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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
COMMISSION FILE NUMBER 1-8292
HELM RESOURCES, INC.
(Exact name of registrant as specified in character)
Delaware 59-0786066
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number )
537 Steamboat Road
Greenwich, CT 06830
(Address of principal executive offices)
203-629-1400
(Registrant s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to 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 such filing
requirements for the past 90 days.
YES X NO
----- -----
As of August 13, 1997 there were 2,521,543 shares of the Company s common stock,
par value $ .01 per share, outstanding.
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PART I- FINANCIAL INFORMATION
HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
(Note 6)
ASSETS Historical Pro-Forma
- ------ ---------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 52 $2,002
Accounts receivable, net 1,826 --
Inventories 225 --
Current portion of promissory notes
receivable from officers 150 150
Prepaid expenses 381 39
------ ------
TOTAL CURRENT ASSETS 2,634 2,191
INVESTMENTS IN AND DUE FROM AFFILIATES 1,097 327
PROMISSORY NOTES RECEIVABLE FROM OFFICERS 150 150
PROPERTY, PLANT AND EQUIPMENT, NET 2,504 --
DEFERRED CHARGES AND OTHER ASSETS 511 66
CASH HELD IN ESCROW, LESS RESERVE -- $ 130
------ ------
$6,896 $2,864
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HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
(Note 6)
LIABILITIES AND SHAREHOLDERS (DEFICIENCY) Historical Pro-forma
- ------------------------------------------ ---------- ---------
CURRENT LIABILITIES:
Notes payable to affiliates $ 851 $ 321
Accounts Payable 1,997 138
Accrued interest 254 254
Accrued expenses 1,230 398
Current portion of long term debt 1,715 --
Due for contract settlement 259 --
Due to affiliates 133 133
------- -------
TOTAL CURRENT LIABILITIES 6,439 1,244
LONG-TERM DEBT, NET OF CURRENT PORTION 701 --
NOTES PAYABLE TO AFFILIATES 210 --
SUBORDINATED DEBENTURES 3,083 3,083
ACCRUED EXPENSES PAYABLE IN COMMON STOCK 593 593
OTHER LIABILITIES 444 444
------- -------
TOTAL LIABILITIES 11,470 5,364
SHAREHOLDERS DEFICIENCY (NOTE 5) (4,574) (2,500)
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$6,896 $ 2,864
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HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
June 30
1997 1996
---- ----
REVENUES $4,632 $4,892
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COSTS, EXPENSES AND OTHER:
Operating expenses 3,475 3,657
Selling, general and administrative
expenses 1,043 1,058
Gain on sale of securities (171) (185)
Equity in net losses of
affiliates (66) (50)
Increase in underlying equity
of Intersystems, Inc. -- (42)
Interest and debt expense 237 268
Interest income (12) (22)
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TOTAL COSTS, EXPENSES AND OTHER 4,506 4,684
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INCOME FROM CONTINUING OPERATIONS 126 208
DISCONTINUED OPERATIONS OF AFFILIATE -- (168)
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NET INCOME $ 126 $ 40
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Earnings Per Share:
Continuing Operations $ .04 $ .07
Discontinued operations -- (.07)
------- -------
Net Earnings $ .04 $ --
------- -------
Average common shares outstanding 2,522 2,459
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HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Six Months Ended
June 30,
----------------------
1997 1996
------- -------
REVENUES $ 9,276 $ 9,877
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COSTS, EXPENSES, AND OTHER:
Operating Expenses 7,037 7,437
Selling, general and
administrative expenses 2,027 2,060
Gain on sale of securities (478) (226)
Equity in net (earnings) losses
of affiliates (55) 8
Increase in underlying equity of
Intersystems, Inc. -- (42)
Interest and debt expense 457 467
Provision for settlement of
litigation -- 275
Interest income (23) (41)
------- -------
TOTAL COSTS, EXPENSES AND OTHER 8,965 9,938
------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS 311 (61)
DISCONTINUED OPERATIONS OF AFFILIATE -- (168)
------- -------
NET INCOME (LOSS) $ 311 $ (229)
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Earnings Per Share:
Continuing operations $ .10 $ (.05)
Discontinued operations -- (.07)
------- -------
Net Earnings (loss) $ .10 $ (.12)
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Average common shares outstanding 2,517 2,450
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HELM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
June 30
----------------
1997 1996
---- ----
Net cash provided by (use in)
operating activities $ 27 $ (69)
----- -----
Cash flows from investing activities:
Decrease in investments
in and due from affiliates -- 635
Proceeds from sales of securities 474 70
Additions to property, plant and
equipment (68) (356)
----- -----
406 349
----- -----
Cash flows from financing activities:
(Decrease) in notes payable
and long-term debt (482) (648)
----- -----
NET (DECREASE) IN CASH (49) (368)
CASH BEGINNING OF PERIOD 101 434
----- -----
CASH END OF PERIOD $ 52 $ 66
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Cash paid during the period for:
Interest $ 260 $ 110
Taxes 6 --
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HELM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
Note 1. Management believes the accompanying unaudited condensed
consolidated financial statements of Helm Resources, Inc. and
subsidiaries (the Company) include all adjustments (consisting of only
normal recurring accruals) required to present fairly the financial
statements for the periods presented. The results of operations for any
interim period are not necessarily indicative of the annual results of
operations.
Note 2. Primary earnings, per share is computed by dividing earnings, after
deducting the preferred stock dividend requirements of $31,600 and
$63,200 in the three month and six month periods, by the average common
shares outstanding during each period.
Note 3. Inventories consist of packaging supplies.
Note 4. Summarized Financial Data (in thousands):
Intersystems, Inc. Three Months Ended
- ------------------
(21% owned in 1997 and 24% in 1996) June 30
1997 1996
-------- -------
REVENUES $ 7,481 $ 5,067
-------- -------
Operating expenses 4,950 3,633
Selling, general and administrative
expenses 1,703 1,330
Interest expense (net) 525 141
-------- -------
TOTAL COST AND EXPENSES 7,178 5,104
-------- -------
INCOME (LOSS) FROM CONTINUING OPERATION $ 303 $ (37)
DISCONTINUED OPERATIONS -- (578)
-------- -------
NET INCOME (LOSS) $ 303 $ (615)
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HELM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
Six Months Ended
June 30, 1997
1997 1996
------- -------
REVENUES $12,965 $ 8,971
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Operating expenses 8,501 6,225
Selling, general and administrative
expenses 3,282 2,586
Settlement of note receivable-sale
of trading business -- 45
Interest expense (net) 859 303
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TOTAL COST AND EXPENSES 12,642 9,159
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INCOME (LOSS) FROM CONTINUING OPERATIONS 323 (188)
DISCONTINUED OPERATIONS -- (730)
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NET INCOME (LOSS) $ 323 $ (918)
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Note 5. Stockholders Equity (in thousands)
Common Stock Additional
Preferred Stock $ .01 par value Paid
Shares Amount Shares Amount in capital
------ ----------- -------- ------ ----------
Balance
Jan. 1, 1997 37 $ -- 2, 501 $25 $19, 852
Preferred
stock received
from officers
in connection
with retirement
of debt (3) -- (150)
Common stock
issued -- -- 20 -- 26
--- ----------- ----------- --- --------
Balance
June 30, 1997 34 $ -- 2, 521 $25 $ 19,727
--- ----------- ----------- --- --------
Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock Total
--------------- --------- ----- -----
Balance
January 1, 1997 $ 315 $(24,639) $(29) $(4,476)
Preferred
stock received
from officers
in connection
with retirement
of debt -- -- -- (150)
Common stock
issued -- -- -- 26
Change in unrealized
gain on available
for sale securities (285) -- -- (285)
Net income -- 311 -- 311
----- --------- ---- -------
Balance
June 30, 1997 $ 31 $ (24,328) $(29) $(4,574)
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Note 6.
On July 31, 1997, the Company's subsidiary, Interpak Holdings,
Inc., sold its Interpak Terminals units, located in Houston, Texas and Edison,
New Jersey to Katoen Natie N.V., a privately-held Belgium corporation, for a
cash purchase price of $2.2 million.
The proforma balance sheet at June 30, 1997 gives effect to the
sale as if it had taken place on that date. The proforma adjustments include the
elimination of Interpak assets of $6,112,000 and liabilities of $6,186,000; the
receipt of cash proceeds of $1,950,000, escrowed cash of $250,000 and a
provision for transaction expenses, including taxes, of $200,000.
For the quarters ended June 30, 1997 and 1996, Interpak had sales
of $4,627,000 and $4,822,000; and for the six months ended June 30, 1997 and
1996, sales of $9,246,000 and $9,807,000.
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Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
Revenue decreased by $260,000 (5%) to $4,632,000 in the 1997 period
compared to $4,892,000 in the 1996 period primarily due to a decrease in the
number of railcars packaged for which Interpak supplies all materials.
Operating expenses decreased $184,000 (5%) to $3,475,000 in the 1997
period $3,657,000 in the 1996 period due to a reduction in warehouse space and
related costs.
Gain on sale of securities of $170, 000 in 1997 represents the gain from
the sale of 16,000 shares of Unapix common stock and 50,000 shares of
Intersystems common stock issued at market to Intersystems in partial payment of
advances payable. In 1996, $106,000 of gain on sale of securities represents
gains on the sale of 65,500 shares on Intersystem common stock. The additional
gain of $79,000 is from the sale of 10,720 shares of Professional Financial
Services, Inc., 4,783 shares of Unapix Entertainment, inc., 14,350 shares of
Intersystems and 86,098 warrants, which expire in 2006, to purchase a like
number of shares of Helm common stock at $1.25 per share, all at market value,
to an officer of the Company in exchange for $91,250 principal amount of 8%
debentures and accrued interest thereon of $16,203.
Discontinued operations of affiliate in 1996 is the Company's share of the
discontinued operations of a subsidiary of Intersystems, Inc. as indicated in
note 4 to the financial statements.
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
Revenue decreased by $601,000 (6%) to $9,276,000 in the 1997 period
compared to $9,877,000 in the 1996 period primarily due to a decrease in
packaging volume at Interpak.
Operating expenses decreased $400,000 (5%) to $7,037,000 in the 1997 period
compared to $7,437,000 in the 1996 period due to the reduction in packaging
volume and a reduction in warehouse space and related costs.
The gains from sales of securities in 1997 of $478,000 included the gain
from the second quarter described above and a gain from the sale of 71,200
shares of Unapix common stock in the first quarter of 1997.
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Gain on sales of securities in 1996 includes the gain described in the
second quarter above and a gain on the sale of 15,900 shares of Intersystem
common stock and 2,000 shares of Unapix common stock in the first quarter of
1996.
The provision for settlement of litigation of $275, 000 in 1996 is for the
settlement of all claims related to a lawsuit against the Company and Interpak.
Impact of Inflation
Inflation has not had a significant impact on the Company's operations.
Liquidity and Capital Resources
Operating activities for the six months ended June 30, 1997 provided cash
of $27,000; $474,000 was provided by proceeds from sale of securities; $482,00
was used for repayments of notes payable and $68,000 was used for purchase of
fixed assets, which resulted in a decrease in cash of $49,000.
At June 30, 1997, the Company had a working capital deficit of $3, 805,
000, which included $2, 881, 000 for Interpak. On July 31, 1997, the Company
received cash of $1,950,000 for the sale of Interpak Terminals with an
additional $250,000 placed in escrow to be released over a three year period. On
a proforma basis, after giving effect to the sale of Interpak Terminals, working
capital amounted to $947,000.
Future liquidity sources for the parent company will consist of
reimbursement of general and administrative expenses from subsidiaries and
affiliates, and possible sales of investment securities. On a longer term basis,
the Company maybe required to seek additional liquidity through debt and equity
offerings of the Company and/or its subsidiaries or affiliates.
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PART II
ITEM 5. OTHER INFORMATION
On July 31, 1997, the Company's subsidiary, Interpak Holdings, Inc., a
Delaware corporation, completed the sale of all of the capital stock of its
subsidiaries, Interpak Terminals, Inc., a Delaware corporation doing business in
New Jersey, and Interpak Terminals, Inc., a Texas corporation doing business in
Houston, to Katoen Natie U.S.A., Inc., a domestic subsidiary of a privately-held
Belgium corporation, for a $2.2 million cash purchase price.
Interpak is a provider of custom packaging and distribution services to
manufacturers of thermoplastic resins. For the years ended December 31, 1996 and
1995, Interpak had revenues of $18,065,361 and $15,066,502, respectively. On a
consolidated basis, Interpak's revenues constitute substantially all of the
revenues reported by Helm, and Interpak's assets constitute a significant
percentage of Helm's assets.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
HELM RESOURCES, INC.
August 18, 1997 /s/ Daniel T. Murphy
---------------------
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
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