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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1 - 5332
P & F INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-1657413
(State of incorporation) (I.R.S. Employer Identification Number)
300 SMITH STREET, FARMINGDALE, NEW YORK 11735
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516)
694-1800
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF CLASS ON WHICH REGISTERED
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Class A Common Stock,
$1.00 par value The NASDAQ Stock Market
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
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by
non-affiliates of the Registrant, based on the last sale price on
March 19, 1996, was approximately $5,835,000.
As of March 19, 1996, there were outstanding 2,928,867
shares of the Registrant's Class A Common Stock, par value $1.00
per share.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference information from the
Registrant's definitive Proxy Statement for the 1996 Annual
Meeting of Stockholders.
P & F INDUSTRIES, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
TABLE OF CONTENTS
PAGE
PART I ----
Item 1. Business 1 - 3
Item 2. Properties 4
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Security Holders 4
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 4
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 10
Item 8. Financial Statements and Supplementary Data 11 - 35
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 36
PART III
Item 10. Directors and Executive Officers of the Registrant 36
Item 11. Executive Compensation 36
Item 12. Security Ownership of Certain Beneficial Owners
and Management 36
Item 13. Certain Relationships and Related Transactions 36
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 37 - 38
Signatures 39
i
PART I
ITEM 1. BUSINESS
P & F Industries, Inc. (the "Company") conducts its business operations
through two wholly-owned subsidiaries. Florida Pneumatic Manufacturing
Corporation ("Florida Pneumatic") is engaged in the importation, manufacture
and sale of pneumatic hand tools for the industrial, retail and automotive
markets and the manufacture and sale of air filters. Florida Pneumatic also
markets, through its Berkley Tool Division ("Berkley"), a line of pipe
cutting and threading tools, wrenches and replacement electrical components
for a widely used brand of pipe cutting and threading machines. Embassy
Industries, Inc. ("Embassy") is engaged in the manufacture and sale of
baseboard and radiant hot-water heating products. Embassy also imports,
assembles and packages a line of small hardware items through its Franklin
Hardware division ("Franklin"). Note 10 of the Notes to Consolidated
Financial Statements presents financial information for the segments of the
Company's business.
Florida Pneumatic has two major customers, Sears, Roebuck and W.W.
Grainger, which accounted for 31.4%, 38.9% and 37.4% and 10.8%, 10.7% and
12.6% of consolidated net sales for the years ended December 31, 1995, 1994
and 1993, respectively.
FLORIDA PNEUMATIC
Florida Pneumatic imports or manufactures approximately fifty types of
pneumatic hand tools, most of which are sold at prices ranging from $30 to
$1,000, under the names "Florida Pneumatic", "Universal Tool", "Raider",
"Fuji" and "Stryker", as well as under the trade names or trademarks of
several private label customers. These tools are similar in appearance and
function to electric hand tools such as sanders, grinders, drills, saws and
impact wrenches but are powered by compressed air, rather than directly by
electricity. Air tools, as they are also called, are generally less expensive
to operate, offer better performance and are lighter in weight than their
electrical counterparts.
Most of Florida Pneumatic's sales are of pneumatic tools imported from
Japan, along with sales of some products imported from Taiwan and mainland
China. Florida Pneumatic manufactures high speed rotary and reciprocating
pneumatic tools at its factory in Jupiter, Florida and also manufactures and
imports air filters.
Products are sold to distributors, retailers and private label customers
through in-house sales personnel and manufacturers' representatives. Typical
users of pneumatic hand tools include automobile mechanics, auto body
repairmen, industrial maintenance and production staffs and home mechanics.
The primary competitive factors in the pneumatic tool market are price,
service and brand-name awareness.
Two customers accounted for approximately 57% of Florida Pneumatic's
sales in 1995. Relationships with these customers remain excellent. The loss
of a third major customer in late 1995 had no significant impact on Florida
Pneumatic's earnings because of reductions, begun in early 1995, of related
overhead and other costs.
1
Berkley markets a product line consisting of pipe and bolt dies, pipe
taps, pipe and tubing cutter wheels, wrenches and replacement electrical
components for a widely used brand of pipe cutting and threading machines.
Florida Pneumatic markets Berkley's products through industrial distributors
and contractors.
Florida Pneumatic's products are sold off the shelf and there is,
therefore, no material backlog of orders. The business is not seasonal, but
it may be subject to significant periodic changes resulting from occasional
sales promotions by customers.
Florida Pneumatic purchases significant amounts of pneumatic tools from
two foreign suppliers. Other sources are available. However, the loss of
either supplier could cause a temporary disruption in the flow of products,
possibly creating an adverse effect on operating results.
EMBASSY
Embassy's baseboard heating products are sold nationally under the
Embassy name and under its Panel-Track, System 6 and Commercial 6-ST
trademarks, for use in hot-water heating systems installed in single family
homes, multi-unit dwellings and commercial and industrial buildings. Products
are sold principally to wholesalers by manufacturers' representatives and
in-house sales support personnel. Embassy's products are also sold to other
manufacturers for incorporation into their products and for distribution on a
private label basis.
Hot-water heating systems operate by heating water in a boiler and
circulating it through the copper tubing in the baseboard along the perimeter
of the space to be heated. Attached to the copper tubing are numerous
closely-spaced aluminum fins which dissipate the heat. Sections are two to
ten feet in length, project several inches from the wall and rise less than a
foot from the floor. These sections may be combined for longer installations.
Embassy's baseboard contains patented plastic tracks which ease handling and
reduce operating noise.
At the end of 1994, Embassy introduced a hot-water radiant heating
system. Radiant heating systems are different from baseboard heating systems
in that the heating systems are generally installed in floors and radiate
heat provided by hot-water circulating in plastic tubing installed beneath
the surface of the floor. These systems include the tubing, manifolds,
controls and installation supplies. Embassy will also provide computer
programming which aids in the design of the system. Sales of this product
accounted for approximately 6.4% of Embassy's total heating equipment sales
in 1995.
2
Baseboard hot-water and radiant heating systems compete with electric
heat and forced hot-air systems. Electric systems are generally more
expensive to operate. Forced hot-air systems are noisier, sometimes cause
discomfort from fluctuations in temperature as the furnace cycles on and off
and do not distribute warm air uniformly within the room. Hot-water systems
are generally more expensive to install. Accordingly, baseboard and radiant
floor heating are more widely used in custom and higher priced homes and in
colder sections of the country. Since Embassy's products are primarily used
in new installations, its sales are related to new housing starts.
Embassy's baseboard heating products are sold off the shelf and there
is, therefore, no material backlog of orders. Raw materials are readily
available. The business is seasonal, with approximately 60% of Embassy's
heating equipment sales coming in the last six months of the year.
The primary competitive factors in the baseboard and radiant heating
market are quality, price, service and brand-name awareness.
The Franklin division of Embassy imports, assembles and packages
approximately 135 types of hardware products, including door knobs, locks,
door viewers, hinges, clothesline pulleys, rope tighteners and fire escape
ladders. Products generally range in price from under $1.00 to $30.00 and are
sold to retailers, wholesalers and private label accounts through
manufacturers' representatives and in-house sales support personnel. Nearly
all of Franklin's sales are of products imported from the Far East. Two
customers accounted for about 31% of Franklin's sales in 1995, with each
doing approximately the same volume.
The primary competitive factors in the hardware business are service,
skill in packaging and point-of-sale marketing.
Franklin's products are sold off the shelf and there is, therefore, no
material backlog of orders. Sources of imported products are readily
available. Franklin's business is not seasonal.
EMPLOYEES
The Company employed approximately 176 persons as of December 31, 1995,
including 4 at corporate headquarters. The 81 employees of the pneumatic tool
operation are not represented by a union. Of the 91 persons employed in the
heating equipment and hardware operations, 65 factory workers are covered by
a single-employer union contract. The heating equipment union contract
expires on November 30, 1998. The Company believes that its relations with
its employees are satisfactory.
3
ITEM 2. PROPERTIES
Embassy and Florida Pneumatic each own, subject to a
mortgage, the plant facilities which they occupy. Embassy's
75,000 square foot plant facility, located in Farmingdale, New
York, is currently being utilized at nearly full capacity.
Florida Pneumatic's 72,000 square foot plant facility, located in
Jupiter, Florida, provides adequate space for its operations in
the foreseeable future. The Company's executive offices are
located in Embassy's facility in Farmingdale, New York.
The Company owns, subject to a mortgage, a 36,000 square
foot facility in New Hyde Park, New York. This building is being
leased to Triangle Sheet Metal Works, Inc. ("Triangle"), the
Company's former subsidiary.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the last quarter of the period covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's Class A Common Stock trades on the Nasdaq
Stock Market. The price range of the Company's Class A Common
Stock during the last two fiscal years was as follows:
1995 HIGH LOW
---- ---- ---
First Quarter 2 3/8 1 15/16
Second Quarter 2 1/2 2 3/16
Third Quarter 2 1/2 2 1/4
Fourth Quarter 2 3/4 2 3/8
1994 HIGH LOW
---- ---- ---
First Quarter 2 1/8 1 3/4
Second Quarter 2 1/8 1 3/4
Third Quarter 2 1/2 1 27/32
Fourth Quarter 2 1/4 1 15/16
As of March 19, 1996, there were approximately 3,900 holders
of record of the Company's Class A Common Stock.
The Company has not declared any cash dividends on its Class
A Common Stock since its incorporation in 1962 and has no plans
to declare any cash dividends in the immediate future. The
Company has outstanding 263,345 shares of $1 Cumulative Preferred
Stock. The dividends on this Preferred Stock must be paid before
any dividends may be paid on the Class A Common Stock. All
dividends on the Preferred Stock have been paid to date.
4
ITEM 6. SELECTED FINANCIAL DATA
P & F INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
---------------------------------------
---------------------------------------
The following selected consolidated financial data has been derived from
the audited consolidated financial statements of P & F Industries, Inc. and
subsidiaries. The selected financial data should be read in conjunction with
the Consolidated Financial Statements and related notes included elsewhere in
this Form 10-K.
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
Net sales $42 645 954 $44 842 790 $40 355 311 $34 468 741 $31 802 198
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income from continuing operations $ 1 491 975 $ 1 233 356 $ 695 866 $ 320 927 $ 103 337
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations per share of
common stock:
Primary $ .38 $ .30 $ .19 $ .04 ($ .08)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Fully diluted $ .38 $ .30 $ .19 $ .04 ($ .05)
----------- ----------- ----------- ----------- -----------
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Total assets $35 415 672 $33 013 300 $35 899 164 $35 555 176 $40 805 472
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Long-term obligations $ 7 414 181 $ 7 767 625 $ 8 208 245 $ 8 469 386 $ 7 678 248
----------- ----------- ----------- ----------- -----------
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Cash dividends declared per
common share $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Consolidated revenues decreased 4.5%, from $45,075,182 to
$43,047,601, including a decrease of $2,129,585 in revenues from
hydraulic equipment. In late 1994, the nature of the transactions
regarding the import and sale of hydraulic equipment changed, and
the Company no longer takes title to the equipment at any time
during the transaction. Prior to this change, the gross amounts
of these transactions were recorded as sales, with corresponding
cost of sales. After the change, the net amounts of these
transactions were recorded as commission income.
Excluding revenues from hydraulic equipment, revenues were
essentially unchanged. Revenues from pneumatic tools and related
equipment, excluding hydraulic equipment, decreased 1.7%, from
$32,161,693 to $31,604,779, despite increases of approximately
3.5% in average selling prices. The decrease in these revenues
was caused primarily by the loss in late 1995 of one large
customer, to whom sales were approximately $2,880,000 in 1994 and
approximately $1,688,000 in 1995, and by a reduction of
approximately $2,303,000 in one-time sales for special promotions
by customers. These decreases in revenues were partially offset
by a one-time sale of approximately $2,337,000 to a new customer.
Revenues from heating equipment increased 5.7%, from $7,126,217
to $7,530,770. This increase resulted from the first full year of
sales of radiant heating products, recently developed by the
Company, and from approximately 5% higher average selling prices.
These increases more than offset a 3.1% decrease of unit sales.
Revenues from hardware were strong, increasing by 6.4%, from
$3,319,101 to $3,531,783.
Consolidated gross profit, as a percentage of revenues,
excluding revenues from hydraulic equipment, increased from 30.2%
to 32.6%. Gross profit from pneumatic tools and related
equipment, excluding hydraulic equipment, increased from 30.7% to
31.8%. This was primarily due to a more profitable product mix of
sales. The decline in the value of the dollar as compared to the
Japanese yen caused a significant increase in the cost of tools
imported from Japan. This increase was offset by the selling
price increase described above, by purchase price reductions
from the suppliers of the imported tools and by lower prices on
purchases from alternative suppliers. Gross profit from heating
equipment decreased from 35.4% to 34.3%, because of higher
material costs and a less profitable product mix. Gross profit
from hardware increased from 28.2% to 29.4%, due to increased
sales volume and a more favorable product mix.
Consolidated selling, administrative and general expenses
increased less than 1%, from $9,973,728 to $10,056,193, and were
virtually unchanged as a percentage of revenues, excluding
revenues from hydraulic equipment.
The effective tax rates for the years ended December 31,
1995 and 1994 were 36.4% and 38.7%, respectively. See Note 7 of
the Notes to Consolidated Financial Statements.
6
1994 COMPARED TO 1993
Consolidated revenues increased 11.7%, from $40,361,318 to
$45,075,182, despite a decrease of $1,884,627 in revenues from
hydraulic equipment resulting from the change in the nature of
the transactions regarding the import and sale of hydraulic
equipment, as described above. Excluding revenues from hydraulic
equipment, revenues increased 18.4%. Revenues from pneumatic
tools and related equipment, excluding hydraulic equipment,
increased 24.5%, from $25,835,466 to $32,161,693. Of this
increase, $3,455,000 resulted from sales for one-time promotions
by customers. The balance of the increase was due to higher sales
in general, aided by sales price increases of approximately 4.7%
on pneumatic tools. These price increases were necessitated by
the decline in the value of the U.S. dollar as compared to the
Japanese yen, which caused the cost of the Company's imported
tools to rise. Selling prices of other products averaged
approximately 1% higher than the prior year.
Revenues from heating equipment increased 10.5%, from
$6,449,708 to $7,126,217, due primarily to an increase in housing
starts. Revenues from hardware decreased 10.8%, from $3,720,933
to $3,319,101. The principal reason for this decrease was the
loss of one customer and the Chapter 11 filing by another
customer.
Consolidated gross profit, as a percentage of revenues,
excluding revenues from hydraulic equipment, increased from 29.5%
to 30.2%. Gross profit from pneumatic tools and related
equipment, excluding hydraulic equipment, decreased from 32.0% to
30.7%. This decrease was caused by changes in customer and
product mix. The decline in the value of the dollar as compared
to the Japanese yen caused a significant increase in the cost of
tools imported from Japan. This increase was partially offset by
the selling price increase described above and by purchase price
reductions from the suppliers of the imported tools. Gross profit
from heating equipment decreased from 38.2% to 35.4%, due to
higher material costs which could not be recaptured by increased
selling prices on a timely basis. Gross profit from hardware
increased from 25.8% to 28.2%, due to changes in product mix.
Consolidated selling, administrative and general expenses
increased at a lower rate than did revenues, despite the
approximately $150,000 in costs associated with the redemption
and reissuance of the Shareholder Rights Plan, resulting in a
decrease of 1.9% as a percentage of revenues, excluding revenues
from hydraulic equipment.
The effective tax rates for the years ended December 31,
1994 and 1993 were 38.7% and 38.6%, respectively. See Note 7 of
the Notes to Consolidated Financial Statements.
During 1994, the Company divested itself of Triangle, its
sheet metal contracting subsidiary. The divestiture had no effect
on earnings in 1994, since the loss on the disposal of this
operation had been recognized in 1993. See Note 8 of the Notes to
Consolidated Financial Statements.
7
LIQUIDITY AND CAPITAL RESOURCES
The Company gauges its liquidity and financial stability by
the measurements as shown in the following table:
DECEMBER 31,
------------------------------
1995 1994 1993
---- ---- ----
(amounts in thousands, except for ratios)
Working Capital $15,838 $14,940 $13,928
Current Ratio 2.54 to 1 2.70 to 1 2.14 to 1
Shareholders' Equity $17,692 $16,463 $15,522
Accounts receivable increased by $841,863 as a result of
greater sales volume in the month of December 1995. Inventories
increased $1,827,338 because of changes in sales product mix. The
relatively long lead times in the purchasing cycle often result
in delays in reacting to changes in the product mix of sales.
Accounts receivable and inventories are both expected to decrease
significantly in 1996.
The Company's credit facilities provide a line of credit
totalling $18,000,000. Of this amount, $14,000,000 is available
for direct loans, letters of credit and bankers' acceptances. At
December 31, 1995, there was approximately $4,230,000 in loans
outstanding against this line of credit. In addition, there was a
commitment at December 31, 1995 of approximately $2,120,000 for
letters of credit. The total line of credit also includes
$4,000,000 earmarked for acquisitions subject to the lending
bank's approval. The Company's credit facilities also provide the
availability of up to $10,000,000 in foreign currency forward
contracts. These contracts fix the exchange rate on future
purchases of Japanese yen needed for payments to foreign
suppliers. The total amount of foreign currency forward contracts
outstanding at December 31, 1995 was approximately $2,800,000.
The Company's credit facilities agreement is subject to
annual review by the lending bank. Under this agreement, the
Company is required to adhere to certain financial covenants. At
December 31, 1995, and for the year then ended, the Company
satisfied all of these covenants.
In June 1994, substantially all of the net assets of
Triangle were sold for $3,500,000 in cash to an investment group
which included Triangle's senior management. The divestiture of
Triangle was in line with the Company's previously stated goal of
disengaging itself from the volatility of the construction
industry. The proceeds from the sale were used to reduce short-
term borrowings. The Company intends to reborrow these funds,
when necessary, to fund an acquisition. The Company is currently
leasing its facilities in New Hyde Park, New York to its former
subsidiary.
8
The Company is currently conducting an extensive acquisition search. The
funds for an acquisition will be provided by reborrowing the $3,500,000 received
from the sale of the assets of Triangle, referred to above, which was
temporarily used to reduce short-term debt and from the new $4,000,000 credit
facility earmarked for acquisitions referred to above. The total funds
available, including cash derived from operations, will be approximately
$9,000,000.
Capital spending in 1995 was approximately $403,000. The total amount was
provided from working capital. Capital expenditures for 1996 are expected to
total approximately $500,000, some of which may be financed. Included in this
amount are expenditures relating to new products as well as expenditures
relating to the replacement or upgrading of old equipment.
On August 23, 1994, the Board of Directors of the Company authorized the
redemption, effective September 6, 1994, of all outstanding rights issued under
a shareholder rights plan established in 1989 and also declared a dividend
distribution of new rights under a new shareholder rights plan. The redemption
price of $.01 per right resulted in an aggregate payment of $29,289, which was
treated as a dividend for tax purposes. In addition, the Company incurred
approximately $150,000 in costs associated with these transactions. These
amounts were charged against operations in 1994.
On February 15, 1995, Florida Pneumatic purchased the assets and business
of Tradesman Tool Co., Inc. ("Tradesman") for cash totalling approximately
$547,000. Tradesman is a domestic manufacturer of heavy-duty pipe wrenches. The
operations of Tradesman have been merged with the operations of Berkley at
Florida Pneumatic.
On March 31, 1995, Florida Pneumatic purchased the assets and business of
Intech Industries, Inc. ("Intech") for cash totalling $206,000. Intech is a
domestic manufacturer and importer of air filters used on air compressors. The
operations of Intech have been merged with the operations of Florida Pneumatic.
The Company, through Florida Pneumatic, imports a significant amount of its
purchases from Japan, with payment due in Japanese yen. As a result, the Company
is subject to the effects of foreign currency exchange fluctuations. The Company
uses a variety of techniques to protect itself from any adverse effects from
these fluctuations, including increasing its selling prices, obtaining price
reductions from its overseas suppliers, using alternative supplier sources and
entering into foreign currency forward contracts. Because of these steps taken
by the Company, foreign currency exchange rate fluctuations have not had a
significant negative effect on the Company's results of operations or its
financial position. Any future weakness of the dollar would again, however,
present a problem and there can be no certainty that the Company will continue
to be successful in its efforts to counter this problem.
9
NEW ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which is effective for fiscal years beginning after
December 31, 1995, with earlier application encouraged. The Company has adopted
Statement No. 121 for the year ended December 31, 1995. The adoption of
Statement No. 121 did not have a material effect on the consolidated financial
statements.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation," which is effective for
transactions entered into after December 31, 1995. Statement No. 123 establishes
a fair value method of accounting for stock-based compensation, through either
recognition or disclosure. The Company intends to adopt the employee stock-based
compensation provisions of Statement No. 123 on January 1, 1996 by disclosing
the pro forma net income and earnings per share amounts assuming the fair value
method was adopted January 1, 1995. The adoption of Statement No. 123 will not
impact the Company's results of operations, financial position or cash flows.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
P & F INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
PAGE
----
Report of Independent Certified Public Accountants 12
Consolidated Balance Sheets - December 31, 1995
and 1994 13 - 14
Consolidated Statements of Operations for each of
the three years ended December 31, 1995, 1994
and 1993 15 - 16
Consolidated Statements of Shareholders' Equity for
each of the three years ended December 31, 1995,
1994 and 1993 17
Consolidated Statements of Cash Flows for each of
the three years ended December 31, 1995,
1994 and 1993 18 - 19
Summary of Accounting Policies 20 - 22
Notes to Consolidated Financial Statements 23 - 35
Schedule II - Valuation and Qualifying Accounts for
each of the three years ended December 31, 1995,
1994 and 1993 38
11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
P & F Industries, Inc.
Farmingdale, New York
We have audited the accompanying consolidated balance sheets of P & F
Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. We have
also audited the schedule listed in the accompanying index. These consolidated
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of P & F Industries,
Inc. and subsidiaries at December 31, 1995 and 1994 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.
/s/ BDO SEIDMAN, LLP
BDO Seidman, LLP
New York, New York
March 14, 1996
12
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------------------
---------------------------------------
DECEMBER 31,
-------------------------
ASSETS 1995 1994
------------ ------------
CURRENT:
Cash $ 1 224 603 $ 1 071 903
Accounts receivable, less allowance
for uncollectibles of $350,684 and
$354,252 (Note 2) 9 163 246 8 315 300
Inventories (Notes 1 and 2) 14 903 561 12 867 604
Deferred income taxes (Note 7) 423 000 764 000
Prepaid expenses and other assets 367 988 618 686
Note receivable from officer 65 000 85 000
------------ ------------
TOTAL CURRENT ASSETS 26 147 398 23 722 493
------------ ------------
PROPERTY AND EQUIPMENT (Notes 2 and 3):
Land 993 020 993 020
Buildings and improvements 4 505 889 4 490 216
Machinery and equipment 5 394 134 4 596 342
------------ ------------
10 893 043 10 079 578
Less accumulated depreciation
and amortization 4 760 074 4 164 690
------------ ------------
NET PROPERTY AND EQUIPMENT 6 132 969 5 914 888
------------ ------------
GOODWILL, net of accumulated amortization
of $828,946 in 1995 and $730,558 in 1994 2 984 821 3 083 209
------------ ------------
OTHER ASSETS, net of accumulated
amortization of $518,663 in 1995
and $402,663 in 1994 150 484 292 710
------------ ------------
$ 35 415 672 $ 33 013 300
------------ ------------
------------ ------------
See accompanying summary of accounting policies and
notes to consolidated financial statements.
13
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
--------------------------------------
--------------------------------------
DECEMBER 31,
---------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
------------ ------------
CURRENT LIABILITIES:
Short-term borrowings (Note 2) $ 4 233 753 $ 3 514 290
Accounts payable 3 499 174 2 952 483
Accruals:
Compensation 983 088 870 652
Other 1 239 782 1 100 546
Current maturities of long-term
debt (Note 3) 353 874 344 514
------------ ------------
TOTAL CURRENT LIABILITIES 10 309 671 8 782 485
LONG-TERM DEBT, less current
maturities (Note 3) 6 044 981 6 398 425
SUBORDINATED DEBENTURES (Note 4) 1 369 200 1 369 200
------------ ------------
TOTAL LIABILITIES 17 723 852 16 550 110
------------ ------------
COMMITMENTS AND CONTINGENCIES
(Notes 2 and 9)
SHAREHOLDERS' EQUITY (Notes 5 and 6):
Preferred stock, $10 par, cumulative;
shares authorized 2,000,000; issued
and outstanding 263,345 2 633 450 2 633 450
Common stock:
Class A - $1 par; shares authorized
7,000,000; outstanding 2,928,867 2 928 867 2 928 867
Class B - $1 par; shares authorized
2,000,000 -- --
Additional paid-in capital 7 607 614 7 607 614
Retained earnings 4 521 889 3 293 259
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 17 691 820 16 463 190
------------ ------------
$ 35 415 672 $ 33 013 300
------------ ------------
------------ ------------
See accompanying summary of accounting policies and
notes to consolidated financial statements.
14
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------
---------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
REVENUES (Note 10):
Net sales $ 42 645 954 $ 44 842 790 $ 40 355 311
Other 401 647 232 392 6 007
------------ ------------ ------------
43 047 601 45 075 182 40 361 318
------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales 29 015 050 31 446 604 28 473 018
Selling, administrative
and general 10 056 193 9 973 728 9 116 292
Interest - net 1 021 400 1 060 305 1 081 341
Depreciation 608 983 583 189 556 801
------------ ------------ ------------
40 701 626 43 063 826 39 227 452
------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES ON INCOME 2 345 975 2 011 356 1 133 866
TAXES ON INCOME (Note 7) 854 000 778 000 438 000
------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS 1 491 975 1 233 356 695 866
------------ ------------ ------------
DISCONTINUED OPERATIONS:
Income (loss) from operations
of discontinued operation,
(less applicable income taxes
recovery of $196,000 (Note 8) -- -- (428 227)
Loss on disposal of discontinued
operation, including provision
of $810,000 for operating losses
during phase-out period (less
applicable income tax recovery
of $1,298,000) (Note 8) -- -- (1 998 000)
------------ ------------ ------------
-- -- (2 426 227)
------------ ------------ ------------
NET INCOME (LOSS) $ 1 491 975 $ 1 233 356 ($ 1 730 361)
------------ ------------ ------------
------------ ------------ ------------
See accompanying summary of accounting policies and
notes to consolidated financial statements.
15
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED)
---------------------------------------
---------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
NET INCOME (LOSS) $ 1 491 975 $ 1 233 356 ($ 1 730 361)
PREFERRED DIVIDENDS $ 263 345 $ 263 345 $ 263 345
------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ 1 228 630 $ 970 011 ($ 1 993 706)
------------ ------------ ------------
------------ ------------ ------------
WEIGHTED AVERAGE COMMON SHARES
AND COMMON SHARE EQUIVALENTS:
PRIMARY 3 312 635 3 253 149 2 298 963
------------ ------------ ------------
------------ ------------ ------------
FULLY DILUTED 3 312 280 3 253 965 2 298 963
------------ ------------ ------------
------------ ------------ ------------
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK:
PRIMARY AND FULLY DILUTED:
CONTINUING OPERATIONS $ .38 $ .30 $ .19
DISCONTINUED OPERATIONS -- -- (1.06)
------------ ------------ ------------
NET INCOME (LOSS) $ .38 $ .30 ($ .87)
------------ ------------ ------------
------------ ------------ ------------
See accompanying summary of accounting policies and
notes to consolidated financial statements.
16
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
-----------------------------------------------
-----------------------------------------------
PREFERRED STOCK, CLASS A COMMON
$10 PAR - CUMULATIVE STOCK - $1 PAR ADDITIONAL
--------------------- ---------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
------- ----------- --------- ----------- ----------- -----------
BALANCE, January 1, 1993 263 345 $ 2 633 450 2 268 908 $ 2 268 908 $ 7 112 614 $ 4 346 243
Net loss for the year ended
December 31, 1993 -- -- -- -- -- (1 730 361)
Common stock issued on
exercise of options -- -- 660 000 660 000 495 000 --
Dividends on preferred stock -- -- -- -- -- (263 345)
Retirement of shares:
Common -- -- (41) (41) -- --
------- ----------- --------- ----------- ----------- -----------
BALANCE, December 31, 1993 263 345 2 633 450 2 928 867 2 928 867 7 607 614 2 352 537
Net income for the year ended
December 31, 1994 -- -- -- -- -- 1 233 356
Redemption of shareholders' rights -- -- -- -- -- (29 289)
Dividends on preferred stock -- -- -- -- -- (263 345)
------- ----------- --------- ----------- ----------- -----------
BALANCE, December 31, 1994 263 345 $ 2 633 450 2 928 867 $ 2 928 867 $ 7 607 614 $ 3 293 259
Net income for the year ended
December 31, 1995 -- -- -- -- -- 1 491 975
Dividends on preferred stock -- -- -- -- -- (263 345)
------- ----------- --------- ----------- ----------- -----------
BALANCE, December 31, 1995 263 345 $ 2 633 450 2 928 867 $ 2 928 867 $ 7 607 614 $ 4 521 889
------- ----------- --------- ----------- ----------- -----------
------- ----------- --------- ----------- ----------- -----------
See accompanying summary of accounting policies and notes to consolidated
financial statements.
17
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------
---------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1 491 975 $ 1 233 356 ($ 1 730 361)
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 889 305 822 476 940 350
Loss on discontinued operation -- -- 2 426 227
Provision for losses on
accounts receivable 77 307 99 996 178 895
Deferred income taxes 341 000 722 000 168 000
Gain on disposal of
fixed assets (12 100) (2 000) (1 825)
Decrease (increase):
Accounts receivable (841 863) (1 411 817) (1 225 850)
Inventories (1 827 338) (562 080) (1 304 788)
Prepayments and other items 254 654 (293 849) (85 002)
Net assets of discontinued
operation -- (577 746) (1 029 125)
Other assets 12 425 (99 030) 20 354
Increase (decrease):
Accounts payable 546 691 (4 639 267) 3 835 099
Accruals 251 672 355 870 146 578
----------- ----------- -----------
Total adjustments (308 247) (5 585 447) 4 068 913
----------- ----------- -----------
Net cash provided by
(used in) operating
activities 1 183 728 (4 352 091) 2 338 552
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment 12 300 3 000 4 500
Capital expenditures (402 403) (212 254) (794 271)
Purchase of assets of Tradesman
Tool Co., Inc. and Intech
Industries, Inc. (752 959) -- --
Proceeds from sale of discontinued
operation -- 3 500 000 --
Investing activities of
discontinued operation -- -- (4 544)
----------- ----------- -----------
Net cash provided by
(used in) investing
activities (1 143 062) 3 290 746 (794 315)
----------- ----------- -----------
See accompanying summary of accounting policies and
notes to consolidated financial statements.
18
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
-----------------------------------------
-----------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 16 310 783 19 292 591 12 063 946
Repayments of short-term borrowings (15 591 320) (18 110 764) (14 652 594)
Proceeds from mortgage -- 2 343 400 --
Proceeds from term loan -- -- 378 081
Principal payments on long-term debt (344 084) (3 068 416) (568 059)
Proceeds from exercise of
stock options -- -- 1 155 000
Purchase and retirement of
treasury stock -- -- (41)
Dividends paid on preferred stock (263 345) (263 345) (263 345)
Redemption of shareholders' rights -- (29 289) --
Financing activities of
discontinued operation -- -- (131 827)
----------- ----------- -----------
Net cash provided by
(used in) financing
activities 112 034 164 177 (2 018 839)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 152 700 (897 168) (474 602)
CASH AT BEGINNING OF YEAR 1 071 903 1 969 071 2 443 673
----------- ----------- -----------
CASH AT END OF YEAR, including
$881,537 in 1993 included in
net assets of discontinued
operation $ 1 224 603 $ 1 071 903 $ 1 969 071
----------- ----------- -----------
----------- ----------- -----------
See accompanying summary of accounting policies and
notes to consolidated financial statements.
19
P & F INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
---------------------------------------
---------------------------------------
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements contained herein include the accounts
of P & F Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany balances and transactions have been eliminated.
The Company conducts its business operations through two wholly-owned
subsidiaries. Florida Pneumatic Manufacturing Corporation ("Florida Pneumatic")
is engaged in the importation, manufacture and sale of pneumatic hand tools for
the industrial, retail and automotive markets and air filters. Florida Pneumatic
also markets, through its Berkley Tool Division ("Berkley"), a line of pipe
cutting and threading tools, wrenches and replacement electrical components for
a widely used brand of pipe cutting and threading machines. Embassy Industries,
Inc. ("Embassy") is engaged in the manufacture and sale of baseboard and radiant
hot-water heating products. Embassy also imports, assembles and packages a line
of small hardware items through its Franklin Hardware division ("Franklin").
BASIS OF FINANCIAL STATEMENT PRESENTATION
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments, including cash, accounts
receivable, accounts payable and short-term debt, approximated fair value as of
December 31, 1995 and 1994, because of the relatively short-term maturity of
these instruments. The carrying value of long-term debt, including the current
portion, approximated fair value as of December 31, 1995 and 1994, based upon
quoted market prices for the same or similar debt issues.
As of December 31, 1995, the Company had foreign currency forward
contracts, maturing in 1996, to purchase approximately $2,800,000 in Japanese
yen at contracted forward rates.
The Company enters into foreign currency forward contracts as a hedge
against foreign accounts payable. Gains and losses on such contracts are
deferred and included in the measurement of the related foreign currency
transaction. The Company does not hold or issue financial instruments for
trading purposes.
20
P & F INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)
---------------------------------------
---------------------------------------
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out method.
PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost.
Depreciation is computed by the straight-line method for financial
reporting and by the straight-line and accelerated methods for income tax
purposes. The estimated useful lives for financial reporting purposes are as
follows:
Buildings and improvements 10 - 30 years
Machinery and equipment 3 - 12 years
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which is effective for fiscal years beginning after
December 31, 1995, with earlier application encouraged. The Company has adopted
Statement No. 121 for the year ended December 31, 1995. The adoption of
Statement No. 121 did not have a material effect on the consolidated financial
statements.
GOODWILL
The excess of the purchase price over fair value of net assets of acquired
businesses arises from business combinations accounted for as purchases and is
amortized on a straight-line basis over 40 years.
The Company's operational policy for the assessment and measurement of any
impairment in the value of excess of cost over net assets acquired which is
other than temporary is to evaluate the recoverability and remaining life of its
goodwill and determine whether the goodwill should be completely or partially
written-off or the amortization period accelerated. The Company will recognize
an impairment of goodwill if undiscounted estimated future operating cash flows
of the acquired businesses are determined to be less than the carrying amount of
goodwill. If the Company determines that goodwill has been impaired, the
measurement of the impairment will be equal to the excess of the carrying amount
of the goodwill over the amount of the undiscounted estimated operating cash
flows. If an impairment of goodwill were to occur, the Company would reflect the
impairment through a reduction in the carrying value of goodwill.
21
P & F INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)
---------------------------------------
---------------------------------------
TAXES ON INCOME
P & F Industries, Inc. and its subsidiaries file a consolidated Federal tax
return and separate state and local tax returns.
The Company follows the liability method of accounting for income taxes, as
prescribed by Statement No. 109 of the Financial Accounting Standards Board.
EARNINGS PER SHARE
Primary and fully diluted earnings per share are computed using the
treasury stock method, modified for stock options and warrants outstanding in
excess of 20% of the total outstanding shares of common stock. Under this
method, the aggregate number of shares outstanding reflects the assumed use of
proceeds from the hypothetical exercise of the outstanding options and warrants,
unless the effect on earnings is antidilutive. The assumed proceeds are used to
repurchase shares of common stock, to a maximum of 20% of the shares
outstanding. The balance of the proceeds, if any, are used to reduce outstanding
debt.
Fully diluted earnings per share also reflects the assumed use of proceeds
from the hypothetical exercise of contingent issuances if such contingent
issuances have a reasonable possibility of occurring.
In calculating the purchase price of common stock, the average market value
for the period is used for primary earnings per share and the greater of the
average or ending market value for the period is used for fully diluted earnings
per share.
Net income or loss is adjusted for preferred dividends in computing the net
income or loss attributable to the common stock.
NEW ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation," which is effective for
transactions entered into after December 31, 1995. Statement No. 123 establishes
a fair value method of accounting for stock-based compensation, through either
recognition or disclosure. The Company intends to adopt the employee stock-based
compensation provisions of Statement No. 123 on January 1, 1996 by disclosing
the pro forma net income and earnings per share amounts assuming the fair value
method was adopted January 1, 1995. The adoption of Statement No. 123 will not
impact the Company's results of operations, financial position or cash flows.
22
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
------------------------------------------
NOTE 1 - INVENTORIES
Inventories consist of:
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
Raw materials $ 3 476 355 $ 2 699 402
Work-in-process 423 114 26 163
Finished goods 11 004 092 10 142 039
------------ ------------
$ 14 903 561 $ 12 867 604
------------ ------------
------------ ------------
NOTE 2 - SHORT-TERM BORROWINGS
The Company's credit facilities provide a line of credit totalling
$18,000,000. Of this amount, $14,000,000 is available for direct loans, letters
of credit and bankers' acceptances. At December 31, 1995, there was
approximately $4,230,000 in loans outstanding against this line of credit. In
addition, there was a commitment at December 31, 1995 of approximately
$2,120,000 for letters of credit. The total line of credit also includes
$4,000,000 earmarked for acquisitions subject to the lending bank's approval.
The Company's credit facilities also provide the availability of up to
$10,000,000 in foreign currency forward contracts. These contracts fix the
exchange rate on future purchases of Japanese yen needed for payments to foreign
suppliers. The total amount of foreign currency forward contracts outstanding at
December 31, 1995 was approximately $2,800,000.
Borrowings under the Company's line of credit bear interest at
approximately the prime rate and are secured by the accounts receivable,
inventory and equipment of the Company. These borrowings are also cross-
guaranteed by the parent company and each of the subsidiaries.
The Company's credit facilities agreement is subject to annual review by
the lending bank. Under this agreement, the Company is required to adhere to
certain financial covenants. At December 31, 1995, and for the year then ended,
the Company satisfied all of these covenants.
The maximum short-term borrowings outstanding at month-end during the years
ended December 31, 1995, 1994 and 1993 were approximately $4,230,000, $5,900,000
and $5,800,000, respectively.
The weighted average monthly balances for the years ended December 31,
1995, 1994 and 1993 were approximately $2,570,000, $4,590,000 and $4,620,000,
respectively. The weighted average interest rates of 8.8%, 8.0% and 7.2% for the
years ended December 31, 1995, 1994 and 1993, respectively, were calculated by
dividing the weighted average monthly interest expense by the weighted average
monthly balance. The interest rate on the short-term borrowings at December 31,
1995 was approximately 8.5% (prime rate) per annum.
23
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 3 - LONG-TERM DEBT
Long-term debt consists of:
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
Mortgage loan - $9,095 payable monthly
(plus interest at 1/2% above prime)
through February 1999, when a final payment
of approximately $1,798,000 is due. (a)(c) $ 2 152 405 $ 2 261 544
Mortgage loan - $11,667 payable monthly
(plus interest at 1% above prime)
through October 2011. (a)(c)(d) 2 216 650 2 356 654
Mortgage loan - $18,143 payable monthly
(including interest at 10.65% per annum)
through November 1997, when a final payment
of approximately $1,740,000 is due. (a) 1 796 913 1 821 803
Term loan - $7,621 payable monthly
(including interest at 7.75% per annum)
through October 1998. (b) 232 887 302 938
----------- -----------
6 398 855 6 742 939
Less current maturities 353 874 344 514
----------- -----------
$ 6 044 981 $ 6 398 425
----------- -----------
----------- -----------
- -----------
(a) These mortgages payable relate to the land and buildings of the
Company's subsidiaries. Property with a net book value of
approximately $3,936,000 is pledged as collateral.
(b) Machinery and equipment with a net book value of approximately
$233,000 is pledged as collateral.
(c) The prime interest rate at December 31, 1995 was 8.5%.
(d) The maturity of this mortgage may be accelerated, at the lender's
discretion, on October 2, 1996 or at any time thereafter.
The aggregate amounts of the long-term debt scheduled to mature in each
of the years ended December 31, are as follows: 1996 - $353,874; 1997 -
$2,100,643; 1998 - $322,715; 1999 -$1,964,989; 2000 - $140,004; 2001 and
thereafter - $1,516,630.
24
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 4 - SUBORDINATED DEBENTURES
The Company's 13.75% Subordinated Debentures are unsecured general
obligations of the Company and are subordinate to all existing and future
senior indebtedness of the Company. Interest on the Debentures is payable in
arrears semi-annually. The Company has the option to redeem the Debentures, at
the principal amount, at any time prior to the fixed due date of January 1,
2017.
NOTE 5 - CAPITAL STOCK TRANSACTIONS
The preferred stock outstanding has preference in liquidation of $10 per
share with dividends of 10% per annum payable quarterly. The Company has the
option to redeem the preferred stock at approximately $10 per share.
On September 8, 1994, the Company redeemed, for $.01 per Right, the
Rights issued in connection with an existing Stockholder Rights Plan and
pursuant to a Rights Agreement, which had been adopted on June 8, 1989 and
amended on January 17, 1991. The total amount paid was $29,289.
In connection with a new Stockholder Rights Plan, the Company entered
into a new Rights Agreement on August 23, 1994 and distributed as a dividend
to each holder of Class A Common Stock a preferred stock purchase right. These
rights entitle the stockholders, in certain circumstances, to purchase one
one-thousandth of a share of the Company's Series A Junior Participating
Preferred Stock for $10. The Stockholder Rights Plan is intended to protect,
among other things, the interests of the Company's stockholders in the event
the Company is confronted with coercive or unfair takeover tactics. The
Company incurred approximately $150,000 in costs associated with these
transactions. These amounts were charged to expense in 1994.
On December 16, 1993, Richard Horowitz, President of the Company,
exercised options to purchase 660,000 shares of the Company's Class A Common
stock for $1,155,000. See Note 6 of the Notes to Consolidated Financial
Statements.
25
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 6 - STOCK OPTIONS AND WARRANTS
Changes in qualified and non-qualified options and warrants outstanding
are summarized as follows:
WARRANTS OPTIONS
--------------------- -----------------------
EXERCISE OPTION PRICE
SHARES PRICE SHARES PER SHARE
--------- ----------- --------- ------------
$ $
Outstanding December 31, 1993 70 000 1.50 1 163 200 1.44-2.06
Granted -- -- 308 500 1.94-1.99
Cancelled -- -- (450 000) 2.06
Exercised -- -- -- --
Expired -- -- (80 000) 1.50-1.88
--------- ---------
Outstanding December 31, 1994 70 000 1.50 941 700 1.44-2.06
Granted -- -- 50 000 2.61
Cancelled -- -- (192 000) 1.65
Exercised -- -- -- --
Expired -- -- (51 000) 1.50-2.06
--------- ---------
Outstanding December 31, 1995 70 000 1.50 748 700 1.44-2.06
--------- ---------
--------- ---------
Of the 748,700 options outstanding at December 31, 1995, 35,000 are
exercisable through 1998; 640,200 are exercisable through 2000; 15,000 are
exercisable through 2003 and 58,500 are exercisable through 2004.
Options to purchase 1,428,700 shares had been issued under this plan. In
1992, the Company adopted a new incentive stock option plan (as amended) which
authorizes the issuance of options to purchase a maximum of 1,100,000 shares of
Class A common stock. These options must be issued within ten years of the
effective date of the plan and are exercisable for a ten year period from the
date of grant at prices not less than 100% of the market value of the common
stock on the date the option is granted. Options granted to any 10% shareholder
are exercisable for a five year period from the date of the grant at prices not
less than 110% of the market value of the common stock on the date the option is
granted. At December 31, 1995, there were 883,500 options available for issuance
under the plan. Of the 748,700 options outstanding at December 31, 1995, 216,500
options were issued under the current plan and 532,200 options were issued under
the previous plan.
On October 11, 1995, the Company recorded a charge against operations of
$163,200, the amount paid for the cancellation of options to purchase 192,000
shares of common stock. These options had been granted to Sidney Horowitz, the
former Chairman of the Board of the Company.
26
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 7 - TAXES ON INCOME
Provisions for (benefits from) taxes on income from continuing operations
in the consolidated statements of operations consist of the following:
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
Current:
Federal $ 437 000 $ -- $ 224 000
State and local 76 000 56 000 46 000
---------- ---------- ----------
Total current 513 000 56 000 270 000
---------- ---------- ----------
Deferred:
Federal 337 000 721 000 184 000
State and local 4 000 1 000 (16 000)
---------- ---------- ----------
Total deferred 341 000 722 000 168 000
---------- ---------- ----------
Total taxes on income from
continuing operations $ 854 000 $ 778 000 $ 438 000
---------- ---------- ----------
---------- ---------- ----------
Deferred tax assets consist of the following:
DECEMBER 31,
------------------------
1995 1994
---------- ----------
Gross deferred tax assets:
Bad debt reserves $ 134 000 $ 137 000
Warranty reserves 20 000 21 000
Net operating loss carryforward 269 000 606 000
---------- ----------
Total $ 423 000 $ 764 000
---------- ----------
---------- ----------
No valuation allowance has been established against the deferred tax assets
because management believes that all of the deferred tax assets will be
realized. The realization of the deferred tax assets resulting from the
utilization of net operating loss carryforwards is dependent upon generating
sufficient taxable income prior to the expiration of these loss carryforwards.
The amount of the deferred tax assets considered realizable could be reduced in
the future if estimates of future taxable income during the carryforward period
are reduced.
27
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 7 - TAXES ON INCOME (continued)
A reconciliation of the Federal statutory rate to the total effective tax
rate applicable to income from continuing operations before taxes on income is
as follows:
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
$ % $ % $ %
------- ----- ------- ----- ------- -----
Federal income taxes
computed at statutory
rates 798 000 34.0 684 000 34.0 385 000 34.0
Increase (decrease)
in taxes resulting
from:
State and local
taxes, net of
Federal tax
benefit 51 000 2.2 36 000 1.8 20 000 1.7
Other 5 000 .2 58 000 2.9 33 000 2.9
------- ----- ------- ----- ------- -----
Taxes on income from
continuing operations 854 000 36.4 778 000 38.7 438 000 38.6
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----
28
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 8 - ACQUISITIONS AND DISCONTINUED OPERATIONS
(a) Acquisitions
During the first quarter of 1995, Florida Pneumatic purchased the assets of
Tradesman Tool Co., Inc. ("Tradesman") and Intech Industries, Inc. ("Intech")
for cash totalling approximately $753,000. Neither of these acquisitions was
material to the consolidated financial statements.
The operations of both Tradesman and Intech were merged into the operations
of Florida Pneumatic.
(b) Discontinued operations
On June 22, 1994, the Company sold substantially all of the assets and
liabilities of Triangle Sheet Metal Works, Inc., its sheet metal contracting
subsidiary, for $3,500,000 in cash. As part of the sale agreement, the Company
is leasing the building to its former subsidiary, for an annual base rental of
approximately $220,000, through October 1997.
The Company had estimated the anticipated loss on the sale of Triangle in
1993 and had recognized the loss in the results of operations for the year ended
December 31, 1993. The actual loss realized on the sale of Triangle in June 1994
had no effect on the results of operations for the year ended December 31, 1994
and was not materially different from the previously estimated loss.
Results of operations applicable to discontinued operations through June
22, 1994 were as follows:
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------
Revenues $ -- $ 3 299 036 $ 10 987 943
------------ ------------ ------------
------------ ------------ ------------
Income (loss)
from operations $ -- ($ 539 068) ($ 428 227)
------------ ------------ ------------
------------ ------------ ------------
29
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 9 - COMMITMENTS AND CONTINGENCIES
(a) The Company and its subsidiaries lease equipment under operating
leases through 1996 for approximate minimum annual rentals as follows: 1996 -
$58,000 and 1997 - $23,000.
Rental expenses for the years ended December 31, 1995, 1994 and 1993 were
approximately $88,000, $77,000 and $81,000, respectively.
(b) The Company and its subsidiaries have adopted a defined contribution
pension plan, which covers substantially all non-union employees. Contributions
to this plan were determined as a percentage of compensation. The amounts
recognized as pension expense for this plan were approximately $229,000,
$213,000 and $232,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.
One of the Company's subsidiaries also participates in a multi-employer
pension plan. This plan provides defined benefits to all union workers.
Contributions to this plan are determined by union contracts and the Company
does not administer or control the funds in any way. The amounts recognized as
pension expense for this plan were approximately $28,000, $26,000 and $30,000
for the years ended December 31, 1995, 1994 and 1993, respectively.
(c) The Company has employment agreements with two officers. These
agreements currently provide for minimum annual aggregate salaries of $570,000
through September 1998 and $321,000 through September 2000. These two agreements
stipulate that if a change in control of the Company occurs and, as a result,
the officers are terminated or are unable to exercise their functions and duties
and therefore resign, they shall have the option to receive either full
compensation for the remaining term of the agreement or a severance allowance
equal to three times average annual compensation for the five previous years.
(d) The Company has a consulting agreement with its former Chairman of the
Board. This agreement currently provides for annual consulting fees of $200,000.
(e) At December 31, 1995, one of the Company's subsidiaries had
outstanding letters of credit totalling approximately $325,000 and foreign
currency forward contracts, maturing in 1996, to purchase approximately
$2,800,000 in Japanese yen at contracted forward rates.
(f) Florida Pneumatic purchases significant amounts of pneumatic tools
from two foreign suppliers. Other sources are available. However, the loss of
either supplier could cause a temporary disruption in the flow of products,
possibly creating an adverse effect on operating results.
30
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 10 - SEGMENTS OF BUSINESS
The following presents financial information by segment for the years ended
December 31, 1995, 1994 and 1993. Operating income excludes general corporate
expenses, interest expense and income taxes. Identifiable assets are those
assets directly owned or utilized by the particular business segment.
BASEBOARD
(000 OMITTED) HEATING PNEUMATIC
CON- MANU- TOOL MANU-
1995 SOLIDATED FACTURING FACTURING OTHER
---- --------- --------- ---------- -------
Net sales $ 42 646 $ 7 523 $ 31 591 $ 3 532
--------- --------- ---------- -------
--------- --------- ---------- -------
Operating income $ 5 623 $ 334 $ 4 953 $ 336
------- -------- -------
------- -------- -------
General corporate
expense (2 256)
Interest expense (1 021)
--------
Income before taxes
on income $ 2 346
--------
--------
Identifiable assets at
December 31, 1995 $ 34 496 $ 5 486 $ 27 136 $ 1 874
------- -------- -------
------- -------- -------
Corporate assets 920
--------
Total assets at
December 31, 1995 $ 35 416
--------
--------
Depreciation
(including $13 corporate) $ 609 $ 212 $ 364 $ 20
-------- ------- -------- -------
-------- ------- -------- -------
Capital expenditures
(including $5 corporate) $ 402 $ 189 $ 208 $ --
-------- ------- -------- -------
-------- ------- -------- -------
31
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 10 - SEGMENTS OF BUSINESS (continued)
BASEBOARD
(000 OMITTED) HEATING PNEUMATIC
CON- MANU- TOOL MANU-
1994 SOLIDATED FACTURING FACTURING OTHER
---- --------- --------- ---------- -------
Net sales $ 44 843 $ 7 126 $ 34 398 $ 3 319
--------- --------- ---------- -------
--------- --------- ---------- -------
Operating income $ 5 262 $ 431 $ 4 559 $ 272
--------- ---------- -------
--------- ---------- -------
General corporate expense (2 191)
Interest expense (1 060)
---------
Income before taxes
on income $ 2 011
---------
Identifiable assets at
December 31, 1994 $ 31 707 $ 4 789 $ 25 087 $ 1 831
Corporate assets 1 306 --------- ---------- -------
--------- --------- ---------- -------
Total assets at
December 31, 1994 $ 33 013
---------
---------
Depreciation
(including $12 corporate) $ 583 $ 220 $ 331 $ 20
--------- --------- ---------- -------
--------- --------- ---------- -------
Capital expenditures
(including $8 corporate) $ 212 $ 81 $ 123 $ --
--------- --------- ---------- -------
--------- --------- ---------- -------
32
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
-------------------------------------------
-------------------------------------------
NOTE 10 - SEGMENTS OF BUSINESS (continued)
BASEBOARD
(000 OMITTED) HEATING PNEUMATIC
CON- MANU- TOOL MANU-
1993 SOLIDATED FACTURING FACTURING OTHER
---- --------- --------- ---------- -------
Net sales $ 40 355 $ 6 450 $ 30 184 $ 3 721
--------- --------- ---------- -------
--------- --------- ---------- -------
Operating income $ 4 069 $ 372 $ 3 334 $ 363
--------- ---------- -------
--------- ---------- -------
General corporate expense (1 854)
Interest expense (1 081)
--------
Income before taxes
on income $ 1 134
--------
--------
Identifiable assets at
December 31, 1993 $ 30 266 $ 4 646 $ 23 803 $ 1 817
Corporate assets 1 530 ------- -------- -------
Net assets of discontinued ------- -------- -------
operation 4 103
--------
Total assets at
December 31, 1993 $ 35 899
--------
--------
Depreciation
(including $12 corporate) $ 557 $ 222 $ 303 $ 20
--------- --------- ---------- -------
--------- --------- ---------- -------
Capital expenditures
(including $6 corporate) $ 794 $ 276 $ 512 $ --
--------- --------- ---------- -------
--------- --------- ---------- -------
The baseboard heating manufacturing segment, which sells to plumbing
supply houses primarily in the Northeast region of the United States, is
directly affected by the housing industry. The pneumatic tool manufacturing
segment sells primarily throughout the United States.
The pneumatic tool manufacturing segment has two major customers that
accounted for 42.2%, 49.6% and 50.0% of consolidated net sales for the years
ended December 31, 1995, 1994 and 1993, respectively. Three customers
accounted for 68.1% of consolidated accounts receivable as of December 31,
1995 and two customers accounted for 68.5% of consolidated accounts
receivable as of December 31, 1994.
33
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 11 - UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION
Unaudited interim consolidated financial information for the two years
ended December 31, 1995 and 1994 is summarized as follows:
QUARTER ENDED
--------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- ---------- ------------- ------------
1995 $ $ $ $
----
Net sales 9 604 535 10 696 735 9 854 150 12 490 534
--------- ---------- --------- ----------
--------- ---------- --------- ----------
Gross profit 3 218 113 3 268 804 3 219 425 3 924 562
--------- --------- --------- ---------
--------- ---------- --------- ----------
Income available to
common shareholders 206 651 232 709 132 358 656 912
--------- ---------- --------- ----------
--------- ---------- --------- ----------
Earnings per share
of common stock (a):
Primary and
fully diluted .06 .07 .04 .21
--- --- --- ---
--- --- --- ---
1994
----
Net sales 9 627 903 9 904 510 10 993 240 14 317 137
--------- --------- ---------- ----------
--------- --------- ---------- ----------
Gross profit 2 957 550 3 322 951 3 191 537 3 924 148
--------- --------- --------- ---------
--------- --------- ---------- ----------
Income available to
common shareholders 114 037 191 938 128 511 535 525
--------- --------- ---------- ----------
--------- --------- ---------- ----------
Earnings per share
of common stock (a):
Primary and
fully diluted .04 .06 .04 .16
--- --- --- ---
--- --- --- ---
(a) After giving effect to dividends paid on preferred stock, as
described in the Summary of Accounting Policies.
34
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
------------------------------------------
------------------------------------------
NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
Interest $ 1 159 936 $ 1 249 465 $ 1 288 944
----------- ----------- -----------
----------- ----------- -----------
Income taxes $ 340 407 $ 266 822 $ 332 550
----------- ----------- -----------
----------- ----------- -----------
35
PART II (continued)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors and executive officers of the
Registrant is set forth in the Registrant's definitive Proxy Statement for
its 1996 Annual Meeting of Stockholders (the "Proxy Statement") to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, and is hereby incorporated by
reference.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is set forth in the Proxy
Statement to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended, and is
hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to the security ownership of certain beneficial
owners and management is set forth in the Proxy Statement to be filed with
the Securities and Exchange Commission pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, and is hereby incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions
is set forth in the Proxy Statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act
of 1934, as amended, and is hereby incorporated by reference.
36
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
PAGE
----
(a) Financial statements and financial statement schedules
(1) The consolidated financial statements of the Registrant
as set forth under Item 8 are filed as part of this report.
(2) The following consolidated financial statement schedule
for the three years ended December 31, 1995, 1994 and 1993 is
filed as part of this report:
Schedule II - Valuation and Qualifying Accounts 38
All other schedules are omitted because they are
not required, are not applicable, or the required information
is otherwise shown in the financial statements or notes thereto.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed by the Registrant during
the last quarter of the period covered by this report.
(c) The following exhibit is filed as part of this report:
Exhibit 11 - Schedule of Computation of Earnings
Per Common Share 40
37
P & F INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
---------------------------------------
---------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- -------------------- ---------- --------
ADDITIONS
--------------------
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ---------- -------- ---------- ---------
Year ended December 31, 1995:
Allowance for possible losses $ 354 252 $ 77 307 $ -- $ 80 875(a) $ 350 684
---------- ---------- -------- ---------- ----------
---------- ---------- -------- ---------- ----------
Reserve for disposal of
discontinued operations $ 69 078 $ -- $ -- $ 69 078(a) $ --
---------- ---------- -------- ---------- ----------
---------- ---------- -------- ---------- ----------
Year ended December 31, 1994:
Allowance for possible losses $ 351 734 $ 99 996 $ -- $ 97 478(a) $ 354 252
---------- ---------- -------- ---------- ----------
---------- ---------- -------- ---------- ----------
Reserve for disposal of
discontinued operations $3 296 000 $ -- $ -- $3 226 922 $ 69 078
---------- ---------- -------- ---------- ----------
---------- ---------- -------- ---------- ----------
Year ended December 31, 1993:
Allowance for possible losses $ 203 623 $ 178 895 $ -- $ 30 784(a) $ 351 734
---------- ---------- -------- ---------- ----------
---------- ---------- -------- ---------- ----------
Reserve for disposal of
discontinued operations $ -- $3 296 000 $ -- $ -- $3 296 000
---------- ---------- -------- ---------- ----------
---------- ---------- -------- ---------- ----------
- -----------------
(a) Write-off of expenses against reserve.
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
P & F INDUSTRIES, INC.
(Registrant)
By: /s/ RICHARD A. HOROWITZ By: /s/ LEON D. FELDMAN
------------------------------ ------------------------------
Richard A. Horowitz Leon D. Feldman
Chairman of the Board Executive Vice President
President Treasurer
Principal Executive Officer Principal Financial and
Principal Operating Officer Accounting Officer
Date: March 19, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/ RICHARD A. HOROWITZ
- -------------------------------- --------------------------------
Richard A. Horowitz, Director Sidney Horowitz, Director
/s/ LEON D. FELDMAN
- -------------------------------- --------------------------------
Leon D. Feldman, Director Earle K. Moore, Director
/s/ ARTHUR HUG, JR. /s/ ROBERT L. DUBOFSKY
- -------------------------------- --------------------------------
Arthur Hug, Jr., Director Robert L. Dubofsky, Director
--------------------------------
Date: March 19, 1996 Marc A. Utay, Director
39