<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 June 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, 1988)
(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 August 8, 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
June 30, 1997 (Unaudited) and
December 31, 1996
Consolidated Statements of Operations for the 3-4
Three Months and Six Months Ended June 30, 1997
and 1996 (Unaudited)
Consolidated Statements of Changes in 5
Stockholders' Investment for the Six Months
Ended June 30, 1997 and 1996 (Unaudited)
Consolidated Statements of Cash Flows for the 6
Six Months Ended June 30, 1997 and 1996
(Unaudited)
Notes to Condensed Consolidated Financial 7-11
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 12-13
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Default Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of 14
Security Holders
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURE 15
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 20,164 $ 36,612
Cash - escrow deposits 75,119 74,540
Accounts receivable - trade, net of
allowance for doubtful accounts of $84,000
in 1997 and 1996 595,870 510,762
Prepaid expenses 3,158 5,914
Other receivables 6,234 --
Current portion of note receivable 6,250 7,500
Income tax receivable -- --
---------- ----------
Total current assets 706,795 635,328
---------- ----------
TITLE PLANT 419,905 419,905
---------- ----------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 108,546 142,523
---------- ----------
OTHER ASSETS:
Note receivable, net of current portion -- --
Cash value of life insurance -- 18,618
Other assets 6,377 8,760
---------- ----------
6,377 27,378
---------- ----------
$1,241,623 $1,225,134
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 1 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- --------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Line-of-credit $ 48,000 $ 50,000
Current portion of notes payable 97,479 97,050
Current portion of obligations under
capital leases --- ---
Notes payable to officers/principal
stockholders 18,000 18,000
Accounts payable 452,523 425,697
Accounts payable - related parties 12,210 21,400
Escrow deposits 75,119 74,540
Accrued income taxes 1,500 1,500
Other accrued expenses 33,717 63,953
---------- ----------
Total current liabilities 738,548 752,140
---------- ----------
LONG-TERM LIABILITIES:
Notes payable, net of current portion 90,138 140,171
Obligations under capital leases, net
of current portion --- ---
Due to officer/principal stockholder 188,382 216,500
---------- ----------
Total long-term liabilities 278,520 356,671
---------- ----------
Total liabilities 1,017,068 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 (713,974) (822,206)
----------- ----------
255,180 146,948
Less: Treasury stock at cost (30,625) (30,625)
---------- ----------
Total stockholders' investment 224,555 116,323
---------- ----------
$1,241,623 $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 JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
REVENUE:
Title insurance premiums $ 316,949 $ 371,883
Abstract and appraisal fees 697,301 667,370
---------- ----------
1,014,250 1,039,253
---------- ----------
DIRECT COSTS OF REVENUE:
Title insurance ( 81,325) (108,830)
Abstract and appraisal services (106,680) (106,914)
---------- -----------
(188,005) (215,744)
---------- -----------
Gross profit 826,245 823,509
OPERATING EXPENSES: (644,257) (761,637)
---------- ----------
Income from operations 181,988 61,872
---------- ----------
INTEREST, NET: (12,833) (14,893)
---------- ----------
NET INCOME $ 169,155 $ 46,979
========== ==========
NET INCOME PER SHARE $ .05 $ .01
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUE:
Title insurance premiums $ 560,350 $ 712,176
Abstract and appraisal fees 1,238,349 1,215,811
---------- ----------
1,798,699 1,927,987
---------- ----------
DIRECT COSTS OF REVENUE:
Title insurance (149,897) (224,958)
Abstract and appraisal services (198,526) (192,907)
---------- -----------
(348,423) (417,865)
---------- -----------
Gross profit 1,450,276 1,510,122
OPERATING EXPENSES: (1,315,587) (1,468,796)
---------- ----------
Income from operations 134,689 41,326
---------- ----------
INTEREST, NET: (26,457) (30,267)
---------- ----------
NET INCOME $ 108,232 $ 11,059
========== ==========
NET INCOME PER SHARE $ .03 $ (.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 SIX MONTHS ENDED JUNE 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 3,343,802 $ 133,752 $ 835,402 $(907,924) $ (5,625) $ 55,605
Net income for the six months ended
June 30, 1996 (Unaudited) -- -- -- 11,059 -- 11,059
----------- ---------- -------------- --------- --------- ---------
BALANCE, June 30, 1996 (Unaudited) 3,343,802 $ 133,752 $ 835,402 $(896,865) $ (5,625) $ 66,664
=========== ========== ============== ========= ========= =========
BALANCE, December 31, 1996 3,293,733 $ 133,752 $ 835,402 $(822,206) $ (30,625) $ 116,323
Net income for the six months ended
June 30, 1997 (Unaudited) -- -- -- 108,232 -- 108,232
----------- ---------- -------------- --------- --------- ---------
BALANCE, June 30, 1997 (Unaudited) 3,293,733 $ 133,752 $ 835,402 $(713,974) $ (30,625) $ 224,555
=========== ========== ============== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 5 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOW OPERATING ACTIVITIES:
Net income $ 108,232 $ 11,059
Adjustments to reconcile net loss to
net cash flow from operating activities:
Depreciation and amortization 32,489 42,812
Increase in accounts receivable (85,108) (54,024)
Decrease/(increase) in other current assets (2,228) 2,836
Increase in accounts payable 17,636 72,844
Decrease in other current liabilities (30,236) (14,929)
----------- -----------
Net cash flow from operating activities 40,785 60,598
----------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment,
net of disposals 1,488 (21,897)
Decrease in other assets 2,383 5,999
Investment in cash value of life insurance 18,618 ---
---------- ----------
Net cash flow from investing activities 22,489 (15,898)
---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Decrease in notes payable, net (49,604) (43,806)
Decrease in obligations under
capital leases, net --- (19,951)
Increase/(decrease) in line-of-credit (2,000) 15,000
Increase/(decrease) in amount due to
officer/principal stockholder (28,118) (9,000)
----------- -----------
Net cash flow from financing activities (79,722) (57,757)
----------- -----------
NET DECREASE IN CASH AND EQUIVALENTS: (16,448) (13,057)
CASH AND EQUIVALENTS - beginning of period 36,612 62,791
---------- ----------
CASH AND EQUIVALENTS - end of period $ 20,164 $ 49,734
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 6 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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.
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.
- 7 -
<PAGE>
(3) Summary of Significant Accounting Policies (Continued)
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.
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 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 is 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
June 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.
- 8 -
<PAGE>
(3) Summary of Significant Accounting Policies (Continued)
(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 $75,119 and $74,540 at June 30, 1997 and
December 31, 1996, respectively, are recorded as both a current asset
and a current liability in the accompanying consolidated balance
sheets.
(7) Notes Payable and Obligations Under Capital Leases
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 at least $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:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
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 assets. $ 180,209 $ 226,250
---------- ----------
Various notes payable in aggregate monthly installments of $450 including
interest at a rate 9.5%. These notes mature through November, 1999 and are
collateralized by the related equipment. 7,408 10,971
---------- ----------
187,617 237,221
Less: Current Portion (97,479) (97,050)
---------- ----------
$ 90,138 $ 140,171
========== ===========
</TABLE>
- 9 -
<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 June 30, 1997, there was $50,000 and $48,000 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 June 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 expire 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 June 30, 1997 and December 31, 1996, there were 271,000 options
outstanding under the 1992 and 1988 Plans.
(10) Related Party Transactions
Due to Officers/Principal Stockholders -
During 1996, 1995, and 1994, one of the Company's principal officers/
stockholders 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 June 30, 1997 and December 31, 1996, the amount outstanding on this
debt was $225,000 and $234,500, respectively.
- 10 -
<PAGE>
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. Durig 1994, total unpaid rent of
$109,000 was forgiven by the related party. This amount has been
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.
- 11 -
<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 six months of 1997, cash reserves of $36,612, cash flow from
operating activities of $40,785 and a net asset investment cash flow of $22,489
were sufficient to fund the Company's negative cash flow from debt financing
activities of $79,722.
Cash Flow from Operations: The Company had positive cash flow from operating
activities through the first six months of 1997 of $40,785 compared to $60,598
for the same period in 1996. The decrease in total operating cash flow was
primarily due to a much smaller increase in accounts payable relative to that of
the prior year. This increase in accounts' payable was $72,844 in 1996 while
only $17,636 in 1997.
Cash Flow from Investing Activities: The only capital expenditures incurred by
the Company during the first six months of 1997 related to assets necessary for
the operation of the Rochester corporate office building. The Company made no
title plant investment in during 1997. At June, 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
and advances made by principal stockholders. Despite the effort to support the
ongoing operations during the first half of 1997, the Company was able to repay
a portion of its borrowings from its principal officer/stockholder by $28,118.
Additional repayments of $2,000 toward an available line-of-credit were made in
1997. This negative cash flow was adequately funded through positive operating
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.
Results of Operations
Total revenues for the first six months of 1997 were $1,798,699 as compared to
$1,927,987 for the same six month period of 1996. This decrease of $129,288 or
7% resulted from a slight decrease in sales order volume specifically within the
title insurance arena. The revenues generated from title insurance premiums
decreased by 21% to $560,350 as compared to $712,176 for the first two quarters
of the 1996 calendar year. Revenues from abstract and appraisal fees increased
during the first six months of 1997 by $22,538 to $1,238,349 as compared to
$1,215,811 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 six months of 1997.
Correspondingly, direct costs of revenue decreased to 19.4% for this period of
1997 representing the cost of producing abstracts of title in areas where the
company does not have a direct operation, as compared to 21.7% for the same
period in 1996. Gross profit for the quarters ended June 30, 1997 was $1,450,276
or 80.6%, as compared to $1,510,122 or 78.3% of sales for the first half of
1996. Operating expenses for the months of January, 1997 through June of 1997
were $1,315,587 or 73.1% of revenues as compared to $1,468,796 or 76.2% of
revenues for the same six months in 1996. The decrease in operating expenses is
primarily attributable to decreased variable costs associated with a reduced
sales volume as well as continuous company-wide cost cutting efforts. The
Company anticipates stable revenue during the remaining quarters of 1997 and a
corresponding percentage reduction in operating costs to further enhance the
company's profitability by year end 1997. The $108,232 net income in the first
two quarters of 1997 compares to that of $11,059 incurred for the same period in
1996.
- 12 -
<PAGE>
The Company's ratio of current assets to current liabilities at June 30, 1997
and December 31, 1996 was .96:1 and .84:1, respectively. Accordingly, the
Company had a working capital deficit of $31,753 as of June 30, 1997 compared to
$116,812 as of December 31, 1996.
- 13 -
<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
- 14 -
<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 August 14, 1997 By /s/ William S. Gagliano
--------------- -------------------------------
William S. Gagliano
Executive Vice President and
Chief Accounting Officer
- 15 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,164
<SECURITIES> 0
<RECEIVABLES> 679,870
<ALLOWANCES> 84,000
<INVENTORY> 0
<CURRENT-ASSETS> 706,795
<PP&E> 1,040,751
<DEPRECIATION> 932,205
<TOTAL-ASSETS> 1,241,623
<CURRENT-LIABILITIES> 738,548
<BONDS> 0
0
0
<COMMON> 133,752
<OTHER-SE> 90,803
<TOTAL-LIABILITY-AND-EQUITY> 1,241,623
<SALES> 1,798,699
<TOTAL-REVENUES> 1,798,699
<CGS> 348,423
<TOTAL-COSTS> 1,315,587
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,457
<INCOME-PRETAX> 108,232
<INCOME-TAX> 0
<INCOME-CONTINUING> 108,232
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,232
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
