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 Six Month Period Ended Commission File #0-916-3
June 30, 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 filing 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 08/ 14 /95: 3,941,523
---------
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
------ ---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
June 30, 1995 and December 31, 1994 3
Condensed consolidated statements of income
and retained earnings -- Six and Three months
ended June 30, 1995 and 1994 5
Condensed consolidated statements of cash
flows -- Six months ended June 30, 1995
and 1994 6
Notes to condensed consolidated financial
statements -- June 30, 1995 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II OTHER INFORMATION
------- -----------------
Item 4. Submission of Matters to a Vote of Security
Holders
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
----------
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
June 31 December 31
------------------- ---------------
1995 1994
---- ----
(UNAUDITED) (NOTE)
------------------- ---------------
ASSETS
Current Assets:
Cash and cash equivalents ($34,410,761 and $30,981,399) $35,363,968 $31,775,618
Marketable securities at aggregate market value 18,270,119 24,290,875
Interest and dividends receivable 65,521 154,654
Receivables -- net of allowances of $1,006,000 and $921,000 4,865,998 6,018,648
Inventories -- Note C 3,696,292 3,636,301
Deferred income tax benefits 1,528,118 2,074,818
------------- ------------
Total Current Assets 63,790,016 67,950,914
------------- ------------
Costs Applicable to Deferred Subscription Income 759,943 720,370
------------- ------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$484,546 and $433,306 3,049,231 3,100,471
Furniture, Fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $991,496 and $882,829 306,954 384,219
Plate costs, net of accumulated depreciation of
$5,386,664 and $4,634,308 3,287,264 3,246,892
------------- -------------
7,333,449 7,421,582
------------- -------------
Deferred Income Taxes 654,628 863,128
------------- -------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $1,846,605 and $1,708,970 2,855,960 2,993,595
Royalties 1,908,208 1,755,394
Investment in Gradco Systems, Inc 2,074,829 2,074,829
Other 636,818 277,813
------------- -------------
7,475,815 7,101,631
------------- -------------
Excess of Cost of Assets Acquired Over Book Amount
Thereof, net of accumulated amortization of
$1,310,045 and $1,283,309 828,805 855,541
------------- -------------
Total Assets $80,842,656 $84,913,166
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Due to customers $492,082 $451,231
Accounts payable 1,572,963 1,792,874
Income taxes payable 1,919,914 2,145,872
Royalties payable 2,048,168 2,911,685
Other accrued expenses and sundry liabilities 2,954,122 4,819,105
Dividends payable 1,143,042 1,127,726
------------- -------------
Total Current Liabilities 10,130,291 13,248,493
Deferred Subscription Income 21,237,552 26,333,855
------------- -------------
Total Liabilities 31,367,843 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 89,416,266 83,983,599
------------- -------------
93,952,516 88,519,849
Less 1,905,718 and 1,862,983 shares of Common
Stock held in treasury - at cost 44,477,703 43,189,031
------------- -------------
Total Stockholders' Equity 49,474,813 45,330,818
------------- -------------
Total Liabilities and Stockholders' Equity $80,842,656 $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)
Six Months Ended June 30 Three Months Ended June 30
------------------------ --------------------------
1995 1994 1995 1994
---- ---- ---- ----
Income:
Subscriptions, books, outside journals and other sales, net $26,287,478 $26,694,853 $12,878,529 $13,186,369
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of sales 11,026,972 10,851,056 5,425,056 5,201,814
Royalties 2,044,099 2,192,653 918,658 957,349
Selling, general and administrative expenses 5,798,481 5,639,679 2,845,323 2,839,241
------------ ------------ ------------ ------------
18,869,552 18,683,388 9,189,037 8,998,404
------------ ------------ ------------ ------------
Income From Operations 7,417,926 8,011,465 3,689,492 4,187,965
Dividend income 202,330 933,412 68,844 407,205
Interest income 955,722 139,539 512,354 62,975
Net realized gain (loss) on sales of marketable securities 2,494,055 (1,841,188) 1,725,310 (862,611)
Net unrealized gain (loss) on marketable securities 1,828,786 (118,636) 163,245 2,535,429
Interest expense __ (16,238) __ (12,713)
Other investment-related expenses (359,328) (102,182) (167,550) (47,566)
------------ ------------ ------------ ------------
Income Before Income Taxes 12,539,491 7,006,172 5,991,695 6,270,684
------------ ------------ ------------ ------------
Income taxes--Note E:
Federal 3,857,000 1,900,000 1,865,000 1,870,000
State and City 963,000 584,000 413,000 492,300
------------ ------------ ------------ ------------
4,820,000 2,484,000 2,278,000 2,362,300
------------ ------------ ------------ ------------
Net Income 7,719,491 4,522,172 3,713,695 3,908,384
Retained earnings - beginning of period 83,983,599 76,165,428 86,845,615 75,519,513
------------ ------------ ------------ ------------
91,703,090 80,687,600 90,559,310 79,427,897
Cash dividends ($.58 and $.56 a share and $.29 and $.28 a share) 2,286,824 2,518,583 1,143,044 1,258,880
------------ ------------ ------------ ------------
Retained earnings - end of period $89,416,266 $78,169,017 $89,416,266 $78,169,017
============ ============ ============ ============
Net income per share of Common Stock - Note D $1.95 $1.00 $.95 $.87
============ ============ =========== ============
<FN>
See notes to condensed consolidated financial statements.
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30
-------------------------------------
1995 1994
---- ----
Cash flows from operating activities:
Net income $7,719,491 $4,522,172
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 752,356 675,077
Depreciation and amortization of building,
furniture, fixtures, equipment and leasehold improvements 170,669 168,194
Amortization of deferred charges and excess
of cost of assets acquired over book amount thereof 1,117,076 1,457,039
Net realized (gain) loss on sale of marketable securities (2,494,055) 1,841,188
Net unrealized (gain) loss on marketable securities (1,828,786) 118,636
Purchases of marketable securities (3,007,274) (23,849,829)
Proceeds from sale of marketable securities 13,350,871 22,017,217
Decrease (increase) in deferred income tax benefits 755,200 (934,800)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 1,241,783 346,724
Inventories (59,991) 241,749
Other assets (1,464,524) (1,574,906)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (1,976,685) (1,455,722)
Due to brokers - 710,641
Income taxes payable (225,958) (430,161)
Deferred subscription income and costs
applicable thereto-net (5,135,876) (3,678,562)
------------- ------------
Net Cash Provided by Operating Activities 8,914,297 174,657
------------- ------------
Cash flows from investing activities:
Additions to plate costs (792,728) (785,487)
Additions to furniture, fixtures, equipment
and leasehold improvements (42,164) (51,486)
------------ ------------
Net Cash Used in Investing Activities (834,892) (836,973)
------------ ------------
Cash flows from financing activities:
Acquisition of treasury stock (a) (2,219,547) (518,240)
Dividends paid (2,271,508) (2,478,970)
------------ ------------
Net Cash Used in Financing Activities (4,491,055) (2,997,210)
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents 3,588,350 (3,659,526)
Cash and cash equivalents at beginning of period 31,775,618 5,030,060
------------ ------------
Cash and Cash Equivalents at End of Period $35,363,968 $1,370,534
============ ============
<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)
June 30, 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 six month period ended June 30, 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 six months ended June 30, 1995 and 1994 for:
1995 1994
---- ----
Income Taxes $ 4,290,758 $ 3,848,961
Interest - 16,238
NOTE C -- INVENTORIES
Inventories at June 30, 1995 and December 31, 1994 are comprised of:
1995 1994
---- ----
Finished publications $ 3,176,993 $ 3,164,658
Work in process 519,299 471,643
------------ -------------
$ 3,696,292 $ 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 six and three months ended June 30, 1995 and 1994 is as
follows:
1995 1994
---- ----
Six months 3,949,148 4,502,499
Three months 3,942,160 4,496,735
NOTE E -- INCOME TAXES:
Total tax expense for the six month periods ended June 30, 1995 and 1994
amounted to $4,820,000 and $2,484,000 (effective rates of 38.44% and 35.45%),
and for the three month periods ended June 30, 1995 and 1994 amounted to
$2,278,000 and $2,362,300 (effective rates of 38.02% and 37.67%) totals
different from those computed by applying the U.S. Federal income tax rate of
35% to income before taxes. The reasons for these differences are as follows:
Six Months Ended June 30 Three Months Ended June 30
--------------------------- --------------------------
1995 1994 1995 1994
---------------------------------------------- ------------------------------------------
% of % of % of % of
Income Income Income Income
Before Before Before Before
Income Income Income Income
Amount Taxes Amount Taxes Amount Taxes Amount Taxes
---------------------------------------------- ------------------------------------------
Computed "expected" tax expense $4,388,800 35.00% $2,452,000 35.00% $2,097,100 35.00% $2,194,600 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 625,900 4.99 379,600 5.41 268,400 4.48 320,000 5.10
Nontaxable portion of
dividend income (49,600) (.39) (228,700) (3.26) (16,900) (.28) (99,800) (1.59)
FSC income taxed at a
lower rate (157,500) (1.25) (175,000) (2.50) (78,700) (1.31) (87,500) (1.40)
Miscellaneous - net 12,400 .09 56,100 .80 8,100 .13 35,000 .56
----------- -------- ----------- ------- ----------- ------ ----------- -------
Actual Tax Expense $4,820,000 38.44% $2,484,000 35.45% $2,278,000 38.02% $2,362,300 37.67%
=========== ======== =========== ======= =========== ====== =========== =======
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATIONS
----------
Revenues from the Company's publishing operations for the three and
six months ended June 30, 1995 decreased by 2.3% and 1.5%, respectively.
Revenues from subscriptions and outside journals for the three and six months
ended June 30, 1995 decreased by 4% and 3.1%, respectively, 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) nonrenewals of subscription 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, and
(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 the three and six months ended June 30, 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 $142,000 and $527,000 for the three and six months
ended June 30, 1994, respectively. Such revenues ceased during the second
quarter of fiscal 1994.
Revenues from book sales for the three and six months ended June 30,
1995 did not materially change from the comparable periods in 1994. Revenues
from database products for the three and six months ended June 30, 1995
increased by 2.5% and 6.1%, respectively, primarily due to increased usage of
the database system.
The cost of sales as a percentage of revenues for the three and six
months ended June 30, 1995 increased from 39.4% and 40.6% to 42.1% and 41.9%,
respectively, principally due to a lower gross margin on certain Russian
scientific journals published by the Academy 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. Under the Distribution Agreement, there were no royalties payable on
certain Russian scientific journals by the Academy, resulting in decreased
royalty expenses. The increase in selling, general and administrative expenses
was primarily due to increased professional fees and mailing expenses, and
sales and use taxes paid with respect to prior years' assessments.
The increase in interest income for the three and six months ended
June 30, 1995 was principally due to increased investment in commercial paper,
time deposits and money market funds. The decrease in dividend income for the
three and six months ended June 30, 1995 was attributable to decreased
investment in marketable securities. The Company had net realized and
unrealized gains of $1,725,310 and $163,245, respectively, on marketable
securities for the three months ended June 30, 1995, as compared to a net
realized loss of $862,611 and a net unrealized gain of $2,535,429 on marketable
securities for the three months ended June 30, 1994. The Company had net
realized and unrealized gains of $2,494,055 and $1,828,786, respectively, on
marketable securities for the six months ended June 30, 1995, as compared to
net realized and unrealized losses of $1,841,188 and $118,636, respectively,
on marketable securities for the six months ended June 30, 1994.
The decrease in net income for the three months ended June 30, 1995
and the increase in net income for the six months ended June 30, 1995 was
mainly due 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 6.3 to 1 at
June 30, 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 $53,634,000 at June 30, 1995 invested in marketable
securities and in cash and cash equivalents, which are available for corporate
purposes.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
------- ----------------------------------------------------
(a) The Company's Annual Meeting of Stockholders was held on June 23,
1995.
(b) The sole purpose of the meeting was the election of four directors
of the Company to serve for a term of two years (i.e. until the Annual Meeting
to be held in 1997). Proxies were solicited by management for its nominees,
pursuant to Regulation 14 under the Securities Exchange Act of 1934, and there
was no opposing solicitation. All of such nominees were elected as directors
by the required plurality of the votes cast. The directors so elected are
Israel Gitman, Howard F. Mathiasen, Nathan Tash and Earl Ubell. Messrs.
Mathiasen and Ubell were incumbent directors. The other directors (whose
current two - year term of office expires at the Annual Meeting to be held in
1996) are Bernard Bressler, Mark Shaw and Martin E. Tash.
(c) The votes cast for, and withheld from, each of the nominees (out of
the 3,941,523 shares of Common Stock outstanding and entitled to vote as of
the record date of May 16, 1995) are set forth below. There were no broker
non-votes.
Nominees For Withheld
-------- --- --------
Israel Gitman 3,441,574 11,217
Howard F. Mathiasen 3,441,694 11,017
Nathan Tash 3,433,442 19,259
Earl Ubell 3,441,684 11,017
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: August 14, 1995 ---------------------------------------
Martin E. Tash
President and CEO
Date: August 14, 1995 ----------------------------------------
Ghanshyam A. Patel
Treasurer and CFO