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Previous: SALOMON INC, 8-K, 1995-07-11 |
Next: GOLD KIST INC, 424B3, 1995-07-11 |
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended May 31, 1995
------------
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from ______________ to _______________
Commission File No. 0-5954
COMPUTER RESEARCH, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Pennsylvania 25-1201499
------------ ----------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
Cherrington Corporate Center, Building 200, Coraopolis, Pennsylvania 15108
-----------------------------------------------------------------------------
(Address of principal executive offices)
(412) 262-4430
---------------------------
(Issuer's telephone number)
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
3,883,895
- - ----------------------
<PAGE> 2
PART I - FINANCIAL STATEMENTS
-----------------------------
ITEM I
- - ------
A. COMPUTER RESEARCH, INC. CONSOLIDATED BALANCE SHEET
--------------------------------------------------
May 31, 1995 and August 31, 1994
--------------------------------
ASSETS
------
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1995 1994
------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 650,462 $ 691,881
Accounts Receivable - Trade 827,350 580,138
Inventories - Finished Goods 102,126 101,347
Prepaid Expenses 51,174 53,146
Prepaid and Refundable Income Taxes 1,720 5,000
---------- ----------
1,632,832 1,431,512
---------- ----------
EQUIPMENT and LEASEHOLD IMPROVEMENTS - At Cost
Data Processing Equipment 4,264,731 4,234,619
Office Equipment 524,488 508,165
Leasehold Improvements 268,744 268,745
---------- ----------
5,057,963 5,011,529
Less: Accumulated Depreciation 4,847,550 4,785,985
---------- ----------
210,413 225,544
---------- ----------
OTHER ASSETS 1,341 2,768
---------- ----------
$1,844,586 $1,659,824
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
A. COMPUTER RESEARCH, INC. CONSOLIDATED BALANCE SHEET - CONT'D.
------------------------------------------------------------
May 31, 1995 and August 31, 1994
--------------------------------
LIABILITIES
-----------
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1995 1994
------- ---------
<S> <C> <C>
CURRENT LIABILITIES
Note Payable to Bank $ 30,000 $ 50,000
Current Portion of Long Term Debt 5,854 6,521
Accounts Payable 224,699 170,841
Accrued Payroll 62,512 87,708
Accrued Vacation Pay 284,854 264,604
Customer Deposits 83,573 40,850
Accrued Rent 100,290 122,274
Accrued Lease Obligations 21,237 61,457
---------- ----------
813,019 804,255
NON-CURRENT LIABILITIES
Long Term Debt - 4,127
Accrued Lease Obligations 22,960 39,151
---------- ----------
835,979 847,533
---------- ----------
SHAREHOLDERS' EQUITY
--------------------
COMMON STOCK (No Par Value - $.0008 stated value)
Issued - 3,883,895 shares at May 31, 1995,
and 3,864,895 at August 31, 1994 3,107 3,092
ADDITIONAL PAID IN CAPITAL 715,085 711,489
RETAINED EARNINGS 290,415 97,710
---------- ----------
1,008,607 812,291
---------- ----------
$1,844,586 $1,659,824
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
B. COMPUTER RESEARCH, INC. CAPITALIZATION AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
May 31, 1995
------------
<TABLE>
<CAPTION>
DEBT AMOUNT
---- ------
<S> <C>
Short-Term Loans, Notes $ 30,000
Long-Term Debt (Including $5,854 due within one year) 5,854
---------
Total Debt $ 35,854
=========
SHAREHOLDERS' EQUITY
- - --------------------
SHARES ISSUED AMOUNT
------------- ------
Preferred Stock -0-
Common Stock 3,883,895 $ 3,107
Capital in Excess of Par Value 715,085
Retained Earnings -
Balance at Beginning of Current Fiscal Year 97,710
Net Income for Period 192,705
----------
290,415
----------
Total Shareholders' Equity $1,008,607
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
C. COMPUTER RESEARCH, INC. STATEMENT OF CONSOLIDATED INCOME
--------------------------------------------------------
For the Nine Months Ended May 31, 1995 and 1994
-----------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
REVENUES
--------
Sales of Services $4,321,124 $4,073,580
Sales of Equipment, Software and Supplies 70,083 67,872
Rental Income From Operating Leases 36,545 38,130
Other Income 34,412 47,510
---------- ----------
4,462,164 4,227,092
---------- ----------
COSTS AND EXPENSE
-----------------
Operating Expenses 2,861,565 2,756,401
Selling and Administrative Expenses 1,281,147 1,234,965
Depreciation and Amortization 63,844 66,546
Cost of Equipment, Software and Supplies Sold 45,322 39,246
Interest Expense 8,581 4,688
---------- ----------
4,260,459 4,101,846
---------- ----------
INCOME BEFORE INCOME TAXES 201,705 125,246
LESS: PROVISION FOR INCOME TAXES 9,000 -
---------- ----------
NET INCOME $ 192,705 $ 125,246
========== ==========
Average Number of Shares Outstanding 3,883,895 3,864,895
---------- ----------
Earnings Per Common Share $ .05 $ .03
---------- ----------
DIVIDENDS PER COMMON SHARE - -
========== ==========
</TABLE>
The results for the period ended May 31, 1995, are not necessarily indicative
of the results to be expected for the year. All known adjustments necessary
for a fair presentation of the financial information of the Company have been
reflected for the nine months ended May 31, 1995.
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
C. COMPUTER RESEARCH, INC. STATEMENT OF CONSOLIDATED INCOME
--------------------------------------------------------
For the Fiscal Third Quarter Ended May 31, 1995 and 1994
--------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
REVENUES
--------
Sales of Services $1,526,074 $1,375,509
Sales of Equipment, Software and Supplies 61,690 18,207
Rental Income From Operating Leases 11,640 13,165
Other Income 13,086 18,081
---------- ----------
1,612,490 1,424,962
---------- ----------
COSTS AND EXPENSES
------------------
Operating Expenses 1,008,696 939,100
Selling and Administrative Expenses 439,545 438,015
Depreciation and Amortization 22,050 23,171
Cost of Equipment, Software and Supplies Sold 42,295 10,435
Interest Expense 2,981 1,693
---------- ----------
1,515,567 1,412,414
---------- ----------
INCOME BEFORE INCOME TAXES 96,923 12,548
LESS: PROVISION FOR INCOME TAXES 9,000 -
---------- ----------
NET INCOME $ 87,923 $ 12,548
========== ==========
Average Number of Shares Outstanding 3,883,895 3,864,895
---------- ----------
Earnings Per Common Share $ .02 $ .00
---------- ----------
DIVIDENDS PER COMMON SHARE - -
========== ==========
</TABLE>
The results for the period ended May 31, 1995, are not necessarily indicative
of the results to be expected for the year. All known adjustments necessary
for a fair presentation of the financial information of the Company have been
reflected for the three months ended May 31, 1995.
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
D. COMPUTER RESEARCH, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------
For the Nine Months Ended May 31, 1995 and 1994
-----------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES:
Net Income $ 192,705 $ 125,246
---------- ---------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and Amortization 63,844 66,546
Provision for Losses on Accounts Receivable 10,000 (11,476)
Change in Assets and Liabilities:
Accounts Receivable (257,212) (103,176)
Inventories (779) 8,564
Prepaid Expenses 1,972 (4,942)
Prepaid and Refundable Income Taxes 3,280
1,580
Other Assets 1,427 -
Accounts Payable 53,858 13,044
Accrued Payroll (25,196) (29,782)
Accrued Vacation Pay 20,250 30,800
Customer Deposits 42,723 4,000
Accrued Rent (21,984) 81,710
Accrued Lease Obligations (56,411) (84,375)
---------- ---------
Total Adjustments (164,228) (27,507)
---------- ---------
Net Cash Provided (Used) by Operating Activities 28,477 97,739
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Equipment and Leasehold Improvements (48,713) (65,260)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on Existing Debt (120,000) (17,865)
Payments on Capital Lease Obligations (4,794) (10,360)
Issuance of Common Stock 3,611 4,750
Proceeds From Line of Credit 100,000 50,000
---------- ---------
Net Cash Provided by Financing Activities (21,183) 26,525
---------- ---------
Net Increase in Cash and Cash Equivalents (41,419) 59,004
Cash and Cash Equivalents at Beginning of Period 691,881 695,635
---------- ---------
Cash and Cash Equivalents at End of Period $ 650,462 $ 754,639
========== =========
CASH PAID DURING THE PERIOD
---------------------------
5/31/95 5/31/94
------- -------
Interest $ 8,581 $ 4,688
========== =========
Taxes $ - $ -
========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
COMPUTER RESEARCH, INC. & CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
NINE MONTHS ENDED MAY 31, 1995
------------------------------
NOTE A - COMPANY'S ANNUAL REPORT UNDER FORM 10-KSB
- - --------------------------------------------------
The accompanying financial information should be read in conjunction
with the Company's 1994 Annual Report on Form 10-KSB.
NOTE B - ADJUSTMENTS
- - --------------------
In the opinion of management, all adjustments that were made, which are
necessary to a fair statement of the results for the interim periods,
were of a normal and recurring nature.
8
<PAGE> 9
ITEM 2
- - ------
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
1. CAPITAL RESOURCES AND LIQUIDITY
-------------------------------
Due to the relatively stable operating costs of the data
processing service business, the working capital requirements of
the Company are normally predictable. Net income of
approximately $193,000 for the first nine months of the current
year added to cash available in support of operations. In the
opinion of management, the Company's existing capital, along with
revenues generated by clients of the service business, will
satisfy the capital needs of the Company for the foreseeable
future. In addition, the Company has a $500,000 line of credit
of which over $450,000 remains available if needed.
As of the current date, no major purchases are being contemplated
for the foreseeable future.
2. RESULTS OF OPERATIONS
---------------------
REVENUES
--------
The Company's principal source of revenue is derived from
providing accounting and computer support services to securities
brokerage firms, some of whom are affiliates of banks and other
financial institutions. The Company's revenues are directly
affected by trading volume and the number of transactions
processed for its clients. Due to the volatile nature of the
industry served, the results of operation for the period
represented are not necessarily indicative of the results of
operations to be expected for the full year or any specific
period.
The revenues for the first nine months of the current year
increased by approximately 6% over the previous year. This
increase is primarily due to an expanded number of transactions
processed for the clients of the data processing service.
The revenues for the fiscal third quarter of the current year
increased by approximately 13% over the corresponding period of
the previous year. This is primarily due to an approximate 11%
increase in service revenues.
9
<PAGE> 10
COSTS AND EXPENSES
------------------
The total costs and expenses for the first nine months of the
current year increased by approximately 4% over the corresponding
period of the previous year.
The total costs and expenses for the fiscal third quarter of the
current year increased by approximately 7% over the corresponding
period of the previous year.
NET INCOME
----------
The net income for the first nine months of the current year was
approximately $198,000 or $.05 per share. This corresponds to
net income of approximately $125,000 or $.03 per share for the
first nine months of the previous year.
The net income for the fiscal third quarter of the current year
was approximately $88,000 or $.02 per share as compared to income
of approximately $13,000 or $.00 per share for the corresponding
period of the previous year.
10
<PAGE> 11
PART II - OTHER INFORMATION
Not applicable.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
COMPUTER RESEARCH, INC.
-----------------------
(Registrant)
Date July 11, 1995 JAMES L. SCHULTZ
----------------- --------------------------
James L. Schultz,
President & Treasurer
11
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