UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
---------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1 - 5332
P & F INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-1657413
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
300 SMITH STREET, FARMINGDALE, NEW YORK 11735
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 694-1800
---------------
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES ( X ) NO ( )
As of May 14, 2001, there were 3,554,448 shares of the Registrant's
Class A Common Stock outstanding.
P & F INDUSTRIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2001
TABLE OF CONTENTS
PAGE
----
PART I
- ------
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 2001 and December 31, 2000 1 - 2
Consolidated Statements of Income for the
three months ended March 31, 2001 and 2000 3
Consolidated Statement of Shareholders' Equity
for the three months ended March 31, 2001 4
Consolidated Statements of Cash Flows for
the three months ended March 31, 2001 and 2000 5 - 6
Notes to Consolidated Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 14
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 15
PART II
- -------
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
EXHIBIT INDEX 18 - 19
i
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
=======================================
MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
ASSETS
------
CURRENT:
Cash $ 3,753 $ 388,422
Accounts receivable, less allowance
for possible losses of $498,712
in 2001 and $496,569 in 2000 10,374,440 10,468,504
Inventories 24,047,443 23,418,990
Deferred income taxes 528,000 528,000
Prepaid expenses and other 795,687 762,548
------------ ------------
TOTAL CURRENT ASSETS 35,749,323 35,566,464
------------ ------------
PROPERTY AND EQUIPMENT:
Land 1,182,938 1,182,938
Buildings and improvements 5,983,654 5,983,654
Machinery and equipment 12,426,537 12,129,262
------------ ------------
19,593,129 19,295,854
Less accumulated depreciation
and amortization 8,870,527 8,506,651
------------ ------------
NET PROPERTY AND EQUIPMENT 10,722,602 10,789,203
------------ ------------
GOODWILL, net of accumulated
amortization of $1,920,020 in
2001 and $1,838,911 in 2000 7,544,938 7,626,047
OTHER ASSETS 183,105 171,103
------------ ------------
TOTAL ASSETS $ 54,199,968 $ 54,152,817
============ ============
1
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(CONTINUED)
=======================================
MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 10,000,000 $ 9,000,000
Accounts payable 3,648,862 3,177,469
Accruals:
Compensation 737,677 2,242,110
Other 1,754,549 1,713,486
Current maturities of long-term debt 287,337 296,106
------------ ------------
TOTAL CURRENT LIABILITIES 16,428,425 16,429,171
LONG-TERM DEBT, less current maturities 3,836,475 3,862,512
DEFERRED INCOME TAXES 869,000 869,000
------------ ------------
21,133,900 21,160,683
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock - $10 par;
authorized - 2,000,000 shares;
no shares outstanding -- --
Common stock:
Class A - $1 par;
authorized - 7,000,000 shares;
issued - 3,677,593 shares 3,677,593 3,677,593
Class B - $1 par;
authorized - 2,000,000 shares;
no shares issued or outstanding -- --
Additional paid-in capital 8,464,139 8,464,139
Retained earnings 21,991,454 21,560,475
Treasury stock, at cost
(123,145 shares and 72,185 shares) (1,067,118) (710,073)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 33,066,068 32,992,134
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 54,199,968 $ 54,152,817
============ ============
2
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
=======================================
THREE MONTHS ENDED
MARCH 31,
------------------
2001 2000
------------ ------------
REVENUES:
Net sales $ 17,298,505 $ 20,685,575
Other 145,259 111,381
------------ ------------
17,443,764 20,796,956
------------ ------------
COSTS AND EXPENSES:
Cost of sales 12,254,793 14,402,372
Selling, general and administrative 4,214,920 4,325,835
Interest - net 270,072 334,742
------------ ------------
16,739,785 19,062,949
------------ ------------
INCOME BEFORE TAXES ON INCOME 703,979 1,734,007
TAXES ON INCOME 273,000 657,000
------------ ------------
NET INCOME $ 430,979 $ 1,077,007
============ ============
Weighted average common shares outstanding:
Basic 3,575,599 3,476,865
Diluted 3,649,245 3,669,512
Earnings per share of common stock:
Basic $ .12 $ .31
Diluted $ .12 $ .29
3
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
==============================================
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK
----------- ----------- ------------ ------------
Balance,
January 1, 2001 $ 3,677,593 $ 8,464,139 $ 21,560,475 ($ 710,073)
Net income for the
three months ended
March 31, 2001 -- -- 430,979 --
Purchase of Class A
Common Stock -- -- -- (357,045)
----------- ----------- ------------ ----------
Balance,
March 31, 2001 $ 3,677,593 $ 8,464,139 $ 21,991,454 ($1,067,118)
=========== =========== ============ ==========
4
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
=======================================
THREE MONTHS ENDED
MARCH 31,
------------------
2001 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 430,979 $ 1,077,007
------------ ------------
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation 363,876 355,267
Amortization 85,403 85,403
(Gain) on disposal of fixed assets -- (41 193)
Provision for losses on
accounts receivable - net 2,143 15,126
Decrease (increase):
Accounts receivable 91,921 (113,096)
Inventories (628,453) (3,280,873)
Prepaid expenses and other (33,139) 43,120
Other assets (16,296) (844)
Increase (decrease):
Accounts payable 471,393 342,090
Accruals and other (1,463,370) (1,270,628)
------------ ------------
Total adjustments (1,126,522) (3,865,628)
------------ ------------
Net cash used in
operating activities (695,543) (2,788,621)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (297,275) (215,405)
Proceeds from sale of fixed assets -- 41,194
------------ ------------
Net cash used in
investing activities (297,275) (174,211)
------------ ------------
5
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
=======================================
THREE MONTHS ENDED
MARCH 31,
------------------
2001 2000
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 2,000,000 2,500,000
Repayments of short-term borrowings (1,000,000) (500,000)
Principal payments on long-term debt (34,806) (198,978)
Purchase of Class A Common Stock (357,045) --
Proceeds from exercise of stock options -- 108,187
------------ ------------
Net cash used in
financing activities 608,149 1,909,209
------------ ------------
NET (DECREASE) INCREASE IN CASH (384,669) (1,053,623)
CASH AT BEGINNING OF PERIOD 388,422 1,305,351
------------ ------------
CASH AT END OF PERIOD $ 3,753 $ 251,728
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes $ 23,000 $ 121,654
============ ============
Interest $ 271,873 $ 324,823
============ ============
During the quarter ended March 31, 2000, the Company received 19,925 shares
of common stock in connection with the exercise of stock options. The value of
these shares was recorded at $192,500.
6
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==========================================
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements contained herein include the
accounts of P & F Industries, Inc. and its subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated.
The Company conducts its business operations through its three
wholly-owned subsidiaries. Florida Pneumatic Manufacturing Corporation ("Florida
Pneumatic") is engaged in the importation, manufacture and sale of pneumatic
hand tools, primarily for the industrial and retail markets, and the importation
and sale of compressor air filters. Florida Pneumatic also markets, through its
Berkley Tool division, a line of pipe cutting and threading tools, wrenches and
replacement electrical components for a widely-used brand of pipe cutting and
threading machines. Green Manufacturing, Inc. ("Green") is engaged primarily in
the manufacture, development and sale of heavy-duty welded custom designed
hydraulic cylinders. Green also manufactures a line of access equipment for the
petro-chemical industry and a line of post hole digging equipment for the
agricultural industry. Embassy Industries, Inc. ("Embassy") is engaged in the
manufacture and sale of baseboard heating products and the importation and sale
of radiant heating systems. Embassy also imports a line of door and window
hardware items through its Franklin Manufacturing hardware division. Note 4
presents financial information for the segments of the Company's business.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the rules and regulations of the Securities and
Exchange Commission regarding interim financial reporting. Accordingly, these
interim financial statements do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of the Company, these
unaudited consolidated financial statements include all adjustments necessary to
present fairly the information set forth therein. All such adjustments are of a
normal recurring nature. Results for interim periods are not necessarily
indicative of results to be expected for a full year, since the operations of
some of the Company's subsidiaries are seasonal in nature.
The consolidated balance sheet information for December 31, 2000 was
derived from the audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000. The interim financial
statements contained herein should be read in conjunction with that Report.
7
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==========================================
BASIS OF FINANCIAL STATEMENT PRESENTATION (CONTINUED)
In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 2 - INVENTORIES
Major classes of inventory were as follows:
MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
Finished goods $ 19,037,098 $ 18,511,265
Work in process 1,054,699 934,283
Raw materials and supplies 3,955,646 3,973,442
------------ ------------
$ 24,047,443 $ 23,418,990
============ ============
NOTE 3 - CAPITAL STOCK TRANSACTIONS
During the quarter ended March 31, 2000, a director of the Company
surrendered 13,144 shares of Class A Common Stock, with a fair value of
$130,625, in connection with the exercise of options to purchase 50,000 shares
of Class A Common Stock.
Also during the quarter ended March 31, 2000, an employee of the
Company surrendered 6,781 shares of Class A Common Stock, with a fair value of
$61,875, in connection with the exercise of options to purchase 35,000 shares of
Class A Common Stock.
8
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==========================================
NOTE 4 - SEGMENTS OF BUSINESS
The following tables present financial information by segment for the
periods ended March 31, 2001 and 2000. Segment profit excludes general corporate
expenses, interest expense and income taxes. During these periods, there were no
intersegment revenues.
PNEUMATIC
TOOLS AND
THREE MONTHS ENDED CON- RELATED HYDRAULIC HEATING
MARCH 31, 2001 SOLIDATED EQUIPMENT CYLINDERS EQUIPMENT HARDWARE
- ------------------- --------- --------- --------- --------- --------
(In thousands)
Revenues from
external customers $ 17,444 $ 10,171 $ 4,161 $ 1,971 $ 1,141
========= ========= ========= ========= ========
Segment profit $ 1,696 $ 1,553 $ 47 $ 67 $ 29
========= ========= ========= ========= ========
PNEUMATIC
TOOLS AND
THREE MONTHS ENDED CON- RELATED HYDRAULIC HEATING
MARCH 31, 2000 SOLIDATED EQUIPMENT CYLINDERS EQUIPMENT HARDWARE
- ------------------- --------- --------- --------- --------- --------
(In thousands)
Revenues from
external customers $ 20,797 $ 11,070 $ 5,836 $ 2,291 $ 1,600
========= ========= ========= ========= ========
Segment profit $ 2,855 $ 2,198 $ 386 $ 115 $ 156
========= ========= ========= ========= ========
9
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==========================================
NOTE 4 - SEGMENTS OF BUSINESS (CONTINUED)
The reconciliation of combined operating profits for reportable
segments to consolidated income before income taxes is as follows:
THREE MONTHS ENDED
MARCH 31,
-----------------------
2001 2000
---------- ----------
Total profit for reportable segments $1,695,556 $2,854,748
General corporate expenses (721,505) (785,999)
Interest expense (270,072) (334,742)
---------- ----------
Income before income taxes $ 703,979 $1,734,007
========== ==========
10
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==========================================
NOTE 5 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per common share:
THREE MONTHS ENDED
MARCH 31,
-----------------------
2001 2000
---------- ----------
Numerator:
Numerator for basic and diluted
earnings per common share - income
available to common shareholders $ 430,979 $1,077,007
========== ==========
Denominator:
Denominator for basic earnings
per common share - weighted
average common shares outstanding 3,575,599 3,476,865
Effect of dilutive securities:
Common stock options 73,646 192,647
--------- ---------
Denominator for diluted earnings
per common share - adjusted
weighted average common shares
and assumed conversions 3,649,245 3,669,512
========= =========
Earnings per common share:
Basic $ .12 $ .31
===== =====
Diluted $ .12 $ .29
===== =====
11
P & F INDUSTRIES, INC. AND SUBSIDIARIES
=======================================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 2001 COMPARED WITH FIRST QUARTER ENDED
MARCH 31, 2000
Consolidated revenues decreased 16.1%, from $20,796,956 to $17,443,764.
Revenues from pneumatic tools and related equipment decreased 8.1%, from
$11,069,618 to $10,170,433, due primarily to a slowdown in the retail segment of
the business and, to a lesser extent, to a slowdown in the industrial catalog
segment. Selling prices of pneumatic tools and related equipment were unchanged
from the first quarter of 2000.
Revenues from hydraulic cylinders and other equipment decreased 28.7%,
from $5,835,674 to $4,160,842, due primarily to continued weakness in the
wrecker and refuse segments of the business, as well as to the loss of sales to
a significant aerial lift customer that exited the business. Selling prices of
hydraulic cylinders were increased by approximately 5% to a majority of
customers since the first quarter of 2000.
Revenues from heating equipment products decreased 14.0%, from
$2,291,404 to $1,971,073, due primarily to a decrease in housing starts.
Revenues from hardware products decreased 28.7%, from $1,600,260 to $1,141,416,
due primarily to the loss of two significant customers that declared bankruptcy
since the first quarter of 2000. Selling prices of all heating equipment and
hardware products were virtually unchanged from the first quarter of 2000.
Consolidated gross profit, as a percentage of revenues, decreased from
30.7% to 29.7%. Gross profit from pneumatic tools and related equipment
decreased from 38.9% to 36.1%, due primarily to the decrease in sales and a less
favorable product mix. This decrease in gross profit was partially offset by a
weakening of the Japanese yen, which decreased the cost of imported products.
Gross profit from hydraulic cylinders and other equipment decreased from 14.8%
to 12.7%, due primarily to the decrease in sales, as well as to higher wage
rates in effect in the first quarter of 2000. This decrease in gross profit was
partially offset by improvements in factory efficiency. Gross profit from
heating equipment products increased from 34.0% to 34.7%, due primarily to a
change in the product mix. Gross profit from hardware products decreased from
27.9% to 26.6%, due primarily to the decrease in sales and a less favorable
product mix.
12
FIRST QUARTER ENDED MARCH 31, 2001 COMPARED WITH FIRST QUARTER ENDED
MARCH 31, 2000 (CONTINUED)
Consolidated selling, general and administrative expenses decreased
2.6%, from $4,325,835 to $4,214,920, due primarily to the decrease in revenues.
As a percentage of revenues, however, these expenses increased from 20.8% to
24.2% as many of these costs are fixed and could not be reduced as quickly as
the decrease in overall revenues. Interest expense decreased 19.3%, from
$334,742 to $270,072, as a result of a decrease in all borrowings.
The effective tax rates for the quarters ended March 31, 2001 and 2000
were 38.8% and 37.9%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company gauges its liquidity and financial stability by the
measurements shown in the following table (dollar amounts in thousands):
MARCH 31, DECEMBER 31, MARCH 31,
2001 2000 2000
--------- ------------ ---------
Working Capital $ 19,321 $ 19,137 $ 19,126
Current Ratio 2.18 to 1 2.16 to 1 2.05 to 1
Shareholders' Equity $ 33,066 $ 32,992 $ 30,210
During the quarter ended March 31, 2001, gross accounts receivable
decreased by approximately $92,000. Decreases in accounts receivable at Embassy
and Florida Pneumatic, which were the results of weak sales during the first
quarter of 2001 and a difference in the timing of receipts, were partially
offset by an increase in accounts receivable at Green, which was the result of
stronger first quarter 2001 sales compared to the fourth quarter of 2000 and, to
a lesser extent, the timing of receipts. Inventories increased by approximately
$628,000, with increases of approximately $360,000 at Embassy and approximately
$320,000 at Green being offset by a decrease of approximately $52,000 at Florida
Pneumatic. The increase in inventories at Embassy was the result of first
quarter sales that were weaker than anticipated, a product design change, and an
inventory build-up required to satisfy increased second quarter sales. The
increase in inventories at Green was primarily the result of weak first quarter
sales. Accounts payable increased by approximately $471,000, due primarily to
the timing of payments and the receipt of inventory.
13
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
On July 12, 2000, the Company renewed its credit agreement, as amended,
with European American Bank. This agreement provides the Company with various
credit facilities, including revolving credit loans, term loans for acquisitions
and a foreign exchange line. The revolving credit loan facility provides a total
of $12,000,000, with various sublimits, for direct borrowings, letters of
credit, bankers' acceptances and equipment loans. At March 31, 2001, there was
$10,000,000 outstanding against the revolving credit loan facility. There was
also a commitment of approximately $180,000 at March 31, 2001 for open letters
of credit.
The term loan facility provides a commitment of $15,000,000 to finance
acquisitions subject to the lending bank's approval. There was no loan balance
outstanding against this facility at March 31, 2001. There was, however, a
standby letter of credit totalling approximately $670,000 outstanding against
this facility at March 31, 2001. This standby letter of credit was used to
secure the Economic Development Revenue Bond assumed as part of the acquisition
of Green.
The foreign exchange line provides for the availability of up to
$10,000,000 in foreign currency forward contracts. These contracts fix the
exchange rate on future purchases of Japanese yen needed for payments to foreign
suppliers. The total amount of foreign currency forward contracts outstanding at
March 31, 2001 was approximately $2,830,000.
The Company's credit agreement is subject to annual review by the
lending bank. Under this agreement, the Company is required to adhere to certain
financial covenants. At March 31, 2001, and for the three months then ended, the
Company satisfied all of these covenants.
Capital spending for the quarter ended March 31, 2001 was approximately
$300,000. The total amount was provided from working capital. Capital
expenditures for the rest of 2001 are expected to total approximately $900,000,
some of which may be financed through the Company's credit facilities. Included
in the expected total for the rest of 2001 are capital expenditures relating to
new products, expansion of existing product lines and replacement of old
equipment.
The Company, through Florida Pneumatic, imports a significant amount of
its purchases from Japan, with payment due in Japanese yen. As a result, the
Company is subject to the effects of foreign currency exchange fluctuations. The
Company uses a variety of techniques to protect itself from any adverse effects
from these fluctuations, including increasing its selling prices, obtaining
price reductions from its overseas suppliers, using alternative supplier sources
and entering into foreign currency forward contracts. The strengthening of the
U.S. dollar versus the Japanese yen over the last 12 months has had a positive
effect on the Company's results of operations and its financial position. There
can be no assurance however, that this situation will continue.
14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks, which include changes in U.S.
and international exchange rates, the prices of certain commodities and currency
rates as measured against the U.S. dollar and each other. The Company attempts
to reduce the risks related to foreign currency fluctuation by utilizing
financial instruments, pursuant to Company policy.
The value of the U.S. dollar affects the Company's financial results.
Changes in exchange rates may positively or negatively affect the Company's
gross margins and operating expenses. The Company engages in hedging programs
aimed at mitigating the impact of currency fluctuations. Using primarily forward
exchange contracts, the Company hedges some of those transactions that, when
remeasured according to accounting principles generally accepted in the United
States of America, impact the income statement. Factors that could impact the
effectiveness of the Company's programs include volatility of the currency
markets and availability of hedging instruments. All currency contracts that are
entered into by the Company are components of hedging programs and are entered
into for the sole purpose of hedging an existing or anticipated currency
exposure, not for speculation. The Company does not buy or sell financial
instruments for trading purposes. Although the Company maintains these programs
to reduce the impact of changes in currency exchange rates, when the U.S. dollar
sustains a weakening exchange rate against currencies in which the Company
incurs costs, the Company's costs are adversely affected. At March 31, 2001, the
Company held open hedge forward contracts to deliver approximately $2,830,000 of
Japanese yen. The potential loss in value of the Company's net investment in
foreign currency forward contracts resulting from a hypothetical 10 percent
adverse change in foreign currency exchange rates at March 31, 2001 is
approximately $315,000.
15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is not a party to any litigation that is
expected to have a material adverse effect on its business.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See "Exhibit Index" immediately following the
signature page.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant
during the quarter ended March 31, 2001.
16
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.
P & F INDUSTRIES, INC.
(Registrant)
By /s/ Joseph A. Molino, Jr.
-------------------------------
Joseph A. Molino, Jr.
Vice President
Dated: May 14, 2001 (Principal Financial Officer)
17
EXHIBIT INDEX
EXHIBIT
NO.
- -------
2.1 Asset Purchase Agreement, dated as of September 16, 1998, by and
between Green Manufacturing, Inc., an Ohio corporation, and the
Registrant (Incorporated by reference to Exhibit 2.1 of the
Registrant's Current Report on Form 8-K dated September 16, 1998).
Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant agrees to
furnish supplementally a copy of any exhibit or schedule omitted from
the Asset Purchase Agreement to the Commission upon request.
3.1 Restated Certificate of Incorporation of the Registrant (Incorporated
by reference to Exhibit 3.1 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1999).
3.2 Amended By-laws of the Registrant (Incorporated by reference to Exhibit
3.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999).
4.1 Rights Agreement, dated as of August 23, 1994, between the Registrant
and American Stock Transfer & Trust Company, as Rights Agent
(Incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A dated August 24, 1994).
4.2 Amendment to Rights Agreement, dated as of April 11, 1997, between the
Registrant and American Stock Transfer & Trust Company, as Rights Agent
(Incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated April 11, 1997).
4.3 Credit Agreement, dated as of July 23, 1998, by and among the
Registrant, Florida Pneumatic Manufacturing Corporation, a Florida
corporation, Embassy Industries, Inc., a New York corporation, and
European American Bank, a New York banking corporation
(Incorporated by reference to Exhibit 4.3 to the Registrant's
Annual Report on Form 10-K/A for the fiscal year ended December 31,
1998).
4.4 Amendment No. 1 to Credit Agreement, dated as of September 16,
1998, by and among the Registrant, Florida Pneumatic Manufacturing
Corporation, a Florida corporation, Embassy Industries, Inc., a New
York corporation, Green Manufacturing, Inc., a Delaware
corporation, and European American Bank, a New York banking
corporation (Incorporated by reference to Exhibit 4.4 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1998).
18
EXHIBIT INDEX
(CONTINUED)
EXHIBIT
NO.
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4.5 Amendment No. 2 to Credit Agreement, dated as of July 28, 1999, by
and among the Registrant, Florida Pneumatic Manufacturing
Corporation, a Florida corporation, Embassy Industries, Inc., a New
York corporation, Green Manufacturing, Inc., a Delaware
corporation, and European American Bank, a New York banking
corporation (Incorporated by reference to Exhibit 4.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999).
4.6 Amendment No. 3 to Credit Agreement, dated as of July 26, 2000, by
and among the Registrant, Florida Pneumatic Manufacturing
Corporation, a Florida corporation, Embassy Industries, Inc., a New
York corporation, Green Manufacturing, Inc., a Delaware
corporation, and European American Bank, a New York banking
corporation (Incorporated by reference to Exhibit 4.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000).
4.7 Certain instruments defining the rights of holders of the long-term
debt securities of the Registrant are omitted pursuant to Section
(b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant agrees to
furnish supplementally copies of these instruments to the Commission
upon request.
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