<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934
For the quarterly period ended September 30, 1997
______ 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 0-8628
________________________________________________________
FOUR CORNERS FINANCIAL CORPORATION (as of April 12, 1998)
_______________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2044086
_______________________________________________________________________________
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 East Avenue, Rochester, New York 14604
_______________________________________________________________________________
(Address of principal executive offices - Zip Code)
(716) 454-2263
________________________________________________________________________________
(Registrant's Telephone Number, including Area Code)
________________________________________________________________________________
(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 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 CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
At November 12, 1997 there were 3,293,733 of the registrant's $.04 par value
common stock outstanding.
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of 1-2
September 30, 1997 (Unaudited) and
December 31, 1996
Consolidated Statements of Operations for the 3-4
Three Months and Nine Months Ended September 30,
1997 and 1996 (Unaudited)
Consolidated Statements of Changes in 5
Stockholders' Investment for the Nine Months
Ended September 30, 1997 and 1996 (Unaudited)
Consolidated Statements of Cash Flows for the 6
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
Notes to Condensed Consolidated Financial 7-12
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 13-14
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Default Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of 15
Security Holders
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 40,580 $ 36,612
Cash - escrow deposits 10,074 74,540
Accounts receivable - trade, net of
allowance for doubtful accounts of $84,000
in 1997 and 1996 560,352 510,762
Prepaid expenses 2,990 5,914
Other receivables 7,098 ---
Current portion of note receivable 5,000 7,500
Income tax receivable --- ---
---------- ----------
Total current assets 626,094 635,328
---------- ----------
TITLE PLANT 419,905 419,905
---------- ----------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 105,161 142,523
---------- ----------
OTHER ASSETS:
Note receivable, net of current portion --- ---
Cash value of life insurance --- 18,618
Other assets 6,626 8,760
---------- ----------
6,626 27,378
---------- ----------
$1,157,786 $1,225,134
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 1 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Line-of-credit $ 40,000 $ 50,000
Current portion of notes payable 81,796 97,050
Current portion of obligations under
capital leases --- ---
Notes payable to officers/principal
stockholders 18,382 18,000
Accounts payable 361,025 425,697
Accounts payable - related parties 15,246 21,400
Escrow deposits 10,074 74,540
Accrued income taxes 1,500 1,500
Other accrued expenses 34,331 63,953
---------- ----------
Total current liabilities 562,354 752,140
---------- ----------
LONG-TERM LIABILITIES:
Notes payable, net of current portion 92,064 140,171
Obligations under capital leases, net
of current portion --- ---
Due to officer/principal stockholder 183,500 216,500
---------- ----------
Total long-term liabilities 275,564 356,671
---------- ----------
Total liabilities 837,918 1,108,811
---------- ----------
STOCKHOLDERS' INVESTMENT:
Common stock, $.04 par value, 15,000,000
shares authorized, 3,348,733 issued and
3,293,733 outstanding in 1997 and 1996 133,752 133,752
Additional paid-in-capital 835,402 835,402
Accumulated deficit (618,661) (822,206)
----------- ----------
350,493 146,948
Less: Treasury stock at cost (30,625) (30,625)
----------- ----------
Total stockholders' investment 319,868 116,323
----------- ----------
$1,157,786 $1,225,134
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 2 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUE:
Title insurance premiums $ 388,884 $ 322,529
Abstract and other fees 577,979 604,867
---------- ----------
966,863 927,396
---------- ----------
DIRECT COSTS OF REVENUE:
Title insurance ( 73,395) ( 68,384)
Abstract and other services (130,514) (106,180)
---------- -----------
(203,909) (174,564)
---------- -----------
Gross profit 762,954 752,832
OPERATING EXPENSES: (656,633) ( 688,906)
---------- ----------
Income from operations 106,321 63,926
---------- ----------
INTEREST, NET: (11,008) (13,975)
---------- ----------
NET INCOME $ 95,313 $ 49,951
========== ==========
NET INCOME PER SHARE $ .03 $ .01
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 3-
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUE:
Title insurance premiums $ 929,437 $1,034,705
Abstract and other fees 1,836,125 1,820,678
---------- ----------
2,765,562 2,855,383
---------- ----------
DIRECT COSTS OF REVENUE:
Title insurance (224,042) (293,343)
Abstract and other services (328,290) (299,087)
---------- -----------
(552,332) (592,430)
---------- -----------
Gross profit 2,213,230 2,262,953
OPERATING EXPENSES: (1,972,220) (2,157,701)
---------- ----------
Income from operations 241,010 105,252
---------- ----------
INTEREST, NET: (37,465) (44,242)
---------- ----------
NET INCOME $ 203,545 $ 61,010
========== ==========
NET INCOME PER SHARE $ .06 $ .02
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 4 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
----- Common Stock ----- Additional Total
Paid-in- Accumulated Treasury Stockholders'
Shares Amount Capital Deficit Stock Investment
------ ------ --------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 3,343,733 $ 133,752 $835,402 $(907,918) $ (5,625) $ 55,611
Purchase of treasury stock 50,000 --- --- --- (25,000) (25,000)
Net income for the nine months ended
September 30, 1996 (Unaudited) --- --- --- 61,010 --- 61,010
--------- --------- --------- --------- --------- ----------
BALANCE, September 30, 1996 (Unaudited) 3,293,733 $ 133,752 $ 835,402 $(846,908) $ (30,625) $ (91,621)
========= ========= ========= ========= ========= =========
BALANCE, December 31, 1996 3,293,733 $ 133,752 $ 835,402 $(822,206) $ (30,625) $ 116,323
Net income for the nine months ended
September 30, 1997 (Unaudited) --- --- --- 203,545 --- 203,545
--------- --------- --------- --------- --------- ----------
BALANCE, September 30, 1997 (Unaudited) 3,293,733 $ 133,752 $ 835,402 $(618,661) $ (30,625) $ 319,868
========= ========= ========= ========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 5 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOW OPERATING ACTIVITIES:
Net income $ 203,545 $ 61,010
Adjustments to reconcile net loss to
net cash flow from operating activities:
Depreciation and amortization 46,654 61,342
Increase in accounts receivable (49,590) (38,608)
Decrease/(increase) in other current assets (1,674) 4,922
Decrease in accounts payable (70,826) (7,742)
Decrease in other current liabilities (29,622) (16,659)
----------- -----------
Net cash flow from operating activities 98,487 64,266
----------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment,
net of disposals ( 9,292) (24,116)
Decrease in other assets 2,134 8,499
Divestiture of cash value of life insurance 18,618 ---
---------- ----------
Net cash flow from investing activities 11,460 (15,617)
---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Decrease in notes payable, net (63,361) (70,392)
Decrease in obligations under
capital leases, net --- (28,278)
Increase/(decrease) in line-of-credit (10,000) 15,000
Purchase of treasury stock --- (25,000)
Increase/(decrease) in amount due to
officer/principal stockholder (32,618) 11,500
------------ ----------
Net cash flow from financing activities (105,979) (97,170)
---------- ----------
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS: 3,968 (48,521)
CASH AND EQUIVALENTS - beginning of period 36,612 62,791
---------- ----------
CASH AND EQUIVALENTS - end of period $ 40,580 $ 14,270
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 6 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
(Unaudited)
(1) General
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate in order that
the information presented is not misleading. All adjustments for a fair
presentation of financial information contained herein have been made.
(2) Organization
The Company -
Four Corners Financial Corporation (FCFC) and its Subsidiaries, Four
Corners Abstract Corporation (FCAC) and Proper Appraisal Specialists,
Inc. provide services and products including real estate title
searching, preparation of abstracts of title, issuance of title
insurance as an agent for certain national underwriting companies and
real estate appraisals, primarily in western and central New York
State. All of these services and products are required in connection
with the mortgaging, sale or purchase of real property.
Unless otherwise indicated, the term "Company" refers to Four Corners
Financial Corp. and its Subsidiaries. The Company operates in one
business segment.
(3) Summary of Significant Accounting Policies
Principles of Consolidation -
The consolidated financial statements include the accounts of FCFC and
all of its subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Cash and Equivalents -
Cash and equivalents include time deposits and other instruments with a
maturity of three months or less at the time of purchase. The Company
maintains cash balances at several banks. Accounts at each institution
are insured by The Federal Deposit Insurance Corporation up to
$100,000.
- 7 -
<PAGE>
(3) Summary of Significant Accounting Policies (Continued)
Property and Equipment -
Property and equipment is stated at cost and is depreciated using
accelerated and straight-line methods over the following useful lives:
Buildings 15 - 31.5 years
Furniture and Equipment 3 - 10 years
Vehicles 5 years
Leasehold Improvements Life of lease
At the time of retirement or other disposition of property, the cost
and accumulated depreciation are removed from the accounts and any gain
or loss is reflected in the statements of operations. Repairs and
maintenance costs are charged to expense when incurred.
Intangible Assets -
Intangible assets consist of goodwill and covenants not-to-compete
resulting from the 1987 acquisition of the Albany branch, the 1989
acquisition of Livingston Abstract Corporation, the 1990 acquisition of
Picciano Abstract Company, Inc. and the 1991 acquisition of Proper
Appraisal Specialists, Inc. These assets were fully amortized during
1995.
Title Plant -
Title plant consists of copies of public records, maps and other
relevant historical documents which facilitate the preparation of title
abstract reports without the necessity of manually searching official
public records.
The Company has incurred identifiable costs related to the activities
necessary to construct a title plant which are reflected as assets. A
title plant is regarded as a tangible asset having an indefinite
economic life; accordingly, title plant costs are not depreciated.
Revenue Recognition -
Title insurance is provided to purchasers or financiers of real
property purchases. The related revenue is recognized when policies
become effective, generally at the property or mortgage loan closing.
Under terms of the Company's agreements with its title insurance
underwriters, a commission of 15% to 20% is paid to its underwriter on
all title insurance policies written. Pricing is based on a rate
schedule established by the Insurance Department of the State of New
York which provides for varying rates for services rendered. Commission
expense is reflected as a direct cost of title insurance revenue in the
statement of operations.
- 8 -
<PAGE>
(3) Summary of Significant Accounting Policies (Continued)
Revenue Recognition - (Continued)
The Company also performs title abstract research and provides
appraisals on real properties under an exclusive arrangement with a
local appraisal company. Abstract and appraisal revenue is recognized
as earned. Direct costs of abstract and appraisal revenue reflects the
cost of work performed by subcontractors in geographical areas where
the Company does not maintain an office, among other direct costs.
(4) Acquisitions
The Company acquired Proper Appraisal Specialists, Inc. (1991),
Picciano Abstract Company, Inc. (1990), Livingston Abstract Corporation
(1989) and Mid-State (1988) for cash, notes and common stock totalling
approximately $185,000. These acquisitions were accounted for as
purchases. Goodwill, representing the excess of purchase price over the
fair value of tangible assets acquired related to these acquisitions,
totalled approximately $66,000 and was being amortized over five years.
These companies were subsequently merged into FCAC.
(5) Income Taxes
During 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes". SFAS 109
requires an asset and a liability approach to measuring deferred income
taxes. Previous standards required an income statement approach.
There were no material temporary differences at December 31, 1996 or at
September 30, 1997. Therefore, no deferred taxes have been provided.
At December 31, 1996, the Company has available a net operating loss
carry-forward of approximately $202,000, which begins to expire in
2002. The Company has recorded a valuation allowance equal to the
deferred tax asset related to the carryforward.
(6) Escrow Deposits
As a service to its customers, FCAC administers escrow deposits
representing undisbursed amounts received for settlements of mortgage
loans or property sales and indemnities against specific title risks.
These funds, totalling $10,074 and $74,540 at September 30, 1997 and
December 31, 1996, respectively, are recorded as both a current asset
and a current liability in the accompanying consolidated balance
sheets.
- 9 -
<PAGE>
(7) Notes Payable
Notes Payable -
On December 13, 1995, the amount outstanding on the note payable to a
bank, $133,333, and $185,000 of the amount borrowed under its
line-of-credit agreement were refinanced with the same bank. The note
payable and line-of-credit have been classified in accordance with the
new agreement as of December 31, 1996. The note payable to the bank
requires the company to meet certain financial covenants at December
31, 1996 as follows:
a. Working capital of at least $20,000.
b. Current ratio of 1.1 to 1
c. Minimum tangible net worth of $400,000
d. Total liabilities to tangible net worth of not more than 1.9 to 1.
e. Debt service ratio of not less than 1.75 to 1.
The agreement also limits the Company's ability to make acquisitions,
pay dividends and make capital expenditures, and requires the Company
to submit certain financial information. At December 31, 1996, the
Company was not in compliance with certain of the covenants. Subsequent
to year end, the Company obtained a waiver from the bank for these
covenants as of December 31, 1996
Notes payable consisted of the following:
September 30, December 31,
1997 1996
------------- ------------
Note payable to Marine Midland Bank, due
in monthly installments of $7,674 through
October, 1997 and $6,230 through October,
1999 plus interest at the bank's prime
rate plus 1.25%. This note is guaranteed
by the officers/ stock-holders of the
Company and is collateralized by
substantially all of the Company's $ 157,188 $ 226,250
assets.
Various notes payable in aggregate
monthly installments of $582 including
interest at rates ranging from 9.50%
to 9.99%. These notes mature through
November, 1999 and are collateralized
by the related equipment. 16,672 10,971
--------- ---------
173,860 237,221
Less: Current Portion (81,796) (97,050)
--------- ---------
$ 92,064 $ 140,171
========= =========
- 10 -
<PAGE>
(8) Lines-of-Credit
The Company may borrow up to $50,000 under the terms of a new
line-of-credit agreement with a bank through October 31, 1997. Amounts
borrowed bear interest at the bank's prime interest rate plus 1% and
are collateralized by substantially all assets of the Company and are
guaranteed by the officers/stockholders of the Company. At December 31,
1996 and September 30, 1997, there was $50,000 and $40,000
respectively, outstanding under this line-of-credit.
The Company may also borrow up to $100,000 under the terms of an
unsecured line-of-credit with another bank. Amounts borrowed bear
interest at the bank's prime rate plus 1%. Borrowings under this
line-of-credit are personally guaranteed by the Company's principal
officer/stockholder. At September 30, 1997 and December 31, 1996, there
were no borrowings on this line-of-credit.
(9) Stockholders' Investment
Stock Options -
In July, 1992, the Company's Board of Directors adopted and the
stockholders approved the 1992 Stock Option Plan (1992 Plan) which
replaced the 1988 Stock Incentive Plan (1988 Plan).
Under the 1992 Plan, the Company may issue incentive stock options,
non-statutory options, non-employee director options and reload
options. The exercise price of incentive, non-statutory and reload
options will not be less than fair market value at date of grant.
Incentive and non-statutory options will generally expire ten years
from date of grant. Reload options will have a term equal to the
remaining option term of the underlying option.
The 1992 Plan also provides for annual grants of stock options to
purchase 500 shares of the Company's common stock to non-employee
directors of the Company with an exercise price not less than fair
market value at date of grant. These options will expire ten years from
date of grant.
Options issued under the 1992 and 1988 Plans expired in 1995. No
further options will be granted under the 1988 Plan.
The Company has reserved 647,500 common shares for issuance under both
plans.
At September 30, 1997 and December 31, 1996, there were 271,000 options
outstanding under the 1992 and 1988 Plans.
- 11 -
<PAGE>
(10) Related Party Transactions
Due to Officers/Principal Stockholders -
During 1996, 1995, and 1994, one of the Company's principal officers/
stock-holders made advances to the Company. These advances bear
interest at the prime rate plus 3% and repayment is subordinated to the
amounts outstanding under all other bank debt agreements. Principal
repayment is scheduled for $18,000 per year.
At September 30, 1997 and December 31, 1996, the amount outstanding on
this debt was $201,882 and $234,500 respectively.
Office Lease Commitment -
The Company leases its Rochester facility from a party related through
common management. The Company has a five year lease agreement through
June 30, 2000 at an annual rental of $72,000. Rent and common area
charges were approximately $72,000, $72,000 and $58,000 in 1996, 1995
and 1994, respectively. The Company owed approximately $20,000 for
unpaid rent at December 31, 1996. During 1994, total unpaid rent of
$109,000 was forgiven by the related party. This amount was reflected
as an extraordinary item, net of income taxes, of $44,000.
Significant Customer -
In 1996, 1995 and 1994, 4% of revenue was derived from a related party.
(11) Lease Commitments
FCAC leases other office facilities under lease agreements expiring
through December, 2000. Minimum lease payments under non-cancelable
lease agreements are as follows at December 31, 1996:
1997........................................ 71,313
1998........................................ 55,564
1999........................................ 11,036
2000........................................ 5,903
--------
$143,816
========
Rent expense related to these operating leases was approximately
$121,000, $124,000 and $135,000 for the years ended December 31, 1996,
1995 and 1994, respectively.
(12) Reverse Stock Split
In July, 1992, the Company's stockholders approved a one-for-four
reverse stock split. In conjunction with this reverse stock split, the
authorized number of shares was reduced to 15,000,000 and par value was
increased to $.04 per share. These actions have been retroactively
reflected in the financial statements.
- 12 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company's cash flow results from operations, bank loans, advances made by
principal stockholders and from sales of common stock.
During the first nine months of 1997, cash reserves of $36,612, cash flow from
operating activities of $98,487 and cash flow from investing activities of
$11,460 were sufficient to fund the Company's negative cash flow from debt
financing activities of $105,979.
Cash Flow from Operations: The Company had positive cash flow from operating
activities through the first nine months of 1997 of $98,487 compared to $64,266
for the same period in 1996. Despite a large decrease in accounts payable of
$70,826 in 1997 as compared to a decrease of $7,742 in 1996 total operating cash
flows increased by $34,221 for the nine month period ending September 30, 1997.
This was primarily due to a net income of $203,545 in 1997. This net income
figure was $142,535 higher than the $61,010 amount that was realized in 1996.
Cash Flow from Investing Activities: The only capital expenditures incurred by
the Company during the first nine months of 1997 related to capital improvements
for the Rochester corporate office building and the replacement of a company
vehicle. The primary cause of the sizeable cash inflow related to investing
activities for the 1997 year was a divestiture of the Keyman life insurance
policy maintained by the Company. This policy, having a cash surrender value of
$18,618 was transferred to a major stockholder as partial repayment for debts
owed to this stockholder. At September, 30, 1997, the Company had no material
purchase commitments.
Cash Flow from Financing Activities: Primary cash flows from financing
activities relate to changes in financing under lines-of-credit, notes payable,
advances made by principal stockholders and treasury stock purchases. Despite
the effort to support the ongoing operations through the third quarter of 1997,
the Company was able to repay a portion of its borrowings from notes and loans
by $105,979. While the company purchased treasury stock in the amount of $25,000
in the 1996 calendar year, no similar purchases were made for the same period in
1997. This negative cash flow was adequately funded through positive operating
cash flows, investing cash flows and the cash reserve available at the beginning
of 1997.
The Company expects that the cash flow generated from operations and bank
lines-of-credit currently available will be adequate to meet its working capital
and capital expenditure needs for the remainder of 1997.
- 13 -
<PAGE>
Results of Operations
Total revenues for the first nine months of 1997 were $2,765,562 as compared to
$2,855,383 for the same period during 1996. This decrease of $89,821 or 3%
resulted from a slight decrease in sales order volume specifically within the
title insurance area. The revenues generated from title insurance premiums
decreased by 10% to $929,437 as compared to $1,034,705 for the first three
quarters of the 1996 calendar year. Despite this slight decrease associated with
title operations, revenues from abstract and other fees during the first nine
months of 1997 increased slightly by $15,447 to $1,836,125 as compared to
$1,820,678 for the same period in 1996.
Due to the decreased sales order volume in areas where the Company does
business, as well as a reduction in internal staffing the need for subcontractor
services diminished during the first nine months of 1997. Correspondingly,
direct costs of revenue decreased to 20.0% of revenues for this time period in
1997 as compared to 20.7% for the same period in 1996. Gross profit for the
quarter ended September 30, 1997 was $2,213,230 or 80.0% of gross revenues, as
compared to $2,262,953 or 79.3% of sales for the first three quarters of 1996.
Operating expenses for the months of January, 1997 through September, 1997 were
$1,972,220 or 71.3% of revenues as compared to $2,157,701 or 75.6% of revenues
for the same nine months in 1996. The reduction in operating expenses is
primarily due to decreased variable costs associated with a reduced sales volume
as well as continuous company-wide cost-cutting efforts. The Company anticipates
stable revenues during the final quarter of 1997 and operating costs consistent
with levels experienced in the first nine months of 1997 to further enhance the
company's profitability by year-end 1997. The $203,545 net income in the first
three quarters of 1997 compares favorably to the $ 61,010 net income incurred
through September, 1996.
The Company's ratio of current assets to current liabilities at September 30,
1997 and December 31, 1996 was 1.1:1 and .84:1, respectively. Accordingly, the
Company had working capital of $63,740 as of September 30, 1997 compared to a
deficit of $116,812 as of December 31, 1996.
- 14 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
None
- 15 -
<PAGE>
SIGNATURE
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.
FOUR CORNERS FINANCIAL CORPORATION
Date November 13, 1997 By /s/ William S. Gagliano
---------------------------- -----------------------
William S. Gagliano
Executive Vice President and
Chief Accounting Officer
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 40,580
<SECURITIES> 0
<RECEIVABLES> 644,352
<ALLOWANCES> 84,000
<INVENTORY> 0
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0
0
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</TABLE>
