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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
Commission File Number 1-8292
HELM RESOURCES, INC.
(Exact name of registrant as specified in charter)
DELAWARE 59-0786066
(State or other jurisdiction (IRS EMPLOYER
incorporation or organization) Identification No.)
537 Steamboat Road
GREENWICH, CONNECTICUT 06830
(Address of principal executive offices)
(Zip Code)
203-629-1400
(Regisrant's telephone number, including area code)
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 such
filing requirements for the past 90 days.
YES X NO
--- ---
As of August 10, 1995 there were 2,160,617 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, 1995
(IN THOUSANDS)
(UNAUDITED)
ASSETS
------
Cash and cash equivalents $ 29
Accounts receivable, net 1,875
Inventories 215
Current portion of promissory notes
receivable from officers 180
Due from affiliates 229
Prepaid expenses 310
------
Total current assets 2,838
Investments in and due from affiliates 2,613
Promissory notes receivable from officers 720
Property, plant and equipment, net 2,681
Other assets 378
------
$9,230
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HELM RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
(IN THOUSANDS)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' (DEFIFIENCY) EQUITY
-------------------------------------------------
Notes payable $ 1,385
Accounts payable 2,514
Promissory notes payable to affiliates 1,377
Accrued interest 155
Accrued expenses 357
Current portion of long-term debt 466
Due for contact settlement 226
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Total current liabilities 6,480
Long-term debt, net of current portion 1,652
Subordinated debentures 3,230
Other liabilities 704
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TOTAL LIABILITIES 12,066
Shareholders' (deficiency) equity (2,836)
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$ 9,230
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HELM RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERTIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
June 30,
1995 1994
-------------------
REVENUES $3,593 $3,677
------ ------
COSTS, EXPENSES AND OTHER:
Operating expenses 2,803 2,829
Selling, general and
administrative expenses 932 955
Equity in net (earnings) losses
of affiliates (13) (10)
Gain on sale of securities (130) -
Increase in underlying equity of
Intersystems, Inc. (40) (228)
Interest and debt expense 269 219
Interest income (20) (34)
------ ------
TOTAL COSTS, EXPENSES AND OTHER 3,801 3,731
------ ------
NET INCOME (LOSS) $ (208) $ (54)
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Net earnings (loss) per share $ (.11) $ (.03)
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Average common shares outstanding 2,160 2,126
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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,
1995 1994
-----------------
REVENUES $7,095 $7,564
------ ------
COSTS, EXPENSES AND OTHER:
Operating expenses 5,541 5,564
Selling, general and
administrative expenses 1,965 1,972
Equity in net (earnings) losses
of affiliates 87 (22)
Gain on sale of securities (130) -
Increase in underlying equity of
Intersystems, Inc. (40) (343)
Interest and debt expense 490 427
Interest income (40) (73)
------ ------
TOTAL COSTS, EXPENSES AND OTHER 7,873 7,525
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INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (778) 39
EXTRAORDINARY ITEM-EXTINGUISHMENT OF DEBT - (85)
------ ------
NET INCOME (LOSS) $ (778) $ (46)
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Earnings Per Share:
Income (loss) before extraordinary item $ (.39) $ .02
Extraordinary item - (.04)
------ ------
Net earnings (loss) $ (.39) $ (.02)
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Average common shares outstanding 2,160 2,125
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HELM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
June 30,
1995 1994
-------------------
Net cash provided by(used in)
operating activities $ (75) $ (77)
------- --------
Cash flows from investing activities:
Decrease (increase) in investments
in and due from affiliates 53 (86)
Additions to property, plant and
equipment (91) (317)
Proceeds from sale of finance
subsidiary portfolio 467 -
Proceeds from sales of securities 70 192
------- --------
499 (211)
------- --------
Cash flows from financing activities:
Increase (decrease)in notes payable
and long-term debt - 387
Repayment of notes payable (510) -
Proceeds from term loan - 1,500
Repayment of term loan (131) (990)
Payment on contract settlement (33) (210)
Repurchase of subordinated debentures
by subsidiary - (400)
Proceeds from promissory note 238 50
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(436) 337
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NET INCREASE (DECREASE) IN CASH (12) 49
CASH BEGINNING OF PERIOD 41 210
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CASH END OF PERIOD $ 29 $ 259
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Cash paid during the period for:
Interest $ 277 $ 270
Taxes - 15
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HELM RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
Note 1. Management believes the accompanying unaudited condensed consolidated
financial statements of Helm Resources, Inc. and subsidiaries (the
"Company") include all adjustments (consisting only of normal
recurring accruals) required to present fairly the financial
statements for the periods presented. The results of operations for
any interm 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 ended June 30, 1995
and, $21,000 and $42,000 in the three month and six month periods
ended June 30, 1994, by the average common shares outstanding during
each period.
Note 3. Inventories consist of finished goods.
Note 4. Summarized Financial Data (in thousands):
Intersystems, Inc. (41% owned) Three Months Ended
------------------------------ June 30,
-------------------
1995 1994
-------- --------
REVENUES $ 3,906 $ 3,809
Cost of sales 2,608 2,561
Selling, general and administrative
expenses 1,073 1,054
Interest expense (net) 193 124
Debt conversion expense - 46
-------- --------
TOTAL COST AND EXPENSES 3,874 3,785
-------- --------
NET INCOME $ 32 $ 24
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Six Months Ended
June 30,
-----------------
1995 1994
---- ----
REVENUES $ 7,159 $ 7,347
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Cost of sales 4,839 4,744
Selling, general and administrative
expenses 2,175 2,228
Interest expense (net) 363 279
Debt conversion expense - 46
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TOTAL COST AND EXPENSES 7,377 7,297
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NET INCOME (LOSS) $ (218) $ 50
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Note 5. In the second quarter of 1995, two officers of the Company purchased
28,749 shares of restricted common stock of Unapix Entertainment, Inc.
and 20,001 shares of restricted common stock of Professional Financial
Services, Inc. at market value from the Company for $140,000. One half
of the purchase price was paid in cash and the other half by surrender
of senior subordinated notes due to them. The purchases were approved
by the Board of Directors and the Company realized a gain of $130,000
on the transactions.
Note 6. Stockholders' Equity (in thousands)
Common Stock Additional
Preferred Stock $.01 par value Paid
Shares Amount Shares Amount in capital
--------- ------ ------ ------ -----------
Balance
Jan. 1, 1995 43 $ - 2,161 $ 22 $ 19,840
Net (loss) - - - - -
--- --- ----- ----- ---------
Balance
June 30, 1995 43 $ - 2,161 $ 22 $ 19,840
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Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock TOTAL
--------------- --------- -------- -----
Balance
Jan. 1, 1995 $ 785 $ (22,907) $ (29) $(2,289)
Net change in
unrealized gain
on available for
sale securities 231 - - 231
Net (loss) - (778) - (778)
---------- --------- ------ -------
Balance
June 30, 1995 $ 1,016 $ (23,685) $ (29) $(2,836)
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Month Periods Ended June 30, 1995 and 1994
Revenue decreased slightly by $84,000 (2%) to $3,593,000 in the 1995 period
compared to $3,677,000 primarily due to lower interest earned by Arcadian
Financial because of the sale of its loan portfolio.
Gain on sale of securities of $130,000 in 1995 represents the gain on sale of
various securities sold to two officers of the Company as described in note 5 to
the consolidated financial statements.
Increase in underlying equity of Intersystems, Inc. was $40,000 in 1995
compared to $228,000 in 1994. A larger amount of Intersystems' convertible
subordinated debentures were converted by the holders into common stock in 1994
than in 1995.
Interest and debt expense increased by $50,000 (22%) to $269,000 in 1995 from
$219,000 in 1994 due to increased borrowings by Interpak Terminals.
Six Month Periods Ended June 30, 1995 and 1994
Revenue decreased by $469,000 (6%) to $7,095,000 in the 1995 period compared
to $7,564,000 in the 1994 period primarily due to a decrease in packaging volume
for Interpak Terminals in the first quarter of 1995.
Equity in earnings of Intersystems, Inc. was a loss of $87,000 in 1995
compared to income of $22,000 in 1994. Intersystems had benefited from a large
overseas sale in the first quarter of 1994.
Gain on sale of securities of $130,000 in 1995 represents the gain on sales
of various securities sold to two officers of the Company as described in note 5
to the consolidated financial statements.
Increase in underlying equity of Intersystems, Inc. was $40,000 in 1995
compared to $343,000 in 1994. A larger amount of Intersystems' convertible
subordinated debentures were converted by the holders into common stock in 1994
than in 1995.
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Interest and debt expense increased by $63,000 (15%) to $490,000 in 1995 from
$427,000 in 1994 due to increased borrowings by Interpak Terminals.
Current Operations
Interpak Terminals, the Company's principal subsidiary had an increase in the
number of rail cars packaged in June and July of 1995 over that of the previous
months of the year. Utilization of warehouse space for storage, which averaged
60% in the first quarter of 1995 and increased to 78% in June 1995, increased to
over 90% in July 1995. If these trends continue there should be significant
improvement in operating results.
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 30,1995 used cash of
$75,000. Proceeds from the sale of a finance subsidiary's loan portfolio
provided cash of $467,000, $70,000 was received from sale of securities, and
$238,000 from the issuance of promissory notes. Repayment of notes payable
related to the finance subsidiary's operations used $510,000, $131,000 was used
for installment payments on the term loan and other net uses required $71,000
which resulted in a decrease in cash of $12,000 for the six months ended June
30,1995.
At June 30, 1995, the Company had a working capital deficit of $3,642,000
which included $1,803,000 for Interpak. The Interpak working capital deficit
includes $1,000,000 under a revolving loan agreement that expires February 1996
but which is expected to be refinanced when it becomes due although there can be
no assurance that the company will be able to refinance or refinance on the same
terms. It is expected that Interpak's operations should be sufficient to
generate cash flow to meet its other obligations as they become due. Included
in the balance of the deficit is approximately $1,901,000 of various accounts
and notes payable to affiliates, as to which the Company is confident of its
ability to fund these amounts as needed from operations and sales of investment
securities.
Future liquidity sources for the parent company will consist of reimbursement
of general and administrative expenses from subsidiaries and affiliates,
available funds from the earnings of Interpak and possible sales of investment
securities. On a longer term basis, the Company may be required to seek
additional liquidity through debt and equity offerings of the Company and/or its
subsidiaries.
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Interpak Holdings, Inc., the Company's principal subsidiary, relies on cash
flow from operations and has a revolving line of credit of $1 million, secured
by accounts receivable, which was fully borrowed at June 30, 1995. The loan
matures in February 1996 with a reduction to $850,000 at August 31, 1995.
Interest is at prime plus 1%.
The Company and its subsidiaries have no significant commitments for capital
expenditures.
SIGNATURES
Prusuant 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 thereunto duly authorized.
Helm Resources, Inc.
August 10, 1995 /s/ Daniel T. Murphy
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Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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27 Financial Data Schedule