UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission File Number __________________
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
(Exact name of registrant as specified in its charter)
OHIO 34-1334199
- ------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
2701 E. CAMELBACK ROAD, SUITE 210
PHOENIX, ARIZONA 85016
- --------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (602) 912-0100
Indicate by checkmark 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15d of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
--- ---
NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK AS
OF NOVEMBER 10, 1998, IS 2,221,263 SHARES.
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION (UNAUDITED) PAGE
--------------------------------- ----
CONSOLIDATED BALANCE SHEETS -
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - 4
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND 1997
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND 1997 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - 6
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 7
CONDITION AND RESULTS OF OPERATIONS
PART II OTHER INFORMATION 8
-----------------
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES 9
2
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
ASSETS 30-SEPT-98 31-DEC-97
---------- ---------
Current assets:
Cash and equivalents, unrestricted $ 1,927 $ 2,815
Accounts and other receivables 273 410
less allowance for doubtful accounts
Notes Receivable 350 0
Current Portion of Receivables from sale of businesses,
net of allowance 269 269
Factored receivables, net of allowance for doubtful accounts 261 261
Inventories 266 313
Prepaid expenses and other current assets 194 227
Real estate held for sale 785 785
-------- --------
Total current assets 4,325 5,080
Deferred income taxes 1,291 1,291
Property and equipment, net 2,338 2,757
Other assets 1,223 1,277
-------- --------
TOTAL ASSETS $ 9,177 $ 10,405
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt 983 1,051
Accounts payable 562 637
Accrued employment costs 473 476
Accrued expenses and other current liabilities 551 666
Factored receivables reserve 61 61
Liabilities subject to compromise 797 797
Foreign Tax Liability 250 250
-------- --------
Total current liabilities 3,677 3,938
Long-term debt, less current portion 66 255
Shareholders' equity:
Preferred Stock, par value $1.00 per share: authorized
100,000 shares; none issued 0 0
Common stock, no par value; authorized 5,000,000 shares;
issued 3,157,332 shares; outstanding 2,226,263 and 2,481,264,
respectively 31,202 31,202
Accumulated deficit (22,023) (21,745)
-------- --------
9,179 9,457
Treasury stock at cost (931,069 and 670,784 shares,
respectively) (3,745) (3,245)
-------- --------
Total shareholders' equity 5,434 6,212
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,177 $ 10,405
======== ========
3
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1998 1997
----------- -----------
Revenues $ 13,664 $ 16,310
Cost of revenues (12,801) (15,390)
Selling, general and administrative expenses (1,291) (1,440)
Interest expense (22) (74)
Other income (expenses), net 85 215
Gain (loss) on sale of assets (48) (42)
----------- -----------
Income (loss) from continuing operations before
income taxes (413) (421)
Provision for income taxes (0) (1)
----------- -----------
Income (loss) from continuing operations (413) (422)
Income (loss) from discontinued operations 135 128
----------- -----------
Net income (loss) $ (278) $ (294)
=========== ===========
Net income (loss) per common share
Continuing operations $ (0.18) $ (0.17)
Discontinued operations $ 0.06 $ 0.05
----------- -----------
Net income (loss) per common share $ (0.12) $ (0.12)
=========== ===========
Average number of shares outstanding 2,339,416 2,481,264
=========== ===========
Certain reclassifications have been made to the consolidated statement of
operations for the nine-month period ended September 1997 to conform to the
consolidated financial statement classifications for 1998.
4
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30
-------------------------------
1998 1997
----------- -----------
Revenues $ 4,209 $ 5,103
Cost of revenues $ (4,188) (4,901)
Selling, general and administrative expenses $ (474) (354)
Interest expense $ (5) (31)
Other income (expenses), net $ 18 125
Gain (loss) on sale of assets $ (15) (42)
----------- -----------
Income (loss) from continuing operations before
income taxes (455) (100)
Provision for income taxes 0 0
----------- -----------
Income (loss) from continuing operations (455) (100)
Income (loss) from discontinued operations $ 25 (40)
----------- -----------
Net income (loss) $ (430) $ (140)
=========== ===========
Net income (loss) per common share
Continuing operations $ (0.19) $ (0.04)
Discontinued operations $ 0.01 $ (0.02)
----------- -----------
Net income (loss) per common share $ (0.18) $ (0.06)
=========== ===========
Average number of shares outstanding 2,339,416 2,481,264
=========== ===========
Certain reclassifications have been made to the consolidated statement of
operations for the three-month period ended September 1997 to conform to the
consolidated financial statement classifications for 1998.
6
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1998 1997
---- ----
Net cash provided by (used in) operating activities 387 339
Cash flows from investing activities:
Decrease (increase) in restricted cash 0 409
Decrease (increase) in receivables from sales of businesses, net 0 1,003
Purchase of property and equipment (168) (402)
Issuance of Notes Receivable (350) 0
------ ------
Net cash provided by (used in) investing activities (518) 1,010
Cash flows from financing activities:
Repayment of borrowings (257) (377)
(Increase) decrease in treasury stock (500) 0
------ ------
Net cash provided by (used in) financing activities (757) (377)
Net increase (decrease) in cash and cash equivalents (888) 972
Cash and cash equivalents at beginning of period 2,815 1,136
------ ------
Cash and cash equivalents at end of period 1,927 2,108
====== ======
Certain reclassifications have been made to the consolidated statement of cash
flows for the nine-month period ended September 1997 to conform to the
consolidated financial statement classifications for 1998.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
During 1997, the Company sold two of its operating companies, Funding and
Development. As a result, there has been a reclassification of income and
expenses related to these businesses as set forth in the Company's Report on
Form 10-Q for the period ending September 30, 1997. Management's Discussion and
Analysis shall be limited to continuing operations.
The Company currently owns and operates five restaurants in California and one
in Arizona. It also owns two Carlos Murphy's Restaurants in San Diego, CA that
were leased to an unrelated third party in the first quarter of 1998.
In August, the party leasing the two Carlos Murphy's filed bankruptcy. In early
September, we took over the La Mesa store. The lease expired on the La Jolla
store.
Revenues for the Company for the third quarter and nine month period were down
versus last year. The decrease in revenue is attributable to the leasing of the
two Carlos Murphy's Restaurants, and declining sales in our three Southern
California stores.
The larger loss from continuing operations in the third quarter can be
attributed to the three Southern California stores and an extraordinary charge
to SG & A for 1998 of approximately $100,000 with discontinued expenses for our
Las Vegas store amounting to $70,000 versus an extraordinary credit to SG & A in
1997 of $100,000 as a reduction in an accrual for Workman's Compensation.
Income from discontinued operations is the result of the collection of a Funding
Account that had been fully reserved.
LIQUIDITY AND CAPITAL RESOURCES
In October, the company purchased Steamers Genuine Seafood Restaurant in
Phoenix. This is an upscale restaurant like our Buster's Restaurant in
Scottsdale. We feel both concepts can be expanded into other markets.
We have an offer on our one remaining Carlos Murphy's in San Diego. The proceeds
from this sale will be used to convert the restaurant concept in two of our
Southern California Bobby McGee's.
The Company continues to look for new locations or other restaurants to
purchase. Management believes, but there can be no assurance, that it will be
able to finance any further expansion through cash reserves and leasing of
equipment.
7
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None
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
None
8
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.
PERFORMANCE INDUSTRIES, INC.
AND SUBSIDIARIES
DATED: NOVEMBER 10, 1998 /s/ JOE HRUDKA
-----------------------------------------
JOE HRUDKA
CHAIRMAN OF THE BOARD
(PRINCIPAL EXECUTIVE OFFICER)
/s/ ED FOCHTMAN
-----------------------------------------
ED FOCHTMAN
CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING OFFICER)