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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended SEPTEMBER 30,1998 Commission File No. 0-8488
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TWENTY SERVICES, INC.
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(Exact name of Registrant as specified in its Charter)
ALABAMA 63-0372577
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
20 CROPWELL DRIVE - SUITE 100, PELL CITY, AL 35125-0527
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(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code (205) 884-7932
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105 VULCAN ROAD, BIRMINGHAM, AL 35209
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Former name, former address, and former fiscal year, if changed
since last report.
Indicate by check mark whether the Registrant (l) has filed all reports
required to be filed by Section l3 or l5 (d) of the Securities Exchange Act
of 1934 during the preceding l2 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 ninety (90) days.
YES X NO
---- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the period of this report.
Par Value $0.l0 per share l,283,068 shares
1
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TWENTY SERVICES, INC.
INDEX
Twenty Services, Inc. Financial Statements
(Unaudited)
Condensed Balance Sheets
September 30, 1998 and December 3l, 1997 3
Condensed Statements of Operations
Three Months ended September 30, 1998 and 1997
and Nine Months ended September 30, 1998 and 1997 4
Condensed Statements of Cash Flows
Nine Months Ended September 30, 1998 and 1997 5
Management's Discussion and Analysis of Financial Condition
and Results of Operations 6-7
Other Information 8
Signatures 9
2
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TWENTY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Assets
September 30, December 31,
1998 1997
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Cash and temporary investments $ 819,830 $ 85,272
Marketable Securities l,266,657 2,122,716
Investment-American Equity
Investment Life Holding Company 986,189 986,189
Finance receivables, net 93,386 126,091
Notes Receivable-Related Parties, net 25,875 25,875
Property and equipment, net 18,235 22,235
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Total assets $3,210,172 $3,368,378
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 20,582 $ 18,671
Income taxes payable (benefit) (12,820) 26,008
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Total liabilities 7,762 44,679
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Stockholders' equity:
Preferred stock, Cumulative, $.l0
par value 50,511 50,5ll
Common Stock, par value $.l0 l28,307 l28,307
Additional paid-in capital l,960,007 l,960,007
Retained earnings l,201,615 l,199,245
Net unrealized gain (loss) on
available-for sale securities (71,085) 45,985
Less investment in Twenty Services
Holding, Inc. (60,000) (60,000)
Treasury Stock (6,945) (356)
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Net stockholders' equity 3,202,410 3,323,699
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Total Liabilities and
Stockholders' Equity $3,210,172 $3,368,378
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3
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TWENTY SERVICES, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ending Nine Months Ending
September 30, September 30,
------------------- ----------------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues $ 41,537 $ 50,021 $ 133,033 $ 143,588
Expenses:
General and
Administrative 21,949 31,148 94,803 115,681
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Income from
operations 19,588 18,873 38,230 27,907
Other income:
Recovery of
previously reserved
Note receivable, net - 110,000 - 110,000
Gain (loss) on disposal
of property
and investments 2,998 (30,515) 5,998 (30,515)
--------- --------- --------- ---------
Income before
income tax 22,586 98,358 44,228 107,392
Provision for income taxes (32,150) 6,500 (33,950)
--------- --------- --------- ---------
Net income 22,586 66,208 37,728 73,442
========= ========= ========= =========
Weighted average number of
common shares outstanding 1,283,068 1,283,068 1,283,068 1,283,068
========= ========= ========= =========
Earnings per share*
Net income $ .00 $ .02 $ .00 $ .02
========= ========= ========= =========
* After giving effect on a pro-rata basis to anticipated
preferred dividends of $.07 per share per annum on
505,ll0 shares.
4
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TWENTY SERVICES, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
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1998 1997
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Cash flows from operating activities:
Interest and dividends received $ 121,931 $ 114,211
Rental income 6,918 9,483
Cash paid employees and suppliers (91,327) (l00,009)
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Net cash provided by
operating activities 37,522 23,685
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Cash flows from investing activities:
Principal collected on loans 39,705 439,340
Loans made to customers (7,000) (97,993)
Purchase of securities (159,293) (374,489)
Proceeds from sale of assets
and securities 855,632 324,518
Principal collected on held-to-maturity
securities 3,530 4,595
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Net cash provided by
investing activities 732,574 295,971
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Cash flows from financing activities:
Preferred stock dividends (35,538) (35,358)
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Net cash used by financing activities (35,538) (35,358)
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Net increase in cash 734,558 284,298
Cash and temporary investments,
beginning of period 85,272 95,438
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Cash and temporary investments,
end of period $ 819,830 $ 379,736
========= =========
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
During the nine months ended September 30, 1998, the Registrant's liquidity
decreased primarily as a result of the loss in market value of marketable
securities. The Company has no notes payable nor long term debt and does not
anticipate the need for borrowing in the near future. The Registrant has
sufficient cash and temporary cash investments to meet its short term liquidity
needs. Should long term liquidity needs exceed cash and temporary cash
investments, then the Registrant would dispose of marketable securities as it
deems appropriate. Current trends and known demands and commitments do not
create a need for liquidity in excess of the Company's current abilities to
generate liquidity.
The Company anticipates that its operating activities will continue to
generate net cash flows, that its investing activities will generate positive
net cash flows and that its financing activities will continue to use cash
flows.
During the third quarter of 1998, the Registrant concentrated upon the
reappraisal of its investments and made selected sales and purchases based on
maximizing its returns on those investments commensurate with the risk assumed.
RESULTS OF OPERATIONS
---------------------
COMPARISON OF THE THREE (3) MONTHS PERIOD ENDED SEPTEMBER 30, 1998
WITH THE CORRESPONDING PERIOD OF 1997
The Registrant reported net income of $22,586 for the three (3) months
ended September 30, 1998 as compared to net income of $66,208 for the
corresponding 1997 period. The decrease was due to the recovery of a previously
reserved note receivable of $l10,000, net, less a loss of $30,515 on the
disposal of various property and other assets in 1997.
6
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EXPENSES
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General and administrative expenses decreased by $9,199 for the period
ended September 30, 1998 versus 1997, due primarily to the reduction in certain
expenses.
COMPARISON OF THE NINE (9) MONTHS PERIOD SEPTEMBER 30, 1998
WITH THE CORRESPONDING PERIOD OF 1997
REVENUES
- --------
During the nine (9) months period ended September 30, 1998, revenues
decreased by approximately $10,500, or 7% as compared to the corresponding
period of 1997. This is primarily due to a change in the mix of marketable
securities and return thereon.
The nine (9) months period ended September 30, 1997 included a net gain on
recovery of a previously reserved note receivable in the amount of $110,000 less
net losses of $30,515 on the disposal of various property and other assets. The
corresponding period for 1998 included a gain on sale of marketable securities
in the amount of $6,998.
EXPENSES
- --------
During the nine (9) months period ended September 30, 1998, expenses
decreased by approximately $21,000, or 18% as compared to the corresponding
period of 1997. This decrease is the result of a program of reducing costs.
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The above financial statements include all the adjustments which, in the opinion
of Management, are necessary for a fair presentation of such financial
information in conformity with generally accepted accounting principles. All
adjustments are of a normal, recurring nature.
7
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PART II
OTHER INFORMATION
Item l. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None.
Item 5. Other Information - None.
8
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TWENTY SERVICES, INC.
SIGNATURES
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.
TWENTY SERVICES, INC.
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(Registrant)
October 28, 1998 Jack C. Bridges
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Date Jack C. Bridges
Executive Vice-President
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1998 SEP-30-1997
<CASH> 819,830 379,736
<SECURITIES> 2,252,846 2,369,876
<RECEIVABLES> 134,261 408,844
<ALLOWANCES> (15,000) (27,993)
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 45,235 78,195
<DEPRECIATION> 27,000 (43,885)
<TOTAL-ASSETS> 3,210,172 3,164,773
<CURRENT-LIABILITIES> 7,762 60,402
<BONDS> 0 0
0 0
43,566 49,939
<COMMON> 128,307 128,307
<OTHER-SE> 3,030,537 2,926,125
<TOTAL-LIABILITY-AND-EQUITY> 3,210,172 3,164,773
<SALES> 133,033 143,588
<TOTAL-REVENUES> 139,031 223,073
<CGS> 94,803 115,681
<TOTAL-COSTS> 94,803 115,681
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 44,228 107,392
<INCOME-TAX> 6,500 33,950
<INCOME-CONTINUING> 37,728 73,442
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 37,728 73,442
<EPS-PRIMARY> .00 .02
<EPS-DILUTED> 0 0
</TABLE>
