<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the quarterly period ended March 31, 1995
OR
__ 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 1-4923
WESTMINSTER CAPITAL, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2157201
- ---------------------- --------------------
(State or other jurisdiction of (IRS. Employer Identification No.)
incorporation or organization)
9665 Wilshire Boulevard, Mezzanine, Beverly Hills, CA 90212
- ------------------------------------------------------------
(Address of principal executive office) (Zip Code)
310 278-1930
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(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.
X Yes No
- --- --
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date 7,814,607
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AS OF MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARCH 31, 1995
ASSETS (UNAUDITED) DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 772,000 $ 845,000
Investment securities available for sale,
at market 21,215,000 25,402,000
Loans receivable, net 1,450,000 716,000
Accounts receivable 324,000 257,000
Income tax refunds receivable 1,954,000 1,954,000
Accrued interest receivable 467,000 611,000
Telephone systems, net 1,518,000 1,579,000
Office furniture and equipment, net 54,000 58,000
Other assets 4,000 5,000
--------------------------------
TOTAL ASSETS $27,758,000 $31,427,000
--------------------------------
--------------------------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
LIABILITIES:
Deferred income taxes $ 3,121,000 $ 3,099,000
Liabilities and accrued expenses 2,424,000 6,350,000
Minority interest in limited partnership 502,000 495,000
--------------------------------
TOTAL LIABILITIES 6,047,000 9,944,000
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SHAREHOLDERS' EQUITY:
Common stock, $1 par value: 30,000,000 shares
authorized: 7,815,000 shares issued and
outstanding in 1995 and 1994 7,815,000 7,815,000
Capital in excess of par value 55,946,000 55,946,000
Accumulated deficit (41,965,000) (42,073,000)
Unrealized holding losses on investment
securities available for sale, net of taxes (85,000) (205,000)
--------------------------------
TOTAL SHAREHOLDERS' EQUITY 21,711,000 21,483,000
--------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $27,758,000 $31,427,000
--------------------------------
--------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
2
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WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
INCOME: ENDED 3/31/95 ENDED 3/31/94
------------- -------------
<S> <C> <C>
Interest and fees on loans receivable $ 61,000 $ 210,000
Interest on investment securities available
for sale and money market funds 240,000 42,000
Telephone system revenue 425,000 137,000
Refund of litigation costs -- 757,000
Other, net -- 38,000
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Total Revenues 726,000 1,184,000
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EXPENSES:
Telephone time charges 207,000 64,000
General and administrative 442,000 221,000
----------------------------
Total Expenses 649,000 285,000
----------------------------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 77,000 899,000
INCOME TAX (PROVISION) BENEFIT 58,000 (355,000)
MINORITY INTEREST IN INCOME
OF CONSOLIDATED PARTNERSHIP (27,000) (15,000)
----------------------------
NET INCOME $ 108,000 $ 529,000
----------------------------
----------------------------
Net income per common share:
Primary $ .01 $ .07
Fully Diluted .01 .07
----------------------------
----------------------------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED 3/31/95 ENDED 3/31/94
CASH FLOWS/OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 108,000 $ 529,000
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 122,000 4,000
Increase in accounts receivable (67,000) --
Decrease in accrued interest receivable 144,000 --
Net change in deferred income taxes (58,000) 355,000
Net change in other assets 1,000 (41,000)
Net change in liabilities and accrued expenses (3,926,000) (385,000)
Net change in minority interest 7,000 15,000
------------------------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (3,669,000) 477,000
------------------------------
CASH FLOWS/INVESTING ACTIVITIES:
Purchase of investment securities (2,000,000) (16,326,000)
Proceeds from maturities of investment securities 2,000,000 --
Proceeds from sales of investment securities 4,330,000 --
Loan originations (853,000) (5,232,000)
Principal collected on loans receivable 119,000 385,000
Purchase of telephone systems and office equipment -- (424,000)
------------------------------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES 3,596,000 (21,597,000)
------------------------------
NET CHANGE IN CASH AND CASH
EQUIVALENTS (73,000) (21,120,000)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 845,000 23,290,000
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CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 772,000 $ 2,170,000
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------------------------------
Supplemental schedule of non cash investing and financial activities for the
period:
Tax effect of unrealized loss on
investment securities $ 80,000 --
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------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
4
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WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
1. BASIS OF PRESENTATION
In the opinion of Westminster Capital, Inc. and consolidated entities (the
"Company"), the accompanying unaudited consolidated financial statements,
prepared from the Company's books and records, contain all adjustments
(consisting of only normal recurring accruals) necessary for a fair
presentation of the Company's financial condition as of March 31, 1995 and
December 31, 1994, and the results of operations and statements of cash flows
for the periods ended March 31, 1995 and 1994.
The consolidated financial statements include the accounts of Westminster
Capital, Inc., its wholly owned subsidiaries and a greater than 50% interest
in a limited partnership, Global Telecommunications Systems, LTD ("Global
Telecommunications"). Due to a significant increase in the limited
partnership investment from March 31, 1994 to March 31, 1995, the
consolidated financial statements now include this investment on a
consolidated basis. Minor reclassifications have been made to the March 31,
1994 consolidated statement of operations to reflect consolidation and to
present comparative information.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary to present the financial
position, results of operations and statements of cash flows in conformity
with generally accepted accounting principles. The following material under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" is written with the presumption that the users of the
interim financial statements have read or have access to the most recent
report on Form 10-K which contains the latest audited financial statements
and notes thereto, together with Management's Discussion and Analysis of
Financial Condition and Results of Operations as of December 31, 1994 and for
the year then ended.
On February 14, 1995 a Settlement Agreement and Release was entered into by
and between the Resolution Trust Corporation (the "RTC"), the Company, and
three of its present and former directors ("Directors"). The Settlement
Agreement provides for payment of $4 million by the Company to the RTC,
requires the RTC to cooperate with the Company in connection with the pending
proceedings to recover tax payments made by the Company to the State of
California, and releases all claims among the parties. The $4 million
settlement was provided for in the 1994 consolidated financial statements as
of and for the year ended December 31, 1994.
5
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2. INCOME TAXES
The Company has received preliminary results provided by the Franchise Tax
Board with respect to its refund claim for approximately $3.9 million
(including accrued interest of $1.2 million). Those audit findings propose to
deny the refund claim. The Company has filed a protest with the California
Franchise Tax Board which sets forth its position with respect to the refund
claims. While the Company remains convinced that it will eventually recover
all or a substantial portion of its refund claim, in 1992 the Company
established a valuation allowance of 50%, adjusting the carrying value of
this asset to $1,954,000, which reflects the uncertainties attributable to
the California Franchise Tax Board's position. Due to continuing
uncertainties and the length of time it will take to resolve this matter,
management established a provision for unresolved tax issues of an additional
$1,954,000 during the fourth quarter of 1994. This provision is included in
liabilities and accrued expenses in the Consolidated Statements of Financial
Condition.
3. EARNINGS PER SHARE
The Company has outstanding certain employee stock options which have been
determined to be common stock equivalents for purposes of computing earnings
per share. During the first quarter of 1995, the market price of the
Company's common stock exceeded the exercise price of certain of these common
stock equivalents. Under the treasury stock method of computing earnings per
share, the weighted average number of shares of common stock and common stock
equivalents outstanding were 7,835,000 for primary earnings per share and
7,840,000 for fully diluted earnings per share. There were no dilutive common
stock equivalents during 1994.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the quarter ended March 31, 1995 were $726,000 compared to
$1,184,000 for the quarter ended March 31, 1994. The large decrease was
primarily due to the receipt in the first quarter of 1994 of a $757,000 refund
of litigation costs incurred in prior years. This decrease was partially offset
by an increase in telephone system revenue which resulted from the expanded
operations of Global Telecommunications.
Total expenses for the first quarter of 1995 were $649,000 compared to
$285,000 for the first quarter of 1994. This increase resulted from a $143,000
increase in telephone time charges and a $221,000 increase in general and
administrative expenses. The increased telephone time charges were due to the
expanded operations of Global Telecommunications. General and administrative
expenses increased in almost all expense categories due to the significant
increase in the Company's activities which include the expanded operations of
Global Telecommunications.
Net income for the three months ended March 31, 1995 was $108,000 or $.01 per
share compared to $529,000 or $.07 per share for the first quarter of 1994. This
large decrease resulted from the decreased revenue and increased expenses
discussed in previous paragraphs. The large decrease was partially offset by a
decrease in income taxes. In 1994, the provision for income taxes was 40% of pre
tax income. In 1995, pre tax income of $50,000 resulted in a tax benefit of 116%
due to non taxable interest on municipal securities.
LOANS RECEIVABLE
At March 31, 1995, there were several loans outstanding to a privately owned
dealer in real estate and real estate mortgages in the amount of $1,349,000,
which includes a new loan of $847,500 made in the first quarter of 1995. At
March 31, 1995, $481,000 of principal payments were past due for more than
ninety days. In addition, approximately $140,000 of accrued but uncollected
interest was past due thirty days or more.
These loans are secured by real properties and Management believes that there
is adequate collateral value to cover the principal balance and all past due
interest. Accordingly, no allowance for loan losses has been established nor has
the accrual of interest ceased.
LIQUIDITY
The principal changes in the Company's financial condition at March 31, 1995
as compared to December 31, 1994 are the decrease of approximately $4.2 million
in investment securities available for sale and a decrease of approximately $3.9
million in liabilities and accrued
7
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expenses. These decreases resulted from the payment of $4 million in the first
quarter of 1995 to the RTC (See Note 1 of Notes to Consolidated Financial
Statements). The remaining $21.2 million of investment securities available for
sale consist of municipal securities. Since these securities have a weighted
average maturity of approximately 10 months, the Company continues to maintain a
very strong liquidity position.
The Company's finanical position at March 31, 1995 remained strong.
Stockholder's equity was $21,711,000 (as compared to $21,483,000 at December 31,
1994), and the Company had no debt, although it did have $3,121,000 in deferred
income tax liabilities. Liabilities and accrued expenses also were reduced from
$6,350,000 at December 31, 1994 to $2,424,000 at March 31, 1995, which primarily
resulted from the $4 million payment to the RTC. (See Note 1 of Notes to
Consolidated Financial Statements). The $1,954,000 provision for unresolved tax
issues is included in liabilities and accrued expenses at March 31, 1995 and
December 31, 1994 (See Note 2 of Notes to Consolidated Financial Statements).
8
<PAGE>
PART II-OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On April 4, 1995, William Belzberg, Chairman of the Board and Chief Executive
Officer was granted an option to purchase up to 250,000 shares of Common Stock
under the Company's Incentive Stock Option Plan at $1.99 per share, which is
equal to 110% of the market price on the date of grant as specified in the Plan.
The options are exercisable in four equal annual installments commencing with
the first anniversary of the grant date. The option expires five years from the
date of grant. Mr. Belzbergs's 1986 option to purchase 150,000 shares was
cancelled.
On April 4, 1995, the five outside Directors' of the Company were granted
options to purchase up to 10,000 shares each under the Company's Non-Statutory
Stock Option Plan at $1.8125 per share, which is equal to the market price on
the date of grant as specified in the Plan. The options are exercisable in four
equal annual installments commencing with the first anniversary of the grant
date. The options expire five years from the date of grant. The 1986 options to
purchase 45,000 shares by these Directors were cancelled.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K
NONE
9
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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.
Dated: May 10, 1995 WESTMINSTER CAPITAL, INC.
(Registrant)
By /s/ William Belzberg
-----------------------------
William Belzberg,
Chairman of the Board of
Directors and Chief
Executive Officer
By /s/ Philip J. Gitzinger
-----------------------------
Philip J. Gitzinger
Executive Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Financial Condition of Registrant as of March
31, 1995 (Unaudited) and the Consolidated Statements of Operations of
Registrant for the three months ended March 31, 1995 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 772,000
<SECURITIES> 21,215,000
<RECEIVABLES> 1,774,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,854,000
<DEPRECIATION> 282,000
<TOTAL-ASSETS> 27,758,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 7,815,000
0
0
<OTHER-SE> 13,896,000
<TOTAL-LIABILITY-AND-EQUITY> 27,758,000
<SALES> 0
<TOTAL-REVENUES> 726,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 77,000
<INCOME-TAX> (58,000)
<INCOME-CONTINUING> 108,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,000
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
