U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/x/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the 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 1-6471
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PGI INCORPORATED
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(Exact name of small business issuer as specified in its charter)
FLORIDA 59-0867335
------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
212 SOUTH CENTRAL, SUITE 100; ST. LOUIS, MISSOURI 63105
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(Address of principal executive offices)
(314) 512-8650
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(Issuer's telephone number)
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(Former Name, Former Address and Former Fiscal Year, if changed since
last report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 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 .
--- ---
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As of
November 13, 1998 there were 5,317,758 shares of the Registrant's
common stock outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes No X
--- ---
PGI INCORPORATED AND SUBSIDIARIES
FORM 10-QSB
For the Quarter Ended September 30, 1998
Table of Contents
Form 10-QSB
Page No.
-----------
PART I Financial Information
Item 1 Financial Statements
Consolidated Statements of Financial Position
September 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1998 and 1997 5
Notes to Consolidated Financial Statements
for Form 10-QSB 6-11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-15
PART II Other Information
Item 1 Legal Proceedings 16
Item 2 Changes in Securities 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
2
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information
Item 1 Financial Statements
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in thousands)
Sept. 30, Dec. 31,
1998 1997
---- ----
(unaudited)
ASSETS
Cash and Cash Equivalents $ 181 $ 2
Restricted Cash 1,936 1,173
Receivables on real estate sales - net 98 156
Other receivables 55 28
Land and improvement inventories 889 8,992
Property and equipment - net 1 18
Other assets 158 759
-------- --------
$ 3,318 $ 11,128
======== ========
LIABILITIES
Accounts payable $ 12 $ 285
Other liabilities 1,305 1,727
Accrued interest:
Primary lender 11 3,461
Debentures 9,333 8,238
Other 1,625 1,629
Credit agreements -
Primary lender 1,000 7,344
Notes and mortgages payable 1,198 3,750
Convertible subordinated
debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
-------- --------
$ 25,043 $ 36,993
-------- --------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; 2,000,000 Class A
cumulative convertible shares issued and
outstanding; (liquidation preference
of $4.00 per share or $8,000,000) 2,000 2,000
Common stock, par value $.10 per share;
authorized 25,000,000 shares; 5,317,758
shares issued and outstanding 532 532
Paid in capital 13,498 13,498
Accumulated deficit (37,755) (41,895)
-------- --------
(21,725) (25,865)
-------- --------
$ 3,318 $ 11,128
======== ========
See accompanying notes to consolidated financial statements for Form 10-QSB.
3
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
Sept.30, Sept.30, Sept.30, Sept.30,
1998 1997 1998 1997
-------- -------- -------- --------
REVENUES
Real Estate Sales 28 - 13,475 -
Interest income 2 3 9 23
Other income 140 137 1,461 412
----- ------ ------- -------
170 140 14,945 435
----- ------ ------- -------
COSTS AND EXPENSES
Costs of Real Estate Sales 5 - 8,432 -
Selling expenses 5 2 20 6
General & administrative expenses 52 257 395 620
Interest 438 682 1,703 2,008
Other expenses 82 91 255 316
----- ------ ------- -------
582 1,032 10,805 2,950
----- ------ ------- -------
NET INCOME (LOSS)BEFORE INCOME TAX $(412) $ (892) 4,140 (2,515)
CREDIT FOR INCOME TAX 104 - - -
----- ------ ------- -------
NET INCOME (LOSS) $(308) $ (892) $ 4,140 $(2,515)
===== ====== ======= =======
NET INCOME (LOSS) PER SHARE <F*>
Primary and fully diluted $(.09) $ (.20) $ .69 $ (.69)
===== ====== ======= =======
<FN>
<F*> Considers the effect of cumulative preferred dividends in
arrears for the three and nine months ended September 30, 1998
and 1997.
See accompanying notes to consolidated financial statements for Form 10-QSB.
4
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
Nine Months Ended
-----------------
Sept.30, Sept.30,
1998 1997
-------- --------
Net cash provided by (used in) operating activities $ 7,686 $ (59)
------- -----
Cash flows from investing activities:
Purchase of property and equipment - (2)
------- -----
Net cash used in investing activities - (2)
------- -----
Cash flows from financing activities:
Proceeds from borrowings 31 172
------- -----
Principal payments on debt (7,538) (118)
------- -----
Net cash provided by (used in) financial activities (7,507) 54
------- -----
Net increase (decrease) in cash 179 (7)
Cash at beginning of period 2 12
------- -----
Cash at end of period $ 181 $ 5
======= =====
See accompanying notes to consolidated financial statements for Form 10-QSB.
5
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB
and therefore do not include all disclosures necessary for fair
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
The Company's independent accountants included an explanatory
paragraph regarding the Company's ability to continue as a going
concern in their opinion on the Company's consolidated financial
statements for the year ended December 31, 1997.
The Company remains in default under the indentures governing its
convertible unsecured subordinated debentures and in default of
its primary debt obligations. A significant payment on the primary
debt obligation occurred with the sale of the undeveloped land in
Citrus County upon closing May 13, 1998. (See Management's
Discussion and Analysis of Financial Condition and Results of
Operations and Notes 10 and 11 to the Company's consolidated
financial statements for the year ended December 31, 1997, as
contained in the Company's Annual Report on Form 10-KSB).
All adjustments (consisting of only normal recurring accruals)
necessary for fair presentation of financial position, results of
operations and cash flows have been made. The results for the
three and nine months ended September 30, 1998 are not necessarily
indicative of operations to be expected for the fiscal year ending
December 31, 1998 or any other interim period.
(2) Recognition of Real Estate Sales
The Company has adopted the installment method of profit
recognition for all homesite sales effective January 1, 1990 and
thereafter. For sales consummated prior to January 1, 1990, the
Company recognized profit under the full accrual or
percentage-of-completion methods as appropriate. The full accrual
method recognizes the entire profit when minimum down payments and
other requirements are met. Under the percentage-of-completion
method, profit is recognized by the relationship of costs incurred
to total estimated costs to be incurred. The installment method
recognizes gross profit, as down payments and principal payments on
contracts are received.
(3) Per Share Data
Primary per share amounts are computed by dividing net income
(loss), after considering cumulative dividends in arrears on the
Company's preferred stock, by the average number of common shares
and common stock equivalents outstanding. For this purpose, the
Company's cumulative convertible preferred stock, convertible
subordinated debentures and collateralized convertible debentures
are not deemed to be common stock equivalents, but outstanding
vested stock options are considered as such. However, under the
treasury stock method, no vested stock options were assumed to be
exercised, and therefore no common stock equivalents existed, for
the calculation of primary per share amounts for the nine months
ended September 30, 1998 and 1997. The average number of common
shares outstanding for the nine months ended September 30, 1998
and 1997 was 5,317,758 and 4,335,973, respectively. On May 15,
1997, preferred dividends accrued through April 25, 1995 were paid
in the form of 2,000,203 shares of common stock.
6
PGI INCORPORATED AND SUBSIDIARIES
Fully diluted per share amounts are computed by dividing net
income (loss) by the average number of common shares outstanding,
after adjusting both for the estimated effects of the assumed
exercise of stock options and the assumed conversion of all
cumulative convertible preferred stock, convertible subordinated
debentures and collateralized convertible debentures into shares
of common stock. For the nine months ended September 30, 1998 and
1997, no stock options were assumed to be exercised and the effect
of the assumed exercise of stock options and the assumed
conversion of all cumulative convertible preferred stock,
convertible subordinated debentures and collateralized convertible
debentures would have been anti-dilutive.
The following is a summary of the calculations used in computing
basic and diluted income(loss) per share for the three and nine
months ended September 30, 1998 and 1997:
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
--------- --------- --------- ---------
Net Income (Loss) (308,000) (892,000) 4,140,000 (2,515,000)
Preferred Dividends (160,000) (160,000) (480,000) (480,000)
--------- ---------- --------- ----------
Income (Loss) Avail-
able to Common
Shareholders (468,000) (1,052,000) 3,660,000 (2,995,000)
========= ========== ========= ==========
Weighted Amount of
Shares Outstanding 5,317,758 5,317,758 5,317,758 4,335,973
Basic and Diluted
Income (Loss) Per
Share (.09) (.20) .69 (.69)
7
PGI INCORPORATED AND SUBSIDIARIES
(4) Statement of Cash Flows
The Financial Accounting Standards Board issued Statement No. 95,
"Statement of Cash Flows", which requires a statement of cash
flows as part of a full set of financial statements. For
quarterly reporting purposes, the Company has elected to condense
the reporting of its net cash flows. Interest paid for the nine
months ended September 30, 1998 and 1997 was $231,000 and
$121,000, respectively.
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
(5) Restricted Cash
Restricted cash included cash pledged to agencies in various
states and local Florida governmental units related to land
development and environmental matters, real estate taxes in
litigation, collateral for primary lender debt, the servicing of
sold receivables and, as a result of sales agreements and Company
policies, customer payments and deposits related to homesite and
housing contracts.
(6) Receivables on Real Estate Sales
Net receivables on real estate sales consisted of:
Sept. 30, December 31,
1998 1997
--------- ------------
($ in thousands)
Contracts receivable on homesite sales $ 760 $ 816
Other 83 89
----- -----
843 905
Less: Allowance for cancellations (706) (706)
Unamortized valuation discount (39) (43)
----- -----
$ 98 $ 156
===== =====
(7) Land and Improvements
Land and improvement inventories consisted of:
Sept. 30, Dec. 31,
1998 1997
--------- --------
($ in thousands)
Unimproved land $629 $8,724
Fully improved land 260 268
---- ------
$889 $8,992
==== ======
8
PGI INCORPORATED AND SUBSIDIARIES
(8) Property and Equipment
Property and equipment consisted of:
Sept. 30, Dec. 31,
1998 1997
--------- --------
($ in thousands)
Furniture, fixtures and other equipment $ 93 $ 212
Less: Accumulated depreciation (92) (194)
---- -----
$ 1 $ 18
==== =====
(9) Other Assets
Other assets consisted of:
Sept. 30, Dec. 31,
1998 1997
--------- --------
($ in thousands)
Guaranteed future connections, net $ - $621
Deposit with Trustee of 6-1/2% debentures 137 131
Other 21 7
---- ----
$158 $759
==== ====
(10) Other Liabilities
Other Liabilities consisted of:
Sept. 30, Dec. 31,
1998 1997
--------- --------
($ in thousands)
Accrued property taxes
- current $ 35 $ 230
- delinquent 679 745
Other accrued expenses 322 342
Deposits, advances and escrows 215 336
Estimated recourse liability for
receivables sold 38 58
Other 16 16
------ ------
$1,305 $1,727
====== ======
(11) Primary Lender Credit Agreements, Notes and Mortgages Payable and
Convertible Subordinated Debentures Payable
Credit agreements with the Company's primary lender and notes and
mortgages payable consisted of the following:
Sept. 30, Dec. 31,
1998 1997
--------- --------
($ in thousands)
Credit agreements - primary lender:
(maturing July 8, 1997, bearing interest
at prime plus 5%) $ 1,000 $ 7,344
Notes and mortgages payable - certain
balances at December 31, 1997 were
paid in the second quarter of 1998.
The balance at September 30, 1998 primarily
consists of $1,176,000 bearing interest
at prime plus 2%. 1,198 3,750
------- -------
9
PGI INCORPORATED AND SUBSIDIARIES
Convertible subordinated debentures payable:
At 6-1/2% interest; due June 1991; convertible
into shares of common stock at
$18.00 per share $ 1,034 $ 1,034
At 6% interest; due May 1, 1992; convertible
into shares of common stock at
$19.50 per share 8,025 8,025
------- -------
$ 9,059 $ 9,059
------- -------
Collateralized convertible debentures payable:
At 14% interest; due July 8, 1997, convertible
into share of common stock at
$1.72 per share 1,500 1,500
------- -------
$12,757 $21,653
======= =======
(12) Real Estate Sales and Other Income
Real Estate Sales and Cost of Sales consisted of:
Three Months Ended Nine Months Ended
---------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
Sales:
Homesite Sales $28 - $ 28 $ -
Acreage Sales - 13,447 -
--- --- ------- ---
28 - $13,475 $ -
=== === ======= ===
Cost of Sales:
Homesite Sales $ 5 5
Acreage Sales - $ - 8,427 $ -
--- --- ------- ---
$ 5 $ 8,432
=== === ======= ===
Other income consisted of:
Three Months Ended Nine Months Ended
---------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
Commission income $ 80 $ 91 $ 247 $292
Reduction of previously accrued
property taxes - - 248 -
Debt release settlement - - 870 -
Other income 60 46 96 120
---- ---- ------ ----
$140 $137 $1,461 $412
==== ==== ====== ====
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $83,000 and $145,000 at September
30, 1998 and December 31, 1997, respectively. Based on its
collection experience with such receivables, the Company
maintained allowances at September 30, 1998 and December 31, 1997,
classified in other liabilities, of $38,000 and $58,000
respectively for the recourse provisions related to all
receivables sold.
10
PGI INCORPORATED AND SUBSIDIARIES
(14) Income Taxes
Effective January 1, 1993 the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," which requires a change from the deferred method to
the asset and liability method of accounting for income taxes.
At December 31, 1997, the Company had an operating loss
carryforward of approximately $37,000,000 to reduce future taxable
income. These operating losses expire at various dates through
2,012.
The following summarizes the temporary differences of the Company
at December 31, 1997 at the current statutory rate:
Deferred tax asset:
Net operating loss carryforward $ 13,690,000
Adjustments to reduce land to
net realizable value 12,000
Expenses capitalized under IRC 263(a) 56,000
ITC carryforward 215,000
Valuation allowance (11,510,000)
------------
2,463,000
------------
Deferred tax liability
Basis difference of land and
improvement inventories 2,453,000
Excess tax over book depreciation 10,000
------------
2,463,000
------------
Net deferred tax asset $ 0
============
11
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Preliminary Note
Readers should understand as they read this report that the
Company is not presently pursuing its core business. The reason the
Company is no longer pursuing its core business is set forth with more
particularity below.
During the fiscal year ended December 31, 1996, the Company's
business focus and emphasis changed substantially as it concentrated its
sales and marketing efforts almost exclusively on the disposition in
bulk of its undeveloped, platted, residential real estate. This change
was prompted by it's continuing financial difficulties due to the
principal and interest owed on its debt and managements' conclusion that
a bulk sale was the best way to reduce the Company's debt service
obligations. The sale of this undeveloped land occurred on May 13, 1998,
its remaining inventory now consists of undeveloped commercial property.
The Company intends to make a decision as to whether it will pursue the
development and sale of the commercial property in accordance with its
traditional core business plans or whether it will attempt to sell such
property in bulk. That decision will depend, in part, on whether the
Company believes it can generate more revenue by developing and selling
individual commercial properties or by selling in bulk.
On January 31, 1997, Sugarmill Woods, Inc., a Florida corporation
and a wholly-owned subsidiary of the Company, and Love-PGI Partners,
L.P. ("L-PGI") (collectively as "Seller"), entered into an Option
Agreement For Sale and Purchase ("Sale Agreement") with The Nature
Conservancy, Inc., an unrelated nonprofit District of Columbia
corporation ("Purchaser"), for the sale of and purchase of approximately
5,240 acres of certain undeveloped real estate located in Citrus County
and Hernando County, Florida ("Property"). Approximately 4,890 acres of
the Property was owned by the Company, and 350 acres was owned by L-PGI.
Shareholder approval of the sale of the property was obtained at the
Annual Meeting of the Company on December 22, 1997. The Company
consummated the transaction on May 13, 1998.
Results of Operations
Revenues for the first nine months of 1998 increased by $14.5
million to $14.9 million from $435,000 for the comparable 1997 period
due to the sale of approximately 4,890 acres on May 13, 1998. A net
gain of $4.1 million was realized for the first nine months of 1998
compared to a net loss of $2,515,000 for the first nine months of 1997.
After consideration of cumulative preferred dividends in arrears,
totaling $480,000 for each of the nine months ended September 30, 1998
and 1997 ($.15 per share of common stock), net income (loss) per share
of $.69 and $(.69), respectively, were reported for the nine month
periods ended September 30, 1998 and 1997.
12
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned
to PGIP L.L.C., a Missouri limited liability company ("PGIP") all of
First Union's right, title and interest in and to the documents (the
"Loan Documents") evidencing and securing its primary credit agreements
with the Company and the Company's subsidiaries, Sugarmill Woods, Inc.,
Burnt Store Marina, Inc. and Gulf Coast Credit Corporation
(collectively, the "Borrowers"), which credit agreements are in default
and the maturity of the indebtedness secured thereby has been
accelerated.
The sale of acreage on May 13, 1998 resulted in a payment of first
mortgage principal and interest to PGIP of $10,362,193. At closing, the
Company and PGIP executed an escrow agreement (the "Escrow Agreement").
The Escrow Agreement provides that $1,000,000 of the PGI Purchase Price
would not be used to repay the First Mortgage Indebtedness, so that
$1,000,000 (the "Remaining Indebtedness") of the First Mortgage
Indebtedness would remain in place. The $1,000,000 was placed in escrow
with PGIP as the escrow agent. Pursuant to the Escrow Agreement, the
escrowed funds are to be paid out (i) as requested by PGI and agreed to
by PGIP, or (ii) as deemed necessary and appropriate by PGIP, in either
case, to protect PGIP's interest in the Retained Acreage (as hereinafter
defined), including PGIP's right to receive principal and interest under
the First Mortgage securing the Remaining Indebtedness, or (iii) to PGIP
to pay any other obligations owed to PGIP by the Company. The real
estate owned by the Company which was not sold to the Purchaser
(approximately 370 acres) (the "Retained Acreage") remains subject to
the First Mortgage.
Real Estate Sales and Cost of Sales consisted of:
Three Months Ended Nine Months Ended
------------------------ ------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
Sales:
Homesite Sales $28 - $ 28 $ -
Acreage Sales - 13,447 -
--- ---- ------- ----
28 - $13,475 $ -
=== ==== ======= ====
Cost of Sales:
Homesite Sales $ 5 5
Acreage Sales - $ - 8,427 $ -
--- ---- ------- ----
$ 5 $ 8,432
=== ==== ======= ====
Other income consisted of:
Three Months Ended Nine Months Ended
------------------------ ------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
Commission income $ 80 $ 91 $ 247 $292
Reduction of previously
accrued property taxes - - 248 -
Debt release settlement - - 870 -
Other income 60 46 96 120
---- ---- ------ ----
$140 $137 $1,461 $412
==== ==== ====== ====
13
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The stock of Sugarmill Woods Sales, Inc., a subsidiary of
Sugarmill Woods Inc. was sold September 15, 1998 to the president of
Sugarmill Woods Sales, Inc. for a price of $25,000. Assets at the time
of sale included the personal property, escrows and rental contracts of
the entity. A promissory note for $24,000 was taken back by Sugarmill
Woods, Inc. secured by a lien on the stock being purchased and evidenced
by a security agreement. The company realized a gain of $18,000 on this
transaction.
The Company suspended the construction of homes and sale of homes
and homesites in 1994. Starting in January 1996, the Company began
concentrating on disposing in bulk of its undeveloped, platted,
residential real estate in order to decrease its debt obligations. The
Company envisioned selling off such property and retaining its
undeveloped commercial real estate for future development or bulk sales
depending on the profitability. The Company's management closed on the
sale of its undeveloped land in Citrus County on May 13, 1998.
Effective January 1, 1990 the Company implemented the installment
method of homesite sales reporting in accordance with Statement of
Financial Accounting Standard No. 66 "Accounting for Sales of Real
Estate" (see Item I - Note 2 - Recognition of Real Estate Sales). This
method will be utilized for all installment sales regardless of the down
payment percentage. As a result of the Secured Lender Transaction
non-recourse sale of receivables, all previously deferred profits were
recognized during 1992.
Cash provided by operating activities for the nine months ended
Septmeber 30, 1998 was $7.7 million compared to cash used of $59,000 for
the comparable 1997 period due to the bulk acreage sale in the second
quarter of 1998. During the first nine months of 1998, financing
activities used $7.5 million in cash flow with $31,000 in proceeds from
borrowings. Net cash used in financing activities was primary lender
for debt repayment as well as repayments of other notes and mortgages
payable.
Analysis of Financial Condition
Assets totaled $3.32 million at September 30, 1998 compared to
$11.13 million at December 31, 1997, reflecting the following changes:
Sept. 30, Dec. 31, Increase
1998 1997 (Decrease)
--------- -------- ----------
($ in thousands)
Cash and Cash Equivalents $ 181 $ 2 $ 179
Restricted Cash 1,936 1,173 763
Receivables 153 184 (31)
Land and improvement inventories 889 8,992 (8,103)
Net property and equipment 1 18 (17)
Other assets 158 759 (601)
------ ------- -------
$3,318 $11,128 $(7,810)
====== ======= =======
Liabilities were $25.0 million at September 30, 1998 compared to
$37.0 million at December 31, 1997, reflecting the following changes
among categories.
14
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Sept. 30, Dec. 31, Increase
1998 1997 (Decrease)
--------- -------- ----------
($ in thousands)
Accounts payable $ 12 $ 285 $ (273)
Other liabilities 1,305 1,727 (422)
Accrued interest 10,969 13,328 (2,359)
Credit agreements - primary lender 1,000 7,344 (6,344)
Notes and mortgages payable 1,198 3,750 (2,552)
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
------- ------- --------
$25,043 $36,993 $(11,950)
======= ======= ========
The Company has aggressively taken steps to curtail and simplify
operations as well as concentrate on major bulk sales of its undeveloped
acreage. The Company remains totally dependent upon the sale of
property to fund its operations and debt service requirements.
The Company remains in default of the entire principal plus
interest on its convertible subordinated debentures. The amounts due
are as indicated in the following table:
Sept. 30, 1998
-----------------------
Principal Unpaid
Amount Due Interest
---------- --------
($ in thousands)
Convertible subordinated debentures due June 1, 1991 $1,034 $ 593
Convertible subordinated debentures due May 1, 1992 8,025 5,019
------ ------
$9,059 $5,612
====== ======
The Company does not have funds available to make any payments of
either principal or interest on the above debentures.
15
PGI INCORPORATED AND SUBSIDIARIES
PART II Other Information
Item 1 Legal Proceedings
In 1994, the Citrus County Tax Assessor denied agricultural exemption
status for the undeveloped Sugarmill Woods property and the Company was
forced to sue the County to reclaim the tax benefit. In 1995, the
Citrus County Tax Assessor again denied agricultural exemption status
for the undeveloped Sugarmill Woods property, but was overruled by the
Value Adjustment Board. As a result, the Tax Assessor sued Sugarmill
Woods, and was again successful in denying the agricultural exemption
for the property. The Company won on appeal, but the Tax Assessor
appealed to the Supreme Court of Florida to reinstate the exemption. At
this time the outcome of the appeal cannot be determined. At the
closing of the bulk acreage sale a restricted escrow was established in
the amount of $557,000 for payment of the taxes upon settlement of the
litigation.
Item 2 Changes in Securities
Not applicable.
Item 3 Defaults Upon Senior Securities
See discussion in Item 2 with respect to defaults on the
Company's convertible subordinated debentures and collateralized
convertible debentures, which discussion is incorporated herein by this
reference.
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 Other Information
Not applicable.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits - reference is made to the Exhibit Index contained on
page 18 herein for a list of exhibits filed under this Item.
(c) No report on Form 8-K was filed during the quarter ended
September 30, 1998.
16
PGI INCORPORATED AND SUBSIDIARIES
SIGNATURES
In accordance with the requirement of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PGI INCORPORATED
----------------------
(Registrant)
Date: November 13, 1998 /s/Laurence A. Schiffer
----------------------- ---------------------------
Laurence A. Schiffer
President
17
PGI INCORPORATED AND SUBSIDIARIES
EXHIBIT INDEX
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2. Inapplicable.
3.1 Restated Articles of Incorporation of PGI, Inc. executed
September 4, 1998 with certificate from the State of Florida
dated October 27, 1998
3.2 Inapplicable.
4. Inapplicable.
10. Inapplicable.
11. Statements re: Computations of Per Share Earnings.
(See Note 3 to the consolidated financial statements.)
15. Inapplicable.
18. Inapplicable.
19. Inapplicable.
22. Inapplicable.
23. Inapplicable.
24. Inapplicable.
27. Financial Data Schedule
18