SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Three Month Period Ended Commission File #0-916-3
March 31, 1995
PLENUM PUBLISHING CORPORATION
(Exact name of the Registrant
as specified in Charter)
Delaware 13-5648711
(State of Incorporation) (I.R.S. Employer
Identification No.)
233 Spring Street
New York, New York 10013
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number,
Including Area Code (212) 620-8000
SECURITIES REGISTERED PURSUANT
TO SECTION 12 (g) OF THE ACT:
COMMON STOCK $.10 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to the filling requirements for at least the past 90 days.
Yes X No
------- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of 05/ 15 /95: 3,941,523
---------
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
- - - - - ------ ---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
March 31, 1995 and December 31, 1994 3
Condensed consolidated statements of income
and retained earnings -- Three months ended
March 31, 1995 and 1994 5
Condensed consolidated statements of cash
flows -- Three months ended March 31, 1995
and 1994 6
Notes to condensed consolidated financial
statements -- March 31, 1995 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II OTHER INFORMATION
- - - - - ------- -----------------
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
- - - - - ----------
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
March 31 December 31
------------------- ---------------
1995 1994
---- ----
(UNAUDITED) (NOTE)
------------------- ---------------
ASSETS
Current Assets:
Cash and cash equivalents ($32,933,622 and $30,981,399) $33,638,016 $31,775,618
Marketable securities at aggregate market value 21,707,638 24,290,875
Interest and dividends receivable 142,460 154,654
Receivables -- net of allowances of $924,000 and $921,000 5,892,932 6,018,648
Inventories -- Note C 3,970,451 3,636,301
Deferred income tax benefits 1,649,518 2,074,818
------------- -------------
Total Current Assets 67,001,015 67,950,914
------------- -------------
Costs Applicable to Deferred Subscription Income 763,160 720,370
------------- -------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$458,926 and $433,306 3,074,851 3,100,471
Furniture, Fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $931,782 and $882,829 361,928 384,219
Plate costs, net of accumulated depreciation of
$5,034,800 and $4,634,308 3,287,763 3,246,892
------------- -------------
7,414,542 7,421,582
------------- -------------
Deferred Income Taxes 823,028 863,128
------------- -------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $1,777,787 and $1,708,970 2,924,778 2,993,595
Royalties 1,842,281 1,755,394
Investment in Gradco Systems, Inc 2,074,829 2,074,829
Other 892,060 277,813
------------- -------------
7,733,948 7,101,631
------------- -------------
Excess of Cost of Assets Acquired Over Book Amount
Thereof, net of accumulated amortization of
$1,296,677 and $1,283,309 842,173 855,541
------------- -------------
Total Assets $84,577,866 $84,913,166
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Due to customers $298,080 $451,231
Accounts payable 2,163,983 1,792,874
Income taxes payable 3,903,333 2,145,872
Royalties payable 2,961,214 2,911,685
Other accrued expenses and sundry liabilities 2,398,419 4,819,105
Dividends payable 1,143,780 1,127,726
------------- -------------
Total Current Liabilities 12,868,809 13,248,493
Deferred Subscription Income 24,730,425 26,333,855
------------- -------------
Total Liabilities 37,599,234 39,582,348
------------- -------------
Stockholders' Equity -- Note D
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 86,845,615 83,983,599
------------- -------------
91,381,865 88,519,849
Less 1,903,172 and 1,862,983 shares of Common
Stock held in treasury - at cost 44,403,233 43,189,031
------------- -------------
Total Stockholders' Equity 46,978,632 45,330,818
------------- -------------
Total Liabilities and Stockholders' Equity $84,577,866 $84,913,166
============= =============
<FN>
Note: The balance sheet at December 31, 1994 has been derived from the audited consolidated financial
statements at that date. See Notes to condensed consolidated financial statements.
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
EARNINGS (UNAUDITED)
Three Months Ended March 31
-------------------------------------
1995 1994
------------------ --------------
Income:
Subscriptions, books, outside journals and other sales, net $13,408,949 $13,508,484
----------------- --------------
Costs and Expenses:
Cost of sales 5,601,916 5,649,242
Royalties 1,125,441 1,235,304
Selling, general and administrative expenses 2,953,158 2,800,438
------------- -------------
9,680,515 9,684,984
------------- -------------
Income From Operations 3,728,434 3,823,500
Dividend income 133,486 526,207
Interest income 443,368 76,564
Net realized gain (loss) on sales of marketable securities 768,745 (978,577)
Net unrealized gain (loss) on marketable securities 1,665,541 (2,654,065)
Interest expense - (3,525)
Other investment-related expenses (191,778) (54,616)
-------------- -------------
Income Before Income Taxes 6,547,796 735,488
-------------- -------------
Income taxes--Note E:
Federal 1,992,000 30,000
State and City 550,000 91,700
-------------- -------------
2,542,000 121,700
-------------- -------------
Net Income 4,005,796 613,788
Retained earnings - beginning of period 83,983,599 76,165,428
-------------- -------------
87,989,395 76,779,216
Cash dividends ($.29 and $.28 a share) 1,143,780 1,259,703
-------------- -------------
Retained earnings - end of period $86,845,615 $75,519,513
============== =============
Net income per share of Common Stock - Note D $1.01 $0.14
============== =============
<FN>
See notes to condensed consolidated financial statements.
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31
-------------------------------------
1995 1994
---- ----
Cash flows from operating activities:
Net income $4,005,796 $613,788
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 400,492 454,217
Depreciation and amortization of building,
furniture, fixtures, equipment and leasehold improvements 85,335 84,098
Amortization of deferred charges and excess
of cost of assets acquired over book amount thereof 640,052 677,603
Net realized (gain) loss on sale of marketable securities (768,745) 978,577
Net unrealized (gain) loss on marketable securities (1,665,541) 2,654,065
Purchases of marketable securities (151,454) (12,373,884)
Proceeds from sale of marketable securities 5,168,977 9,397,117
Decrease (increase) in deferred income tax benefits 465,400 (1,724,100)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 137,910 791,564
Inventories (334,150) (129,735)
Other assets (1,259,001) (1,157,258)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (1,222,324) (908,060)
Due to brokers - 2,143,929
Income taxes payable 1,757,461 1,247,409
Deferred subscription income and costs
applicable thereto-net (1,646,220) (2,825,616)
-------------- -------------
Net Cash Provided by (Used in) Operating Activities 5,613,988 (76,286)
-------------- -------------
Cash flows from investing activities:
Additions to plate costs (441,363) (281,293)
Additions to furniture, fixtures, equipment
and leasehold improvements (37,424) (23,960)
------------- -------------
Net Cash Used in Investing Activities (478,787) (305,253)
------------- -------------
Cash flows from financing activities:
Acquisition of treasury stock (a) (2,145,077) (446,210)
Dividends paid (1,127,726) (1,219,267)
------------- -------------
Net Cash Used in Financing Activities (3,272,803) (1,665,477)
------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents 1,862,398 (2,047,016)
Cash and cash equivalents at beginning of period 31,775,618 5,030,060
------------- -------------
Cash and Cash Equivalents at End of Period $33,638,016 $2,983,044
============= ==============
<FN>
See notes to condensed consolidated financial statements.
(a) Includes $930,875 paid in 1995 for treasury stock acquired in 1994.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
March 31, 1995
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period ended March 31, 1995 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1994.
NOTE B -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the three months ended March 31, 1995 and 1994 for:
1995 1994
---- ----
Income Taxes $319,139 $598,391
Interest - 3,525
NOTE C -- INVENTORIES
Inventories at March 31, 1995 and December 31, 1994 are comprised of:
1995 1994
---- ----
Finished publications $3,508,019 $3,164,658
Work in process 462,432 471,643
---------- -----------
$3,970,451 $3,636,301
========== ===========
NOTE D -- PER SHARE AMOUNTS
Net income per share of Common Stock is computed on the basis of the
weighted average number of shares outstanding. The number of shares used
in this computation for the three months ended March 31, 1995 and 1994 is
3,954,116 and 4,507,373, respectively.
NOTE E -- INCOME TAXES:
Total tax expense for the three month periods ended March 31, 1995 and 1994 amounted to $2,542,000 and $121,700 (effective
rates of 38.80% and 16.50%), totals different from those computed by applying the U.S. Federal income tax rate to
income before taxes. The reasons for these differences are as follows:
Three Months Ended March 31
-------------------------------
1995 1994
-------------------------------------------------------------------
% of % of
Income Income
Before Before
Income Income
Amount Taxes Amount Taxes
-------------------------------------------------------------------
Computed "expected" tax expense $2,291,700 35.00% $257,400 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 357,500 5.40 59,600 8.10
Nontaxable portion of
dividend income (32,700) (.50) (128,900) (17.50)
FSC income taxed at a
lower rate (78,800) (1.20) (87,500) (11.90)
Miscellaneous - net 4,300 .10 21,100 2.80
------------- ------------ ------------ ------------
Actual Tax Expense $2,542,000 38.80% $121,700 16.50%
============= ============ ============ ============
NOTE F -- CONTINGENCIES
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 April 1995, the litigation was settled by all but one of
the remaining plaintiffs. The settlement involved a release of all claims
and cross-claims without any payment by any of the parties. 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Three Month Period - 1995 vs 1994
- - - - - --------------------------------
Revenues from the Company's publishing operations decreased by 0.7% to
$13,408,949. Revenues from subscriptions and outside journals decreased by
2.1%, 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), and
(c) nonrenewals 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.
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 the three months ended
March 31, 1995, since the publication of most of the affected journals for
the 1994 volume year commenced during the second quarter of fiscal 1994.
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 $363,000 for the three months ended March 31,
1994. Such revenues ceased during the second quarter of fiscal 1994.
Revenues from book sales for the three months ended March 31, 1995 did
not materially change from the comparable period in 1993. Revenues from
database products for the three months ended March 31, 1995 increased by
9.9%, primarily due to increased usage of the database system.
The cost of sales as a percentage of revenues for the three months ended
March 31, 1995 was almost the same as in the corresponding period in 1994.
Under the Distribution Agreement, there were no royalties payable on certain
Russian scientific journals published by the Academy, resulting in decreased
royalty expenses. The increase in selling, general and administrative
expenses was mainly due to increased advertising expenditures and mailing
expenses, and a provision for sales and use taxes for assessments of such
taxes expected with respect to prior years.
The increase in interest income was principally due to increased
investment in commercial paper, time deposits and money market funds. The
decrease in dividend income was attributable to decreased investment in
marketable securities. The company had net realized and unrealized gains of
$768,745 and $1,665,541, respectively, on marketable securities for the three
months ended March 31, 1995, as compared to net realized and unrealized
losses of $978,577 and $2,654,065, respectively, on marketable securities for
the three months ended March 31, 1994.
The increase in net income was principally attributable to the increase
in investment income as discussed in the preceding paragraph, offset by
decreased income from publishing operations.
LIQUIDITY AND SOURCES OF CAPITAL
- - - - - --------------------------------
The ratio of current assets to current liabilities is 5.2 to 1 at March
31, 1995 compared to 5.1 to 1 at December 31, 1994.
Management anticipates that internally generated funds will exceed the
requirements of the operations of the business. The Company also has funds of
approximately $55,346,000 at March 31, 1995 invested in marketable securities
and in cash and cash equivalents, which are available for corporate purposes.
PART II - OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
- - - - - ----------------------------------------
(a) Exhibits-None
(b) Reports on Form 8-K-None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PLENUM PUBLISHING CORPORATION
-----------------------------
Date: May 15, 1995 ---------------------------------------
Martin E. Tash
President and CEO
Date: May 15, 1995 ---------------------------------------
Ghanshyam A. Patel
Treasurer and CFO