1
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 September 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)
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 November 10, 1995 there were 2,368,768 shares of the Company's common
stock, par value $.01 per share, outstanding.
PAGE 1 OF 13
2
PART I - FINANCIAL INFORMATION
HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(IN THOUSANDS)
(UNAUDITED)
ASSETS
- ------
Cash and cash equivalents $ 25
Accounts receivable, net 2,098
Inventories 213
Current portion of promissory notes
receivable from officers 180
Due from affiliates 286
Prepaid expenses 267
------
Total current assets 3,069
Investments in and due from affiliates 2,644
Promissory notes receivable from officers 720
Property, plant and equipment, net 2,563
Other assets 396
------
$9,392
======
PAGE 2 OF 13
3
HELM RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(IN THOUSANDS)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' (DEFIFIENCY)
- ------------------------------------------
Notes payable $ 1,175
Accounts payable and accrued expenses 3,304
Promissory notes payable to affiliates 1,275
Due to affiliates 143
Current portion of long-term debt 478
Due for contact settlement 226
--------
Total current liabilities 6,601
Long-term debt, net of current portion 1,576
Subordinated debentures 3,242
Other liabilities 612
--------
TOTAL LIABILITIES 12,031
Shareholders' (deficiency) (2,639)
--------
$ 9,392
========
PAGE 3 OF 13
4
HELM RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
September 30,
1995 1994
REVENUES $ 4,088 $ 3,503
------- -------
COSTS, EXPENSES AND OTHER:
Operating expenses 3,082 2,906
Selling, general and
administrative expenses 948 1,138
Gain on sale of securities (163) --
Equity in net (earnings) losses
of Intersystems, Inc. (21) 99
Increase in underlying equity of
Intersystems, Inc. -- (28)
Interest and debt expense,net 237 182
------- -------
TOTAL COSTS, EXPENSES AND OTHER 4,083 4,297
------- -------
NET INCOME (LOSS) $ 5 $ (794)
======= =======
Net earnings (loss) per share $ (.01) $ (.38)
======= =======
Average common shares outstanding 2,227 2,161
======= =======
PAGE 4 OF 13
5
HELM RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
-------- --------
REVENUES $ 11,183 $ 11,238
-------- --------
COSTS, EXPENSES AND OTHER:
Operating expenses 8,623 8,639
Selling, general and
administrative expenses 2,913 3,112
Gain on sale of securities (293) --
Equity in net (earnings) losses
of intersystems, Inc. 66 77
Increase in underlying equity of
Intersystems, Inc. (40) (371)
Interest and debt expense,net 687 536
-------- --------
TOTAL COSTS, EXPENSES AND OTHER 11,956 11,993
-------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (773) (755)
EXTRAORDINARY ITEM-EXTINGUISHMENT OF DEBT -- (85)
-------- --------
NET INCOME (LOSS) $ (773) $ (840)
-------- ========
Earnings Per Share:
Income (loss) before extraordinary item $ (.40) $ (.38)
Extraordinary item -- (.04)
-------- --------
Net earnings (loss) $ (.40) $ (.42)
======== ========
Average common shares outstanding 2,183 2,157
======== ========
PAGE 5 OF 13
6
HELM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
----- -------
Net cash provided by(used in)
operating activities $ (76) $ (497)
----- -------
Cash flows from investing activities:
Decrease(increase) in investments
in and due from affiliates 14 (148)
Advances from affiliates 125 --
Additions to property, plant and
equipment (143) (371)
Proceeds from sale of finance
subsidiary portfolio 467
Proceeds from sales of securities 172 192
----- -------
635 (327)
----- -------
Cash flows from financing activities:
Increase (decrease)in notes payable
and long-term debt -- 759
Repayment of notes payable (660) --
Proceeds from term loan -- 1,500
Repayment of term loan (200) (990)
Payment on contract settlement (33) (337)
Repurchase of subordinated debentures
by subsidiary -- (400)
Proceeds from promissory note 318 190
----- -------
(575) 722
----- -------
NET INCREASE (DECREASE) IN CASH (16) (102)
CASH BEGINNING OF PERIOD 41 210
----- -------
CASH END OF PERIOD $ 25 $ 108
===== =======
Cash paid during the period for:
Interest $ 344 $ 400
Taxes -- 15
PAGE 6 OF 13
7
HELM RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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
$94,800 in the three month and nine month periods ended September 30,
1995 and, $31,600 and $84,200 in the three month and nine month
periods ended September 30, 1994, by the average common shares
outstanding during each period.
Note 3. Inventories consist of packaging materials and supplies.
Note 4. Summarized Financial Data (in thousands):
Intersystems, Inc. (37% owned) Three Months Ended
- ------------------------------ September 30,
--------------------------
1995 1994
------ -------
REVENUES $4,747 $ 4,255
------ -------
NET INCOME (LOSS) $ 59 $ (240)
====== =======
PAGE 7 OF 13
8
Nine Months Ended
September 30,
-----------------------
1995 1994
---- ----
REVENUES $ 11,906 $ 11,602
-------- --------
NET INCOME (LOSS) $ (159) $ (190)
======== ========
Note 5. During the nine months ended September 30, 1995, two officers of the
Company purchased 44,282 shares of restricted common stock of Unapix
Entertainment, Inc.; 74,366 shares of restricted common stock of
Professional Financial Services, Inc. and 60,405 shares of restricted
common stock of Intersystems, Inc. at market value from the Company for
$344,000. 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 from the transactions of $163,000 for the quarter ended
September 30 and $293,000 for the nine months ended September 30, 1995.
Note 6. Stockholders' (Deficiency) (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
Common stock
issued, primarily
for accrued
interest -- -- 198 2 171
Net change in
unrealized gain
on available for
sale securities -- -- -- -- --
Net (loss) -- -- -- -- --
-- ----- ----- ------ -------
Balance
Sept.30, 1995 43 $ -- 2,359 $ 24 $20,011
== ===== ===== ====== =======
PAGE 8 OF 13
9
Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock TOTAL
---------------- --------- -------- --------
Balance
Jan. 1, 1995 $ 785 $(22,907) $ (29) $ (2,289)
Common stock
issued, primarily
for accured
interest -- -- -- 173
Net change in
unrealized gain
on available for
sale securities 250 -- -- 250
Net (loss) -- (773) -- (773)
-------- -------- ------ --------
Balance
Sept. 30, 1995 $ 1,035 $(23,680) $ (29) $ (2,639)
======== ======== ====== ========
PAGE 9 OF 13
10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Month Periods Ended September 30, 1995 and 1994
Revenue increased by $585,000 (17%) to $4,088,000 in the 1995 period
compared to $3,503,000 in 1994 primarily due to an increase in packaging and
storage volume for Interpak Terminals.
Operating expenses increased $176,000 (6%) to $3,082,000 in 1995 from
$2,906,000 in 1994 due to increased labor cost to accomodate the increase in
volume.
Selling, general and administative expenses decreased $160,000 (14%) in 1995
to $982,000 compared to $1,142,000 in 1994 of which $85,000 was due to
reductions in personnel at Interpak Terminals and $60,000 was due to reductions
at Arcadian Financial following the sale of its loan portfolio in the second
quarter.
Gain on sale of securities of $163,000 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.
Equity in earnings of Intersystems, Inc. resulted in income of $21,000 in
1995 compared to a loss of $99,000. The 1994 period had been adversely impacted
by a special non recurring charge for damage to a customer's conveying equipment
resulting from a harmonic vibration.
Interest and debt expense increased by $55,000 (30%) to $237,000 in 1995
from $182,000 in 1994 due to increased borrowings by Interpak Terminals.
Nine Month Periods Ended September 30, 1995 and 1994
Revenue of $11,183,000 in 1995 was relatively unchanged from $11,238,000 in
the 1994 period.
Selling, general and administrative expenses decreased by $199,000 (6%)
primarily due to a reduction of $88,000 in Arcadian Financial's expenses
following the sale of its loan portfolio and $80,000 of income attributable to
Interpak Terminal's share of a real estate joint venture.
Gain on sales of securities of $293,000 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.
PAGE 10 of 13
11
Increase in underlying equity of Intersystems, Inc. was $40,000 in 1995
compared to $371,000 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 $151,000 (28%) to $687,000 in 1995
from $536,000 in 1994 due to increased borrowings by Interpak Terminals.
Impact of Inflation
Inflation has not had a significant impact on the Company's operations.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities for the nine months ended September 30,1995 used cash
of $76,000. Proceeds from the sale of a finance subsidiary's loan portfolio
provided cash of $467,000, $125,000 was received from an affiliate, $172,000 was
received from sale of securities, and $318,000 from the issuance of promissory
notes. Repayment of notes payable related to the finance subsidiary's operations
used $660,000, $200,000 was used for installment payments on the term loan,
$143,000 for additions to equipment and other net uses required, $19,000 which
resulted in a decrease in cash of $16,000 for the six months ended June 30,1995.
At September 30, 1995, the Company had a working capital deficit of
$3,532,000 which included $1,785,000 for Interpak. The Interpak working capital
deficit includes $850,000 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 $1,850,000 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.
PAGE 11 OF 13
12
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 November 30, 1995. The loan
matures in February 1996 and the interest rate is prime plus 1%.
The Company and its subsidiaries have no significant commitments for capital
expenditures.
PART II
Item 4. Submission of Matters to a Vote of Security-Holders
On July 11, 1995, the Company held its 1995 Annual Meeting of Shareholders,
at which the shareholders elected the following individuals to serve as
directors until the next annual meeting of shareholders and until their
successors are elected: Herbert M. Pearlman, David S. Lawi, Joseph J. Farley,
Walter M. Craig, Jr., William Lerner and John E. Stieglitz.
The holders of record of the respective number of shares at common stock of
the Company set forth below voted for, or withheld authority for, the election
of the following individuals as members of the board of directors:
No. of No. of Votes
NAME Votes For Withheld
- ---- --------- ------------
Herbert M. Pearlman 1,668,676 76,029
David S. Lawi 1,668,723 75,982
John E. Stieglitz 1,668,723 75,982
Walter M. Craig, Jr. 1,668,751 75,954
William Lerner 1,668,784 75,920
Joseph J. Farley 1,568,756 75,948
PAGE 12 OF 13
13
SIGNATURE
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 thereunto duly authorized.
Helm Resources, Inc.
November 10, 1995 /s/Daniel T. Murphy
------------------------
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
PAGE 13 of 13
14
INDEX TO EXHIBITS
Ex-27.1 Financial Data Schedule