<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A No. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission File Number 0-8254
--------------------------- --------------------------------
WESTF0RD GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0854431
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 East Broad Street, Columbus, Ohio 43215
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (614) 228-2800
----------------
None
- -------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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 twelve 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 last practicable date.
Class Outstanding at June 30, 1999
- ------------------------------- -----------------------------------
Common stock, without par value 1,368,706
<PAGE> 2
WESTFORD GROUP, INC.
AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
June 30, 1999 (unaudited) and December 31, 1998 3
Consolidated Statements of Operations for the three months and six
months ended June 30, 1999 and 1998 (unaudited) 5
Consolidated Statements of Cash Flows for the
six months ended June 30, 1999 and 1998 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure About
Market Risk Not Applicable
PART II - OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities and Use of Proceeds Not Applicable
Item 3. Default upon Senior Securities Not Applicable
Item 4. Submission of Matter to a Vote
of Security Holders Not Applicable
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
--------------------
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1999 1998
- ------ ----------- ------------
(Unaudited)
<S> <C> <C>
Cash $ 412,942 $ 400,983
Accounts receivable - trade, net 282,326 260,340
Estimated earnings in excess of billings on
uncompleted codification contracts 150,044 135,364
Costs of uncompleted code supplements 10,445 13,331
Other assets 10,644 5,853
----------- ---------
Total current assets 866,401 815,871
Property and equipment, net 94,278 42,571
Intangible asset, net of accumulated amortization of
$47,625 in 1999 and $45,555 in 1998 118,029 120,100
----------- ---------
Total assets $ 1,078,708 $ 978,542
=========== =========
</TABLE>
(Continued)
3
<PAGE> 4
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Balance Sheets, Continued
<TABLE>
<CAPTION>
June 30, December 31,
Liabilities and Shareholders' Equity 1999 1998
- ------------------------------------ ----------- ------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 90,541 $ 95,557
Accrued salaries, commissions and payroll taxes
payable 127,194 102,577
Accrued legal and professional- - 6,845
Billings in excess of costs and estimated earnings on
uncompleted codification contracts 59,741 39,142
Current portion of capital lease obligations - 2,002
Deferred taxes 22,422 3,293
Deferred revenue 373 15,323
Other accrued liabilities 10,914 8,352
----------- ------------
Total current liabilities 311,185 273,091
Debenture payable 50,000 50,000
----------- ------------
Total liabilities 361,185 323,091
----------- ------------
Commitments
Series two serial redeemable preference stock, 500 shares
authorized; none issued - -
----------- ------------
Shareholders' equity:
Serial preference stock, without par value:
Series one serial preference, authorized 100 shares;
none issued - -
Class A preferred shares, par value $2,285; authorized
500 shares; none issued - -
Class B preferred shares, par value $500; authorized
4,000 shares; none issued - -
Common stock, without par value; authorized 2,000,000
shares; 1,434,202 shares issued 871,286 871,286
Additional paid-in capital 782,360 782,499
Accumulated deficit (919,227) (976,925)
----------- ------------
734,419 676,860
Less: Treasury stock, at cost (65,496 common shares at
June 30, 1999 and 82,996 at December 31,
1998) (16,896) (21,409)
----------- ------------
Total shareholders' equity 717,523 655,451
----------- ------------
Total liabilities and shareholders' equity $ 1,078,708 $ 978,542
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 532,595 $ 472,278 $1,020,886 $ 890,240
Cost of sales 265,555 225,446 499,907 429,829
--------- --------- ---------- ---------
267,040 246,832 520,979 460,411
--------- --------- ---------- ---------
Selling, general and administrative expenses:
Salaries and related costs 88,428 72,743 184,764 144,773
Professional fees 56,733 28,309 84,895 59,599
Other 103,165 79,592 171,955 126,702
--------- --------- ---------- ---------
248,326 180,644 441,614 331,074
--------- --------- ---------- ---------
Non-operating expense:
Interest expense 1,258 1,466 2,539 2,963
--------- --------- ---------- ---------
Income before federal income tax
expense 17,456 64,722 76,826 126,374
Federal income tax expense 4,681 15,766 19,129 30,740
--------- --------- ---------- ---------
Net income $ 12,775 $ 48,956 $ 57,697 $ 95,634
========= ========= ========== =========
Net income per common share $ .01 $ .04 $ .04 $ .07
========= ========= ========== =========
Net income per common share, assuming
dilution $ .00 $ .03 $ .03 $ .06
========= ========= ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 57,697 $ 95,634
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 19,991 13,836
Deferred federal income tax expense 19,129 30,742
Employee stock awards 4,375 750
Increase in accounts receivable - trade (21,986) (48,467)
Increase in costs and estimated earnings
in excess of billings on uncompleted codification
contracts (14,680) (235)
Decrease in costs of uncompleted code
supplements 2,886 19,868
Increase in other assets (4,791) (786)
Increase (decrease) in accounts payable (5,016) 6,641
Increase in accrued salaries,
commissions, and payroll taxes payable 24,617 15,316
Decrease in accrued legal and professional (6,845) (10,555)
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted codification contracts 20,599 (1,444)
Decrease in deferred revenue (14,950) (24,000)
Increase in other accrued liabilities 2,562 --
--------- ---------
Net cash provided by operating activities 83,588 97,300
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (69,627) (1,549)
--------- ---------
Net cash used in investing activities (69,627) (1,549)
--------- ---------
Cash flows from financing activities:
Principal payments under capital lease obligations (2,002) (2,753)
--------- ---------
Net cash used in financing activities (2,002) (2,753)
--------- ---------
Net increase in cash 11,959 92,998
Cash at December 31 400,983 195,371
--------- ---------
Cash at June 30 $ 412,942 $ 288,369
========= =========
Supplemental cash flow disclosure:
Interest paid $ 2,539 $ 2,963
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
WESTFORD GROUP, INC.
AND SUBSIDIARY
Notes To Consolidated Financial Statements (Unaudited)
1. The Consolidated Balance Sheets as of June 30, 1999, the Consolidated
Statements of Income for the three months and six months ended June 30, 1999 and
1998, and the Consolidated Statements of Cash Flows for the six months then
ended have been prepared by Westford Group, Inc. (the "Company") without an
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows at June 30, 1999 and for all periods
presented have been made.
2. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these unaudited Consolidated Financial
Statements be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-K for the year ended December 31,
1998. The results of operations for the period ended June 30, 1999 are not
necessarily indicative of the results of operations for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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.
3. Supplemental Disclosure For Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $ 12,775 $ 48,956 $ 57,697 $ 95,634
---------- ---------- ---------- ----------
Income available to common
stockholders, assuming
dilution $ 12,775 $ 48,956 $ 57,697 $ 95,634
---------- ---------- ---------- ----------
Weighted average common
shares outstanding 1,368,706 1,351,206 1,367,546 1,350,875
Adjustments for dilutive
securities:
Conversion of debentures 345,000 345,000 $ 345,000 $ 345,000
---------- ---------- ---------- ----------
Diluted common shares 1,713,706 1,696,206 1,712,546 1,695,875
========== ========== ========== ==========
Net income per common share $ .01 $ .04 $ .04 $ .07
Net income per common share,
assuming dilution $ .00 $ .03 $ .03 $ .06
</TABLE>
4. Subsequent Events. On July 19, 1999, the Company entered into an Agreement
and Plan of Merger with Bancinsurance Corporation, an Ohio corporation
("Bancinsurance"), and Bancinsurance Acquisitions, Inc., an Ohio corporation and
a wholly owned subsidiary of Bancinsurance ("Acquisitions"), whereby the Company
will be merged with and into Acquisitions, with Acquisitions being the surviving
entity as a wholly-owned subsidiary of Bancinsurance under the name Westford
Group, Inc. (the "Merger"). If the Merger is consummated, shareholders of the
Company will be entitled to receive cash in the amount of $0.70 per share of
common stock, without par value, of the Company. The Merger is contingent upon
approval by the holders of a majority of the shares of the Company's outstanding
common stock, among other things.
7
<PAGE> 8
WESTFORD GROUP, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
Summary
- -------
The following table sets forth changes in certain items reflected in the
financial data as compared to the indicated prior period.
<TABLE>
<CAPTION>
Period to Period Increase
Six Months Ended June 30,
1998-99
-------------------------
Amount % Change
------ --------
<S> <C> <C>
Sales $ 130,646 14.7%
Cost of sales 70,078 16.3%
Selling, general and administrative
expenses 110,540 33.4%
</TABLE>
The Company's business is principally carried on through American Legal
Publishing Corporation ("ALP Corporation"), a consolidated subsidiary. ALP
Corporation's sales increased 14.7% during the first six months of 1999 as
compared to the first six months of 1998 and increased 12.8% during the three
months ended June 30, 1999 as compared to the three months ended June 30, 1998.
Codification revenue of $288,018 increased 41.8% during the first six months of
1999 as compared to $203,107 during the first six months of 1998 and increased
48.4% during the three months ended June 30, 1999 as compared to the three
months ended June 30, 1998 principally due to expanding sales in the Company's
key growth areas coming into 1999. The Company's subscription services provided
to governmental and emerging private industry markets increased 11.1% from
$173,873 during the six months ended June 30, 1998 to $193,125 for the six
months ended June 30, 1999 due to higher subscription sales of expanded search
and retrieval software products including city league law handbooks, city
production and zoning manuals, and state statutes and manuals on CD rom.
Subscription services remained relatively constant for the three months ended
June 30, 1999 as compared with the three months ended June 30, 1998.
Supplementation services on existing codes of ordinance increased 5.2% from
$513,260 for the six months ended June 30, 1998 as compared to $539,744 for the
six months ended June 30, 1999 and increased 5.9% for the three months ended
June 30, 1999 as compared to the three months ended June 30, 1998 due to
maximizing revenue from existing clients and accelerated job completions. Gross
margin increased 13.2% in the six months ended June 30, 1999 compared to the six
months ended June 30, 1998 and increased 8.2% in the three months ended June 30,
1999 compared to the three months ended June 30, 1998. Cost of sales increased
16.3% from $429,829 in the six months ended June 30, 1998 compared to $499,907
for the six months ended June 30, 1999 and increased 17.8% for the three months
ended June 30, 1999 as compared with the three months ended June 30, 1998
primarily due to increases in production salaries, outside printing, and
insurance. Selling, general and administrative expenses increased 33.4% from
$331,074 for the six months ended June 30, 1998 to $441,614 for the six months
ended June 30, 1999 and increased 37.5% for the three months ended June 30, 1999
as compared with the three months ended June 30, 1998 primarily due to increases
in administrative salaries, computer consulting, shareholder expense,
conventions and legal. The addition of two additional employees was the largest
factor in increases to production and administrative salaries. Many employees
have both production and administrative responsibilities and their percentages
in each area often vary throughout the year. Pay raises were within usual
parameters. The executive offices of the Company are shared with consolidated
subsidiaries and other affiliated entities. Rental, equipment and bookkeeping
expenses are allocated among them pursuant to management fee agreements. The
pre-existing management fee agreement with an affiliate was amended January 1,
1999 which will result in a $4,265 increase in selling, general and
administrative expenses in the three months ended March 31, 1999 as compared
with the three months ended March 31, 1998 and a $8,530 increase in selling,
general and administrative expenses for the six months ended June 30, 1999 as
compared to the six months ended June 30, 1998.
Liquidity and Capital Resources
Although it is impossible to estimate accurately the future cash flow from the
operations of the Company's codification business, management believes the
Company's effective capital costs may increase. All of the capital expenditures
for 1999 were funded from the Company's cash flow from operations. Equipment
additions in 1999 approximated $70,000 and were funded from the Company's cash
flow from operations. Management does not know of any trends, events or
uncertainties that will have or that are reasonably likely to have a material
effect on the Company's liquidity, capital resources or results of operations.
8
<PAGE> 9
WESTFORD GROUP, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
---------------------------------------------------------
Intangible Asset
- ----------------
The excess of net assets acquired in a business combination over the purchase
price of approximately $165,000 was allocated to a database acquired. The
database is comprised of the municipal code data and related files. Provision
for amortization of the database is based on an estimated useful life of forty
years reflecting the long-lived nature of municipal codes.
Inflation
- ---------
Management does not consider the impact of changing prices to be material in the
analysis of the Company's overall operations.
Impact of the Year 2000 Issue
- -----------------------------
The Company utilizes management information systems and software technology that
may be affected by Year 2000 issues throughout its business. During fiscal 1997,
the Company began to implement plans at both of its locations to ensure those
systems continue to meet its internal and external requirements. During fiscal
1997, the Company's Corporate office completed the installation and testing of
its internal financial systems which are Year 2000 compliant. The Corporate
office utilizes the latest version of Year 2000 compliant Platinum SQL software
for its internal financial system. All of ALP Corporation's Folio products are
Year 2000 compliant. During the fourth quarter of 1998, ALP Corporation
purchased the network enhancement pack which contained Year 2000 compliance
patches. The Company's invoicing database software is not Year 2000 compliant.
The Company is in the data gathering phase with regard to applications, database
software and hardware. The Company has a MCSE (Microsoft Certified Systems
Engineer) on staff to review the impact of its Year 2000 risks. Continuing
evaluation by our MCSE in developing contingency plans and to complete
remediation work on separate portions of the project are on-going. Expected
completion of all phases is anticipated by third quarter end, 1999. If the
Company is unable to achieve Year 2000 compliance for its invoice database
system, the Year 2000 would not have a material impact on the operations of the
Company as billings would be produced with alternative procedures. The Company
is developing a contingency plan for its database software. Those plans include
adapting and expanding the Company's existing database system to be Year 2000
compliant. The cost of making these adaptations is not expected to be material
and will be expensed in the period incurred.
Trends
- ------
The Company's results of operations have varied from quarter to quarter
principally because of fluctuations in production results. The Company's
experience indicates that sales increase during second and third quarters as a
result of sales to basic code subscribers. The Company expects that such
quarterly fluctuations may lessen as the percentage of the Company's new sales
are made to clients with fiscal years other than December 31, although there can
be no assurance that this will occur.
Forward-Looking Information
- ---------------------------
Statements in the preceding discussion that indicate the Company's or
management's intentions, hopes, beliefs, expectations or predictions of the
future are forward-looking statements. Additional information concerning factors
that could cause actual results to differ materially from those suggested in the
forward-looking statements is continued under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 filed
with the Securities and Exchange Commission, as the same may be amended from
time to time.
9
<PAGE> 10
WESTFORD GROUP, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
---------------------------------------------------------
Forward-looking statements are not guarantees for performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
of the Company may differ materially from those expressed in these
forward-looking statements. Many factors that will determine these results and
values are beyond the Company's ability to control or predict. Shareholders are
cautioned not to put undue reliance on forward-looking statements. In addition,
the Company does not have an intention or obligation to update forward-looking
statements after the date hereof, even if new information, future events, or
other circumstances have made them incorrect or misleading. For those
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
Item 27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1999.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Amendment No. 1 to Form 10-Q to be signed on its behalf by
the undersigned thereunto duly authorized.
WESTFORD GROUP, INC.
--------------------
(Company)
Date: December 15, 1999 By: Si Sokol
---------------------------- ------------------------------
Si Sokol
President and
Chairman of Board of Directors
(Principal Executive Officer)
Date: December 15, 1999 By: Sally Cress
----------------------------- ------------------------------
Sally Cress
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 412,942
<SECURITIES> 0
<RECEIVABLES> 290,098
<ALLOWANCES> 7,772
<INVENTORY> 0
<CURRENT-ASSETS> 866,401
<PP&E> 276,617
<DEPRECIATION> 182,339
<TOTAL-ASSETS> 1,078,708
<CURRENT-LIABILITIES> 311,185
<BONDS> 0
0
0
<COMMON> 871,286
<OTHER-SE> (153,763)
<TOTAL-LIABILITY-AND-EQUITY> 1,078,708
<SALES> 1,020,886
<TOTAL-REVENUES> 1,020,886
<CGS> 499,907
<TOTAL-COSTS> 941,521
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,539
<INCOME-PRETAX> 76,826
<INCOME-TAX> 19,129
<INCOME-CONTINUING> 57,697
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,697
<EPS-BASIC> .04
<EPS-DILUTED> .03
</TABLE>
