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Previous: CITY NATIONAL CORP, 8-K, 1996-01-12 |
Next: LAZARE KAPLAN INTERNATIONAL INC, 10-Q, 1996-01-12 |
<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 November 30, 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:
3,887,338
- ----------------------
<PAGE> 2
PART I - FINANCIAL STATEMENTS
-----------------------------
ITEM I
- ------
A. COMPUTER RESEARCH, INC. CONSOLIDATED BALANCE SHEET
--------------------------------------------------
November 30, 1995 and August 31, 1995
-------------------------------------
ASSETS
------
<TABLE>
<CAPTION>
NOVEMBER 30, AUGUST 31,
1995 1995
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $1,099,430 $ 873,508
Accounts Receivable - Trade
(net of allowance for doubtful accounts
of $35,000 and $30,000 at 11/30/95 and
8/31/95 respectively) 968,316 776,099
Inventories
(first-in, first-out) or market 77,746 80,518
Prepaid Expenses 70,432 75,911
Total Current Assets 2,215,924 1,806,036
---------- ----------
EQUIPMENT and LEASEHOLD IMPROVEMENTS - At Cost
Data Processing Equipment 4,260,099 4,255,912
Data Processing Equipment Under Capital Leases 104,339 104,339
Other 802,012 798,889
---------- ----------
5,166,450 5,159,140
Less Accumulated Depreciation and Amortization 4,902,772 4,879,610
---------- ----------
263,678 279,530
---------- ----------
OTHER ASSETS 1,341 1,341
---------- ----------
$2,480,943 $2,086,907
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
A. COMPUTER RESEARCH, INC. CONSOLIDATED BALANCE SHEET - CONT'D.
------------------------------------------------------------
November 30, 1995 and August 31, 1995
-------------------------------------
LIABILITIES
-----------
<TABLE>
<CAPTION>
NOVEMBER 30, AUGUST 31,
1995 1995
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note Payable to Bank $ 5,000 $ 25,000
Current Portion of Long-Term Obligations 45,081 45,852
Accounts Payable 109,959 82,057
Accrued Payroll 166,018 157,036
Accrued Income Taxes 90,870 27,500
Accrued Vacation 288,470 281,720
Customer Deposits 109,179 70,350
Accrued Rent 109,743 103,847
Accrued Lease Obligation 18,644 20,204
Other Current Liabilities 6,046 4,746
---------- ----------
Total Current Liabilities 949,010 818,312
LONG-TERM OBLIGATIONS 24,805 35,885
ACCRUED LEASE OBLIGATION 14,417 17,909
---------- ----------
Total Liabilities 988,232 872,106
---------- ----------
COMMITMENTS
STOCKHOLDERS' EQUITY
- --------------------
Common Stock - No Par Value; $.0008 Stated Value;
5,000,000 Shares Authorized; 3,887,338 and
3,887,895 Shares Issued and Outstanding
at 11/30/95 and 8/31/95, Respectively 3,110 3,110
Additional Paid-In Capital 715,666 715,842
Retained Earnings 773,935 495,849
---------- ----------
Total Stockholders' Equity 1,492,711 1,214,801
---------- ----------
$2,480,943 $2,086,907
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
B. COMPUTER RESEARCH, INC. CAPITALIZATION AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------
November 30, 1995
-----------------
<TABLE>
<CAPTION>
DEBT AMOUNT
---- ------
<S> <C> <C>
Short-Term Loans, Notes $ 5,000
Long-Term Debt (Including $45,081 due within one year) 69,886
----------
Total Debt $ 74,886
==========
SHAREHOLDERS' EQUITY
- --------------------
SHARES ISSUED AMOUNT
------------- ------
Preferred Stock -0-
Common Stock 3,887,338 $ 3,110
Capital in Excess of Par Value 715,666
Retained Earnings -
Balance at Beginning of Current Fiscal Year 495,849
Net Income for Period 278,086
----------
773,935
----------
Total Stockholders' Equity $1,492,711
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
C. COMPUTER RESEARCH, INC. STATEMENT OF CONSOLIDATED INCOME
--------------------------------------------------------
For the Three Months Ended November 30, 1995 and 1994
-----------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
REVENUES
--------
Sales of Services $1,802,781 $1,333,922
Sales of Equipment, Software and Supplies 530 3,583
Rental Income From Operating Leases 11,565 12,765
Other Income 15,752 7,284
---------- ----------
1,830,628 1,357,554
---------- ----------
COSTS AND EXPENSES
------------------
Operating Expenses 998,487 887,573
Selling and Administrative Expenses 462,184 413,845
Depreciation and Amortization 23,162 20,708
Cost of Equipment, Software and Supplies Sold - 1,402
Interest Expense 3,709 1,856
---------- ----------
1,487,542 1,325,384
---------- ----------
INCOME BEFORE INCOME TAXES 343,086 32,170
LESS: PROVISION FOR INCOME TAXES 65,000 -
---------- ----------
NET INCOME $ 278,086 $ 32,170
========== ==========
Average Number of Shares Outstanding 3,887,338 3,879,895
---------- ----------
Earnings Per Common Share Before Taxes $ .07 $ .01
---------- ----------
DIVIDENDS PER COMMON SHARE - -
========== ==========
</TABLE>
The results for the period ended November 30, 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 November 30, 1995.
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
D. COMPUTER RESEARCH, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------
For the Three Months Ended November 30, 1995 and 1994
-----------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES:
Net Income $ 278,086 $ 32,170
---------- ----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and Amortization 23,162 20,708
Provision for Losses on Doubtful Accounts 5,000 -
Change in Assets and Liabilities:
Accounts Receivable (197,217) (165,298)
Inventories 2,772 (15,009)
Prepaid Expenses 5,479 (39,949)
Other Assets - 1,427
Accounts Payable, Accrued Expenses and
Other Current Liabilities 114,200 (46,402)
Customer Deposits 38,829 16,139
Accrued Lease Obligation (5,052) (26,562)
----------- -----------
Total Adjustments (12,827) (254,946)
---------- ----------
Net Cash (Used In) Provided by Operating Activities 265,259 (222,776)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Equipment and Leasehold Improvements (7,310) (6,574)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance (Retirement) of Stock (176) 2,852
Proceeds From Line of Credit - 100,000
Payments on Capital Lease Obligations (11,851) (1,536)
Payments on Line of Credit (20,000) (53,354)
---------- ----------
Net Cash Provided by (Used In) Financing Activities (32,027) 47,962
---------- ----------
Net Increase (Decrease) in Cash 225,922 (181,388)
Cash and Cash Equivalents at August 31, 1995 873,508 691,881
---------- ----------
Cash and Cash Equivalents at November 30, 1995 $1,099,430 $ 510,493
========== ==========
CASH PAID DURING THE PERIOD
- ---------------------------
11/30/95 11/30/94
-------- --------
Interest $ 3,709 $ 1,856
========== ==========
Income Taxes $ 1,630 $ -
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
COMPUTER RESEARCH, INC. & CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
THREE MONTHS ENDED NOVEMBER 30, 1995
------------------------------------
NOTE A - COMPANY'S ANNUAL REPORT UNDER FORM 10-KSB
- --------------------------------------------------
The accompanying financial information should be read in conjunction
with the Company's 1995 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.
7
<PAGE> 8
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 $278,000 during the first quarter of the current
year added to cash available in support of operations. In the
opinion of management, the Company's existing cash on hand,
combined 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 an approximate
$500,000 line of credit available, if needed.
The Company will install an additional Honeywell Bull mainframe
computer system in January 1996 on a 24 month lease with a total
commitment of approximately $60,000. During the 1997 fiscal
year, the Company intends to have the software of its product
line operational on IBM computer equipment. At that time, the
Company will have the option to purchase computer processing time
from an outside supplier or, if cost justified, to install IBM
computer equipment of its own for its service business.
2. RESULTS OF OPERATIONS
---------------------
REVENUES
--------
The Company's principal source of revenue is derived from
providing computerized accounting and support services to
securities brokerage firms, banks and other financial
institutions. The Company's revenues are directly affected by
securities trading volume and the number of transactions
processed for its clients. Due to the volatile nature of the
industry served, the results of operations 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 total revenues for the first quarter of the current year
exceeded the revenues for the comparable period of the previous
year by approximately 35%. This is attributable to an
approximate 30% monthly increase in transactions processed for
the banking and brokerage clients, plus an increase in systems
development revenues.
The total revenues for the first three months ending November 30,
1994, increased by approximately 5% over the previous year as a
result of increased billings for data processing service.
8
<PAGE> 9
COSTS AND EXPENSES
------------------
The total costs and expenses for the first quarter of the current
year increased by approximately 12% over the comparable period of
the previous year. An increase in data communications costs, as
well as costs associated with systems development, were partly
responsible for this increase.
The total costs and expenses increased approximately 4% for the
first three months of the previous year.
NET INCOME
----------
Net income for the first three months of the current year was
$278,086 or $.07 per share.
The net income for the first three months of the previous year
was $32,170 or $.01 per share.
9
<PAGE> 10
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 January 12, 1996 /s/ JAMES L. SCHULTZ
------------------ --------------------------------
James L. Schultz,
President & Treasurer
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000201511
<NAME> COMPUTER RESEARCH, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> NOV-30-1995
<EXCHANGE-RATE> 1
<CASH> 1,099,430
<SECURITIES> 0
<RECEIVABLES> 1,003,316
<ALLOWANCES> 35,000
<INVENTORY> 77,746
<CURRENT-ASSETS> 2,215,924
<PP&E> 5,166,450
<DEPRECIATION> 4,902,772
<TOTAL-ASSETS> 2,480,943
<CURRENT-LIABILITIES> 949,010
<BONDS> 5,000
<COMMON> 3,110
0
0
<OTHER-SE> 1,489,601
<TOTAL-LIABILITY-AND-EQUITY> 2,480,943
<SALES> 530
<TOTAL-REVENUES> 1,830,628
<CGS> 0
<TOTAL-COSTS> 1,483,833
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,000
<INTEREST-EXPENSE> 3,709
<INCOME-PRETAX> 343,086
<INCOME-TAX> 65,000
<INCOME-CONTINUING> 278,086
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 278,086
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
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