-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NUeiC3xpqqC+d2+7DjmrUxToDpofA2z1WgIhMq+QvDLLYPihtGYq4rh4AvI6mY8O TTQqW19dXfb0h7wJFPHaMQ== 0000950123-97-008591.txt : 19971016 0000950123-97-008591.hdr.sgml : 19971016 ACCESSION NUMBER: 0000950123-97-008591 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971015 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARLEN CORP CENTRAL INDEX KEY: 0000007346 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 132668657 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06675 FILM NUMBER: 97696070 BUSINESS ADDRESS: STREET 1: 505 EIGHTH AVE CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2127368100 MAIL ADDRESS: STREET 1: 505 EIGHTH AVE CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: ARLEN REALTY & DEVELOPMENT CORP DATE OF NAME CHANGE: 19860121 10-Q 1 ARLEN CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES - ----- EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1997 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 1-6675 THE ARLEN CORPORATION (Exact name of registrant as specified in its charter) New York 13-2668657 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 505 Eighth Avenue, New York, New York 10018 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 736-8100 Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section l3 or l5(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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $1 par value - 29,587,619 shares outstanding as of October 3, 1997 1 2 THE ARLEN CORPORATION AND SUBSIDIARIES INDEX ===============================================================================
PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated balance sheet -- August 31, 1997 (unaudited) 4 Consolidated balance sheet -- February 28, 1997 5 Consolidated statements of operations -- Six and three months ended August 31, 1997 and 1996 (unaudited) 6 Consolidated statements of cash flows -- Six months ended August 31, 1997 and 1996 (unaudited) 7-8 Notes to consolidated financial statements 9-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-12 PART II. OTHER INFORMATION 13 SIGNATURES 13
2 3 PART I - FINANCIAL INFORMATION Item 1 Financial Statements 3 4 THE ARLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET August 31, 1997 ($000s Omitted) (UNAUDITED) ===============================================================================
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 22 Note receivable - current portion, net of unamortized discount of $4 882 --------- TOTAL CURRENT ASSETS 904 PROPERTY AND EQUIPMENT, net 45 OTHER ASSETS, including amounts due from former subsidiaries 85 --------- TOTAL ASSETS $1,034 ========= LIABILITIES AND CAPITAL DEFICIT CURRENT LIABILITIES: Notes payable $ 137 Accrued interest payable (including $5 due to related parties) 233 Accrued expenses, fees and other (Note 2) 7,393 Current portion of long-term obligations due to related parties 829 --------- TOTAL CURRENT LIABILITIES 8,592 AMOUNTS DUE TO RELATED PARTIES 137,845 --------- TOTAL LIABILITIES 146,437 COMMITMENTS AND CONTINGENCIES (Note 2) CAPITAL DEFICIT (145,403) --------- TOTAL LIABILITIES AND CAPITAL DEFICIT $1,034 =========
See notes to consolidated financial statements 4 5 THE ARLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET February 28, 1997 ($000s Omitted) ===============================================================================
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4 Note receivable - current portion, net of unamortized discount of $35 887 --------- TOTAL CURRENT ASSETS 891 PROPERTY AND EQUIPMENT, net 51 OTHER ASSETS, including amounts due from former subsidiaries 181 --------- TOTAL ASSETS $1,123 ========= LIABILITIES AND CAPITAL DEFICIT CURRENT LIABILITIES: Notes payable $ 137 Accrued interest payable (including $4 due to related parties) 213 Accrued expenses, fees and other (Note 2) 7,013 Current portion of long-term obligations due to related parties 829 --------- TOTAL CURRENT LIABILITIES 8,192 AMOUNTS DUE TO RELATED PARTIES 133,143 --------- TOTAL LIABILITIES 141,335 COMMITMENTS AND CONTINGENCIES (Note 2) CAPITAL DEFICIT (140,212) --------- TOTAL LIABILITIES AND CAPITAL DEFICIT $1,123 =========
5 6 THE ARLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($000s Omitted) (UNAUDITED) ===============================================================================
Six months ended Three months ended August 31, August 31, --------- --------- 1997 1996 1997 1996 ---- ---- ---- ---- GENERAL & ADMINISTRATIVE EXPENSES ($585) ($581) ($306) ($301) OTHER (EXPENSES) INCOME: Interest expense (including amounts due to related parties of $5,412 and $2,730 in 1997 and $5,039 and $2,531 in 1996) (5,432) (5,265) (2,736) (2,643) Interest income 737 770 367 734 Other Income, net 89 144 - - -------- -------- -------- -------- Net loss ($5,191) ($4,932) ($2,675) ($2,210) ======== ======== ======== ======== LOSS PER COMMON SHARE ($0.16) ($0.15) ($0.08) ($0.07) ======= ======= ======== ========
See notes to consolidated financial statements 6 7 THE ARLEN CORPORATION AND SUBSIDIARIES STATEMENTS OF CASH FLOWS ($000s Omitted) (UNAUDITED) ===============================================================================
Six months ended August 31, 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($5,191) ($4,932) -------- -------- Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 12 11 Amortization on note discount (31) (70) Increase in accrued interest due related parties in exchange for interest 5,412 5,040 Changes in assets and liabilities (Increase) decrease in assets Other assets 96 4 Increase (decrease) in liabilities: Accrued interest payable 20 15 Accrued other liabilities 380 213 -------- -------- Total adjustments 5,889 5,213 -------- -------- Net cash provided by operating activities 698 281 -------- --------
See notes to consolidated financial statements 7 8 THE ARLEN CORPORATION AND SUBSIDIARIES STATEMENTS OF CASH FLOWS ($000s Omitted) (UNAUDITED) (Continued) ===============================================================================
Six months ended August 31, 1997 1996 ---- ---- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of property and equipment (6) 0 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds on notes receivable 36 466 Payments on debt due to related parties (710) (703) Principal payments on long-term borrowings - (40) -------- -------- Net cash used in financing activities (674) (277) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 18 4 CASH AND CASH EQUIVALENTS, at February 28, 1997 and February 29, 1996 4 10 -------- -------- CASH AND CASH EQUIVALENTS, at August 31, 1997 and 1996 $ 22 $ 14 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the six months ended August 31, 1997 and 1996 for interest $ 710 $ 707 ======== ========
See notes to consolidated financial statements 8 9 THE ARLEN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (August 31, 1997) =============================================================================== NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of The Arlen Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and six-month periods ended August 31, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, 1998. For further information, reference is made to the Company's Consolidated Financial Statements and Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1997. 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, the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying unaudited consolidated financial statements of the Company have been prepared on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At August 31, 1997, the Company had a working capital deficiency of $7,688,000 and a capital deficit of $145,403,000. Currently, the Company meets its operating expenses with the fees generated by a subsidiary for participation in mortgage financing activities and the proceeds of a $2,000,000 promissory note received in connection with the February 1996 disposition of its operating subsidiaries. The Company is seeking new business opportunities, though there can be no assurance that it will be successful in achieving this objective. 9 10 THE ARLEN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (August 31, 1997) =============================================================================== NOTE 2 - COMMITMENTS AND CONTINGENCIES The Company is the sponsor of a defined benefit pension plan (the "Plan") which was frozen in 1981. The actuarial valuation of the Plan as of March 1, 1991 (the latest Plan valuation) indicated the unfunded actuarial accrued liability was approximately $850,000. In November 1996, the United States Internal Revenue Service (the "IRS") granted the Company's request for a waiver of the minimum funding standard for the plan year ended February 29, 1996, conditioned upon (1) eight quarterly payments by the Company to the Plan of $33,000 each beginning with the calendar quarter ended December 31, 1996 and (2) a credit balance equal to the unamortized balance of the waiver (estimated to be approximately $175,000) being maintained in the Plan's funding standard account for each plan year commencing on or after March 1, 1997. After giving effect to the waiver granted by the IRS, management believes that it has adequately provided in the Company's balance sheet (in accrued expenses, fees and other) for the Plan's unfunded accrued liability. If the conditions described above are not satisfied, the waiver could be declared null and void. NOTE 3 - LOSS PER COMMON SHARE Loss per common share is computed by dividing the net loss, after giving effect to dividends on preferred stock, by the weighted average number of common shares and common share equivalents outstanding during each period. Convertible securities that are deemed to be common share equivalents are assumed to have been converted at the beginning of each period. The Company's common share equivalents and convertible issues were anti-dilutive at August 31, 1997 and 1996 and, therefore, were not included in the loss per share computations for these periods. The weighted average number of shares used to compute per share amounts was 31,587,000 for the three- and six-month periods ended August 31, 1997 and 31,690,000 for the three- and six-month periods ended August 31, 1996, inclusive of Class B shares. 10 11 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11 12 THE ARLEN CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (August 31, 1997) =============================================================================== The following discussion and analysis should be read in conjunction with the Company's unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Item 1 of Part I of this Report: LIQUIDITY AND CAPITAL RESOURCES The cash flow which the Company receives from the $2,000,000 promissory note acquired in connection with the February 1996 disposition of its operating subsidiaries and the fee income generated from a subsidiary's participation in mortgage financing activities have enabled the Company to meet its current cash requirements and are believed to be adequate to enable the Company to avoid any serious cash flow shortages in the near term. RESULTS OF OPERATIONS The Company's net losses for the three-month periods ended August 31, 1997 and 1996 result almost entirely from the interest accrual attributable to the indebtedness owed to related parties. 12 13 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (b) The Registrant filed a Current Report on Form 8-K, dated August 15, 1997, with respect to Item 5 (Other Events). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. THE ARLEN CORPORATION (Registrant) By: /s/ Allan J. Marrus ------------------------------------- Allan J. Marrus, President Date: October 10, 1997 By: /s/ Stanley Garber ------------------------------------- Stanley Garber, Treasurer Date: October 10, 1997 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000007346 ARLEN CORPORATION 1,000 6-MOS FEB-28-1998 MAR-01-1997 AUG-31-1997 22 0 0 0 0 904 161 116 1,034 8,592 137,845 0 1,992 30,804 (178,199) 1,034 0 826 0 0 585 0 5,432 (5,191) 0 (5,191) 0 0 0 (5,191) (.16) (.16)
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