------------------------
The Company bills subscribers to certain publications and patent information
services in advance of issuance thereof. The publications are generally issued
over a one-year period and subscription revenues are taken into income by the
straight-line method based on the relationship of the number of publications
issued to the number ordered by subscribers. Patent information service
revenues are taken into income when published.
The portion of advance billings which will require use of financial resources
within one year is not practicable to determine and, accordingly, no portion
thereof is included in current liabilities; expenditures at balance sheet
dates in respect of such advance billings have similarly been excluded from
current assets.
Marketable Securities
---------------------
As determined by management, marketable securities are classified as trading
securities and are stated at fair market value. Gains and losses, both
realized and unrealized, are included as a component of current earnings.
Realized gains and losses on marketable securities are determined based on
specific identification of securities sold.
Cash Equivalents and Supplemental Cash Flow Information
-------------------------------------------------------
The Company considers all highly liquid financial instruments with a maturity
of three months or less when purchased to be cash equivalents. As of December
31, 1994, the Company had time deposits, commercial paper and money market
accounts totalling approximately $30,981,000 substantially on deposit with
three financial institutions. As of December 31, 1993, the Company had time
deposits and money market accounts of approximately $1,442,000 on deposit
with five financial institutions.
At December 31, 1994, cash equivalents included commercial paper totaling
$20,500,000. The commercial paper is held to maturity and, as such, it is
recorded at amortized cost which approximates fair value.
The Company paid income taxes in 1994, 1993 and 1992 of approximately
$6,442,000, $6,029,000 and $5,962,000, respectively. In addition, the Company
paid interest in 1994, 1993 and 1992 of approximately $20,000, $1,565,000 and
$3,023,000, respectively.
2. Accounting Changes
---------------------
In February 1992, the Financial Accounting Standards Board issued Statement
No. 109, "Accounting for Income Taxes" (the "Statement"). The Company adopted
the provisions of the new standard in its financial statements for the year
ended December 31, 1992. As permitted by the Statement, prior year financial
statements have not been restated to reflect the change in accounting method.
The cumulative effect as of January 1, 1992 of adopting the Statement increased
net income by $1,179,950 or $.25 per share ($.19 per share on a fully diluted
basis).
Under the Statement, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption
of the Statement, income tax expense was determined using the liability method
prescribed by Financial Accounting Standards Board Statement No. 96
("Statement 96"), which is superseded by the Statement. Among other matters,
the Statement changes the recognition and measurement criteria for deferred
tax assets included in Statement 96. In accordance with the Statement, all of
the income tax benefits on the excess of book over tax deductions (for
example, depreciation, allowance for doubtful accounts, etc.) are deferred
(see Note 6). The cumulative effect on prior years of the change has been
shown in the income statement for 1992.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." The Company adopted the provisions of the new
standard for investments held as of or acquired after January 1, 1994.
Accordingly, the Company has classified its marketable equity securities held
as trading securities on the basis of its intent to trade such securities and
has carried them at fair market value, with unrealized gains and losses
reported as a component of current earnings.
Since at December 31, 1993, the Company valued marketable equity securities at
market with unrealized losses reported as a component of 1993 earnings, there
was no cumulative effect on net income as of January 1, 1994 of adopting
Statement 115.
3. Inventories
--------------
Inventories at December 31 are comprised of:
1994 1993
-----------------------------
Finished publications $3,164,658 $3,612,257
Work in process 471,643 566,928
-----------------------------
$3,636,301 $4,179,185
=============================
4. Investment in Gradco Systems, Inc.
-------------------------------------
As of December 31, 1994 and 1993, the Company owned 913,000 common shares of
Gradco Systems, Inc. ("Gradco"), a company engaged in the development and
marketing of photocopier machine technology, representing approximately 11.7%
of its outstanding common stock. Gradco stock is publicly traded on the NASDAQ
National Market System. The aggregate market value of this investment as of
December 31, 1994 and 1993 amounted to approximately $3,196,000 and
$2,739,000, respectively.
Selected financial data of Gradco as of and for the 12 months ended December
31, 1994, 1993 and 1992 is as follows and has been extracted from unaudited
financial information as filed by Gradco with the Securities and Exchange
Commission (in thousands):
1994 1993 1992
-----------------------------
Balance sheet data
Total assets $54,800 $38,863 $44,019
Working capital 12,744 9,147 7,198
Noncurrent liabilities,
including minority interest and
excluding current installments 17,689 15,669 12,387
Shareholders' equity 12,477 9,767 10,914
Statement of operations data
Net revenues 71,458 55,773 55,635
Net income (loss) 878 233 (863)
The President and Chairman of the Board of the Company, Mr. Martin E.Tash, is
also the President and Chairman of the Board of Gradco.
5. Long-Term Debt
-----------------
Long-term debt at December 31, 1992 consisted of 6-1/2% Convertible
Subordinated Debentures (the "Debentures") due April 15, 2007. The Debentures
were issued in April and May 1987.
In 1993 and 1992, the Company purchased Debentures in the principal amount
of $1,149,000 and $6,808,000, respectively, for an aggregate cost(including
the write-off of related deferred issuance costs of approximately $28,000
and $173,000, respectively) of approximately $1,143,000 and $6,149,000,
respectively.
On April 30, 1993 (the"Redemption Date"), pursuant to a notice of election to
redeem which had been given to the holders on March 24, 1993, the Company
redeemed the Debentures which were outstanding on the Redemption Date. In
accordance with the terms of the Debentures and the applicable Trust Indenture,
the redemption price was equal to 102.60% of the principal amount of
outstanding Debentures, and the holders were also paid accrued interest for
the period from April 15, 1993 (the date on which the last semiannual
installment of interest was paid) to the Redemption Date. Prior to the
Redemption Date, Debentures in the aggregate principal amount of $80,000 were
converted into 2,560 shares of Common Stock at the applicable conversion rate
of $31.25 per $1,000 of principal amount. On the Redemption Date, Debentures in
the aggregate principal amount of $39,598,000 were outstanding, requiring a
total payment to the holders of approximately $40,735,000 (including accrued
interest). This amount was funded by liquidating a portion of the Company's
investments of its excess cash, and from short-term borrowing on the Company's
margin account with a broker. The premium paid for the Debentures, and the
write-off of related deferred issuance costs of approximately $956,000, and
professional fees of approximately $13,000 incurred for redemption, net of
applicable income tax benefit of $675,000 totalled approximately $1,323,000,
which has been accounted for as an extraordinary loss.
6. Income Taxes
---------------
Effective January 1, 1992, the Company changed its method of accounting for
income taxes to the liability method required by FASB Statement No. 109,
"Accounting for Income Taxes" (see Note 2-"Accounting Change").
Income taxes for the years ended December 31 consist of the following:
1994
-------------------------------------
Current Deferred Total
-------------------------------------
Federal $4,883,664 $ 838,336 $5,722,000
State and local 1,519,282 224,718 1,744,000
-------------------------------------
$6,402,946 $ 1,063,054 $7,466,000
=====================================
1993
-------------------------------------
Current Deferred Total
-------------------------------------
Federal $5,424,809 $ (874,809) $4,550,000
State and local 1,652,470 (266,470) 1,386,000
-------------------------------------
$7,077,279 $(1,141,279) $5,936,000
=====================================
1992
-------------------------------------
Current Deferred Total
-------------------------------------
Federal $5,084,206 $ (84,206) $5,000,000
State and local 2,871,540 (21,540) 2,850,000
-------------------------------------
$7,955,746 $ (105,746) $7,850,000
=====================================
Deferred income taxes result from the recognition of the income tax effect
of timing differences in reporting transactions for financial and tax
purposes. A description of the differences and the related tax effect follows:
1994 1993 1992
-----------------------------------
Valuation of inventories $ (129,727) $ (337,711) $ (95,457)
Depreciation 207,181 (77,000) (102,600)
Allowance for doubtful accounts, etc. (45,100) (26,768) 92,311
Adjustments applicable to net
unrealized gains (losses) 1,030,700 (699,800) -
-------------------------------------
$1,063,054 $(1,141,279) $(105,746)
=====================================
Significant components of the Company's deferred tax assets as of December 31
are as follows:
1994 1993
-----------------------------
Valuation of inventories $2,247,438 $ 2,117,711
Depreciation 863,128 1,070,309
Allowance for doubtful accounts, etc. 158,280 113,180
Net unrealized (gains) losses (330,900) 699,800
Equity in losses of Gradco 1,962,400 1,998,400
-----------------------------
Total deferred tax assets 4,900,346 5,999,400
Valuation allowance (1,962,400) (1,998,400)
-----------------------------
Net deferred tax assets $2,937,946 $ 4,001,000
=============================
The Company has recorded a valuation allowance for the entire value of the
deferred tax asset attributable to the equity in losses of Gradco, since
management believes the realization of such asset is not reasonably assured.
The change in the valuation allowance in 1994, 1993 and 1992 was $(36,000),
$(1,600) and $34,000, respectively.
A reconciliation of the computed "expected" tax expense at the Federal
statutory rate and the actual tax expense for the years shown below is
as follows:
1994 1993 1992
----------------------------------------------------------------------
% of % of % of
Income Income Income
Before Before Before
Income Income Income
Amount Taxes Amount Taxes Amount Taxes
----------------------------------------------------------------------
Computed "expected" tax expense $7,064,800 35.0% $5,902,600 35.0% $6,799,600 34.0%
Increases (reductions) in tax resulting from:
State and city income taxes,
net of Federal income tax benefit 1,133,600 5.6 900,900 5.3 1,881,000 9.4
Nontaxable portion of dividend income (390,200) (1.9) (523,600) (3.1) (389,500) (1.9)
Foreign Sales Corporation income taxed
at a lower rate (363,000) (1.8) (363,000) (2.2) (330,600) (1.7)
Equity in net (income) loss of
Gradco Systems, Inc. not recognized
as deferred tax benefits (36,000) (.2) (1,600) - 34,100 .1
Miscellaneous-net 56,800 .3 20,700 .2 (144,600) (.7)
----------------------------------------------------------------------
Actual tax expense $7,466,000 37.0% $5,936,000 35.2% $7,850,000 39.2%
======================================================================
</TABLE)
7. Leases
---------
The Company leases certain real properties. Certain leases provide for the
payment of real estate taxes and escalation of rentals based on increases in
real estate taxes.
Rental expense for the years ended December 31 is as follows:
1994 $737,000
1993 758,000
1992 805,000
Approximate future minimum rentals under all noncancelable operating leases
for real property at December 31, 1994 are as follows:
1995 $515,000
1996 460,000
1997 301,000
1998 289,000
1999 295,000
Subsequent to 1999 2,353,000
----------
$4,213,000
==========
8. Profit Sharing and Incentive Compensation Plans
--------------------------------------------------
The Company has a profit sharing plan for its employees which provides for
annual contributions based upon the Company's net income as a percentage of
gross revenue and the employees' salary level and length of service. Such
contributions, which are placed in a trust fund, are invested at the employees'
discretion. Contributions under the plan aggregated approximately $1,032,000
(1994), $1,121,000 (1993) and $1,126,000 (1992). Other accrued expenses and
sundry liabilities include accrued contributions under the plan of $1,032,000
(1994) and $1,121,000 (1993).
The Company has an incentive compensation plan for executive officers and key
employees of the Company providing for 5% of the Company's income from
operations to be distributed (as provided) to participants of the plan. In
addition to the amounts payable as set forth above, since cumulative investment
income (as defined) earned after 1990 through December 31, 1992 exceeded
investment loss (as defined) incurred in 1990, the excess was added to income
from operations for the purpose of calculating incentive compensation for 1992.
Since there was investment income (as defined) in 1993 and 1994, the amount of
such income was added to income from operations for the purpose of calculating
incentive compensation for 1993 and 1994. Distributions under the plan
aggregated $1,009,500 (1994), $844,000 (1993) and $959,000 (1992). Other
accrued expenses and sundry liabilities include accrued incentive compensation
of $879,500 (1994) and $339,000 (1993).
The Company has the right to change, modify or terminate the above plans at
any time.
9. Per Share Amounts
--------------------
Primary net income per share of Common Stock is computed on the basis of
weighted average number of common shares outstanding (4,435,831 (1994),
4,607,458 (1993) and 4,727,714 (1992)).
Amounts per share of Common Stock assuming full dilution are computed on the
basis of the weighted average number of shares set forth in the preceding
paragraph adjusted for shares issuable upon conversion of the Convertible
Subordinated Debentures, after elimination from net income of related debt
expense thereon, less applicable income taxes. The number of shares used in
this computation is 5,003,791 (1993) and 6,166,436 (1992).
Fully diluted net income per share is not presented for the periods where
the result of the computation is antidilutive.
Other accrued expenses and sundry liabilities at December 31, 1994 include
$930,875 payable for the acquisition of 31,000 shares of the Company's Common
Stock for treasury.
10. Marketable Securities
-------------------------
The Company's portfolio of marketable securities is substantially invested in
a limited number of issuers, operating principally in the pharmaceutical and
communications industries at December 31, 1994 and in the pharmaceutical
industry at December 31, 1993. At December 31, 1994, the market value of the
Company's largest holding (invested in a company operating in the
pharmaceutical industry) was $11,268,000 ($21,749,000 at December 31, 1993).
11. Quarterly Financial Information (Unaudited)
-----------------------------------------------
Income (Loss) Net Income
Subscriptions from Securities, Per Share of
and Cost Net of Certain Net Common
Quarter Other Sales of Sales Expenses (1) Income (2) Stock (2)
------------------------------------------------------------------------------
1994
First $13,508,484 $5,649,242 $(3,088,012) $613,788 $ .14
Second 13,186,369 5,201,814 2,082,719 3,908,384 .87
Third 12,537,868 5,049,087 3,457,355 4,345,851 .97
Fourth 13,243,634 5,316,656 1,782,698 3,851,095 .90
1993
First $12,618,897 $5,317,041 $(2,019,370) $1,015,085 $ .22
Second 13,995,497 5,458,523 1,420,980 2,336,514 .50
Third 13,608,535 5,667,423 (1,223,442) 2,019,493 .44
Fourth 13,875,317 5,241,891 2,358,360 4,237,821 .93
(1) Included in expenses are interest on 6-1/2% Convertible Subordinated
Debentures, gains in connection with the Company's investment in
Gradco and other investment-related expenses.
(2) Included in net income for the first and second quarters of 1993 are
extraordinary gain (loss) of $3,656 and $(1,323,450) ($(.29) per
share), respectively.
12. Distribution Agreement
--------------------------
In December 1993, the Company entered into a Journal Production and
Distribution Agreement (the "Distribution Agreement") with the Russian Academy
of Sciences (the "Academy") and other interested parties pursuant to which
the litigation then pending, relating to the translation of Russian scientific
journals, was ended, and the Company's role as publisher and distributor of
certain of such journals was altered. The Distribution Agreement extends
from 1994 through 2006.
Pursuant to the Distribution Agreement, in 1994 the Company distributed for
MAIK Nauka ("MN"), an entity owned in part by Pleiades Publishing, Inc. and
the Academy, 21 Russian scientific journals in English. MN became the
exclusive publisher of such journals. Prior thereto, the Company had
translated, published and distributed these journals under a contract with
the Copyright Agency of the former Soviet government, and under contracts
with the individual institutes publishing the journals, and had paid
royalties based in part upon the number of subscribers. Under the
Distribution Agreement, the Company continues to promote and distribute
these journals throughout the world, and continues to deal with and collect
from subscribers to the journals, retaining a portion of such revenues for
performing these functions. In 1994, the Company retained 35% of the revenue.
The amount will gradually be reduced to 30% in 1999 and will remain at that
level for the balance of the term of the Distribution Agreement. Pursuant to
the Distribution Agreement, the Company advanced the Academy $1,000,000
during 1993, which was fully recovered during 1993 and 1994.
Under the Distribution Agreement, in 1995 MN has undertaken the publication of
the English translations of 14 additional Russian journals, to be promoted and
distributed by the Company. In 1996, MN will undertake the publication of the
English translations of three additional Russian journals and may elect to
publish the English translations of up to 14 additional Russian journals, to
be promoted and distributed by the Company. As to each additional journal
which is published by MN and distributed by the Company under the Distribution
Agreement, the Company will retain 35% of the revenue in the initial year of
distribution, with the amount gradually being reduced to 30% over a six-year
period.
MN intends to translate and publish the above-mentioned journals in Russia.
The Company continues its activities in translating, publishing and
distributing both the journals subject to the Distribution Agreement until
they are published by MN and the 43 English Translation Russian Journals not
subject to the Agreement. These activities are undertaken pursuant to the
Company's existing English translation and publication contracts with the
individual entities publishing the Russian language journals which generally
extend through 2001.
13. Contingencies
-----------------
The Company has contingent compensation agreements with certain key personnel.
Each agreement provides for the cash payment of an amount equal to 290% of
average annual compensation (as defined), in the event of termination of
employment, under certain conditions which include, among other matters, (a)
the sale of 75% of the book value of the Company's operating assets
(as defined) or (b) any person (as defined) becoming the owner of more than
25% of the issued and outstanding shares of the Company's voting stock.
In a prior year, the Company was named as a co-defendant in an action brought
by former executives of Gradco, seeking compensatory and other damages of a
material amount. In March 1995, the litigation was agreed to be settled by all
but one of the remaining plaintiffs. The settlement will involve a release of
all claims and cross-claims without any payment by any of the parties. The
settlement documents have not yet been filed with the Court, but this is
expected to occur imminently. Management of the Company, after consultation
with counsel, believes the action with the remaining plaintiff will not
result in a material loss to the Company and intends to vigorously defend
against it.
Plenum Publishing Corporation
and Subsidiary Companies
Schedule II-Valuation and Qualifying Accounts
Column A Column B Column C Column D Column E
-------------------------------------------------------------------------------------------------------------
Additions
Balance Charged
at Beginning to Costs and Balance at
Description of Period Expenses Deductions End of Period
-------------------------------------------------------------------------------------------------------------
Year ended December 31, 1994
Allowances deducted from assets to
which they apply:
Allowance for doubtful accounts $ 179,000 $ 14,168 $ 12,168 (a) $ 181,000
Allowance for sales returns $ 669,000 $ 2,774,520 $ 2,703,520 (b) $ 740,000
Allowance for decline in market
value of marketable securities $1,713,197 $ - $ 1,713,197 (c) $ -
Year ended December 31, 1993
Allowances deducted from assets to
which they apply:
Allowance for doubtful accounts $ 187,000 $ 6,611 $ 14,611(a) $ 179,000
Allowance for sales returns $ 680,000 $ 2,908,367 $ 2,919,367(b) $ 669,000
Allowance for decline in market
value of marketable securities $ - $ 1,713,197 $ - $ 1,713,197
Year ended December 31, 1992
Allowances deducted from assets to
which they apply:
Allowance for doubtful accounts $ 207,000 $ 70,999 $ 90,999(a) $ 187,000
Allowance for sales returns $ 692,000 $ 2,722,777 $ 2,734,777(b) $ 680,000
<FN>
Notes:
(a) Uncollectible receivables written off.
(b) Returns made by customers.
(c) Reversal of allowance no longer required.
Exhibit 3.2(b)
--------------
By-laws - Section 2.1 (as amended 3/10/95)
------------------------------------------
2.1 Number, Qualification, Election
-------------------------------
and Term of Directors.
----------------------
The business of the Company shall be managed by the Board, which shall consist
of seven directors unless and until such number is changed by resolution of
a majority of the entire Board or by the shareholders entitled to vote,
provided that in no event may there be fewer than seven directors, and that
no decrease in the number of directors effected at any time may shorten the
term of any incumbent director. The directors shall each be at least 21
years old. Subject to the provisions of the certificate of incorporation of
the Company, the directors shall be divided into two classes, with one class
consisting of four directors and the other consisting of three directors.
Each class of directors shall be elected at alternate annual meetings of
shareholders by a plurality of the votes cast and shall hold office until the
second annual meeting of shareholders after their election and until the
election of their respective successors.
Exhibit 11
Plenum Publishing Corporation and Subsidiary Companies
Computation of Per Share Amounts of Common Stock
Assuming Full Dilution
Year ended December 31
1993 1992
--------------------------
Net income:
Income before extraordinary (loss) gain and cumulative effect on
prior years of accounting change (1) $ 10,928,707 $12,148,883
Debt expense, less applicable income tax benefit, attributable to
conversion of 6-1/2% Convertible Subordinated Debentures (2) 567,769 1,879,286
Adjusted income before extraordinary (loss) gain and cumulative
effect on prior years of accounting change (1)+(2)=(3) 11,496,476 14,028,169
Extraordinary (loss) gain (5) (1,319,794) 394,823
Cumulative effect on prior years of accounting change (4) - 1,179,950
--------------------------
Net income-adjusted for computation of per share amounts of
common stock-fully diluted (3)+(4)+(5)=(6) $ 10,176,682 $15,602,942
==========================
Shares of Common Stock:
Weighted average number of shares outstanding during the year (7) 4,607,458 4,727,714
Shares issuable upon conversion of 6-1/2% Convertible
Subordinated Debentures due April 15, 2007 (8) 396,333 1,438,722
--------------------------
Adjusted number of shares outstanding for the purpose
of fully diluted computation (7)+(8)=(9) 5,003,791 6,166,436
==========================
Per share amounts of Common Stock-fully diluted:
Income before extraordinary (loss) gain and cumulative
effect on prior years of accounting change (3)/(9) $2.30 $2.28
Extraordinary (loss) gain (5)/(9) (.26) .06
Cumulative effect on prior years of accounting change (4)/(9) - .19
--------------------------
Net income (6)/(9) $2.04 $2.53
==========================
<FN>
In 1994, there was no dilution in the computation of per share amounts of
common stock.