FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: February 28, 1995
Commission File Number: 0-14786
AUTOINFO, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-2867481
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
1600 Route 208, Fair Lawn, New Jersey 07410
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(Address of principal executive offices)
(201) 703-0500
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(Registrant's telephone number, including area code)
n/a
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(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
--- ---
Number of shares outstanding of the registrant's common stock as of
April 12, 1995: 7,301,453 shares of common stock, $.01 par value.
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AUTOINFO, INC.
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INDEX
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Part I. Financial Information:
---------------------
Item 1. Financial Statements: Page
Condensed Balance Sheet -
February 28, 1995 and May 31, 1994 ............... 3
Condensed Statements of Operations -
Three and nine months ended
February 28, 1995 and February 28, 1994 .......... 4
Condensed Statements of Changes in Financial
Position - Three and nine months ended
February 28, 1995 and February 28, 1994 .......... 5
Notes to Unaudited Condensed Financial
Statements ....................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ....................................... 8
Part II. Other Information ................................ 12
-----------------
Signatures .................................................. 15
-2-
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AUTOINFO, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
February 28, May 31,
ASSETS 1995 1994
------ ------------ ------------
Current assets:
Cash ......................................... $ 149,657 $ 445,484
Short-term investments ....................... 7,884,477 7,063,691
Accounts receivable .......................... 862,578 822,835
Net book value of assets of
discontinued operations ..................... 13,175,161 13,453,483
Other current assets ......................... 361,502 114,502
------------ ------------
Total current assets ...................... 22,433,375 21,899,995
Property, equipment and furniture (at cost),
net of accumulated depreciation
(February 28, 1995 - $1,200,485
May 31, 1994 - $1,006,152) ................... 705,111 595,290
Goodwill and other intangibles,
net of accumulated amortization
(February 28, 1995 - $245,450;
May 31, 1994 - $130,200) ..................... 1,800,040 1,936,062
Investments, at cost ........................... 1,648,797 1,637,199
Other assets ................................... 385,569 318,878
------------ ------------
$ 26,972,892 $ 26,387,424
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current portion of long term debt ............ $ 397,735 $ 623,096
Accounts payable and accrued
liabilities .................................. 565,967 746,361
------------ ------------
Total current liabilities ................. 963,702 1,369,457
------------ ------------
Long-term debt ................................. 4,000,000 4,160,869
------------ ------------
Stockholders' equity:
Common stock - authorized 20,000,000 shares
$.01 par value; issued and outstanding -
7,255,286 shares at February 28, 1995
and 7,253,286 at May 31, 1994 ................ 72,553 72,533
Additional paid-in capital ................... 16,347,674 16,344,194
Deferred compensation under
stock bonus plan ............................. (419,226) (432,847)
Retained earnings ............................ 6,008,189 4,873,218
------------ ------------
Total stockholders' equity ................ 22,009,190 20,857,098
------------ ------------
$ 26,972,892 $ 26,387,424
============ ============
See notes to unaudited financial statements
3
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AUTOINFO, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
February 28, February 28,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues ........................................... $ 1,081,203 $ 801,614 $ 3,722,234 $ 2,999,597
----------- ----------- ----------- -----------
Operating Expenses:
System and support costs .......................... 441,068 205,957 1,508,664 806,558
Salaries and employee
benefits ......................................... 531,459 398,800 1,590,396 1,291,171
Selling, general & administative .................. 331,390 333,338 970,378 1,188,805
Depreciation and amortization ..................... 105,271 59,521 309,583 161,448
----------- ----------- ----------- -----------
Total operating expenses ........................ 1,409,188 997,616 4,379,021 3,447,982
----------- ----------- ----------- -----------
Income from continuing operations .................. (327,985) (196,002) (656,787) (448,385)
----------- ----------- ----------- -----------
Other (income) expenses:
Interest income ................................... (76,296) (43,583) (229,053) (81,551)
Dividend income ................................... (28,815) (28,815) (86,444) (86,444)
Interest expense .................................. 78,659 44,705 237,993 51,730
Minority interest in net loss
of partnership ................................... -- (67,020) (67,133) (146,637)
----------- ----------- ----------- -----------
Total other (income) & expenses ................. (26,452) (94,713) (144,637) (262,910)
----------- ----------- ----------- -----------
Loss from continuing operations
before income taxes ............................... (301,533) (101,289) (512,150) (185,475)
Income tax benefit ................................. (104,541) (31,643) (178,945) (61,188)
----------- ----------- ----------- -----------
Loss from continuing
operations ........................................ (196,992) (69,646) (333,205) (124,287)
Discontinued operations:
Income from discontinued
operations ....................................... 837,994 816,871 2,256,674 2,499,264
Provision for income taxes ........................ 290,553 255,172 788,498 824,539
----------- ----------- ----------- -----------
Net income from discontinued
operations ....................................... 547,441 561,699 1,468,176 1,674,725
----------- ----------- ----------- -----------
Net income ......................................... $ 350,449 $ 492,053 $ 1,134,971 $ 1,550,438
=========== =========== =========== ===========
Net income (loss) per share:
Continuing operations ............................. $ (0.03) $ (0.01) $ (0.05) $ (0.02)
Discontinued operations ........................... 0.07 0.07 0.20 0.23
----------- ----------- ----------- -----------
Net income per share ............................... $ 0.05 $ 0.07 $ 0.15 $ 0.21
----------- ----------- ----------- -----------
Weighted average number of common
and common equivalent shares ...................... 7,348,581 7,510,347 7,356,014 7,423,900
----------- ----------- ----------- -----------
</TABLE>
See notes to unaudited condensed financial statements
4
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AUTOINFO, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
-----------------
February 28,
------------
1995 1994
---- ----
Cash Flows from Operating Activities:
Net income ..................................... $ 1,134,971 $ 1,550,474
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization expenses . 309,583 161,448
Decrease in deferred compensation ...... 13,621 12,812
Changes in assets and liabilities:
Accounts receivable, net ................ (39,743) (6,012)
Other current assets .................... (247,000) (137,486)
Net assets of discontinued operations
held for disposal ...................... 278,322 (686,142)
Other assets ............................ (66,691) 12,425
Accounts payable
and accrued liabilities ................... (180,394) (50,916)
----------- -----------
Net cash provided by operations .................. 1,202,669 856,603
----------- -----------
Cash Flows from Investing Activities:
Acquisitions ................................... -- (998,908)
Capital expenditures ........................... (304,154) (230,066)
Purchases of short-term investments ............ (820,786) (4,004,378)
Goodwill, license fees, other
intangibles and investments .................. 9,174 --
----------- -----------
Net cash (used for)
investing activities ........................... (1,115,766) (5,233,352)
----------- -----------
Cash Flows from Financing Activities:
Issuance of notes .............................. -- 4,497,500
Reduction of borrowings ........................ (386,230) (188,875)
Exercise of stock options ...................... 3,500 185,544
----------- -----------
Net cash provided by (used for)
financing activities ........................... (382,730) 4,494,169
----------- -----------
Net increase (decrease) in cash .................. (295,827) 117,420
Cash at beginning of period ...................... 445,484 152,056
----------- -----------
Cash at end of period ........................... $ 149,657 $ 269,476
=========== ===========
See notes to unaudited condensed financial statements.
5
<PAGE>
AUTOINFO, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - General
- ----------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions for Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments consisting
of normal recurring accruals considered necessary for a fair presentation have
been included. Operating results for the three and nine months ended February
28, 1995 and February 28, 1994 are not necessarily indicative of the results
that may be expected for a full fiscal year. For further information, refer to
the financial statement and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended May 31, 1994.
Note 2 - Marketable Securities
- ------------------------------
Effective June 1, 1994, the Company, as required, adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". This pronouncement establishes the
accounting and reporting for investments in equity securities that have readily
determinable fair values and for all investments in debt securities. This
statement supersedes Statement No. 12 "Accounting for Certain Marketable
Securities".
In connection with the adoption of SFAS No. 115, debt and equity
securities used as part of the Company's investment management that may be sold
in response to cash needs, changes in interest rates, and other factors have
been classified as securities available for sale. Such securities are reported
at cost which approximates fair value and have maturities of less than one year
and included common stock and bond funds ($3,577,584 as of May 31, 1994 and
$3,509,739 as of February 28, 1995), money market instruments ($1,786,107 as of
May 31, 1994 and $1,524,738 as of February 28, 1995) and municipal bonds
($1,700,000 as of May 31, 1994 and $2,850,000 as of February 28, 1995). As of
February 28, 1995 and May 31, 1994 unrealized gains and losses were not
material. Unrealized gains and losses, if material, would be excluded from
earnings and reported as a separate component of stockholders' equity. During
the three and nine month periods ended February 28, 1995 and 1994, there were no
gains or losses arising from the disposition of marketable securities. Gains and
losses on disposition of securities are recognized on the specific
identification method in the period in which they occur.
6
<PAGE>
Note 3 - Acquisition of Minority Interest
- -----------------------------------------
In September 1994, the Company acquired the minority interest in its
insurance inspection services business pursuant to a formularized valuation
which resulted in no additional consideration being due. Accordingly, there is
no provision for minority interest in net loss of partnership for any period
subsequent to August 31, 1994.
Note 4 - Subsequent Event
- -------------------------
On April 1, 1995, the Company consummated the sale of certain assets
net of certain liabilities constituting the operating assets of the Orion
Network, Compass Network, Checkmate Computer Systems, and Insurance Parts
Locator businesses for $30,350,000 in cash.
All such assets and liabilities have been classified as "Net Book Value
of Assets of Discontinued Operations" in the Balance Sheet as of February 28,
1995, and the Balance Sheet as of May 31, 1994 has been accordingly restated.
The accompanying Statement of Operations for the three and nine month
periods ending February 28, 1995 reflects the results of operations classifying
the results related to the businesses sold as discontinued operations. The
Statement of Operations for the corresponding periods of the prior year have
been restated.
7
<PAGE>
AUTOINFO, INC.
Management's Discussion and Analysis of
---------------------------------------
Financial Condition
-------------------
and
---
Results of Operations
---------------------
Liquidity and Capital Resources
- -------------------------------
The Company's working capital was $21.5 million and liquid assets
amounted to $8.0 million as of February 28, 1995. The Company has sufficient
liquid assets and expects to generate funds through operations sufficient to
meet its short and long term capital requirements.
The total amount of debt outstanding as of February 28, 1995 was
$4,398,000, of which $398,000 is due in less than one year. This debt relates to
the $4 million of 7.55% subordinated notes issued by the Company in January 1994
and to acquisitions. The Company has adequate resources to meet these
obligations.
Subsequent to the close of the quarter ended February 28, 1995, the
Company received cash of $30,350,000 in connection with the sale of certain
assets with a net book value of $13,175,161 as of February 28, 1995. (See Note 4
to the Condensed Financial Statements (unaudited).) The tax provision on the
estimated gain on the sale of such assets is approximately $8.4 million.
Inflation and changing prices had no material impact on revenues or the
results of operations for the quarter ended February 28, 1995. There are no
trends or commitments which may have an impact on the Company's liquidity.
Results of Operations
- ---------------------
On April 1, 1995, the Company consummated the sale of certain assets,
net of certain liabilities, constituting the operating assets of the Orion
Network, Compass Network, Checkmate Computer Systems, and Insurance Parts
Locator businesses. The Results of Operations of these businesses has been
classified as discontinued operations. The Company's continuing operations
consist of its insurance inspection services and long distance services
businesses. Except as otherwise noted, the following discussion of the results
of operations is with respect to the Company's continuing operations.
Three Months Ended February 28, 1995 and 1994
- ---------------------------------------------
Revenues
- --------
For the three month periods ended February 28, 1995 and 1994, the
Company's revenues were derived from the sale of insurance inspection services
(74% and 57% respectively) and the sale of long
8
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distance telephone services (26% and 43% respectively). Total revenues for the
three months ended February 28, 1995 were $1,081,203, an increase of 35% or
$279,589 over total revenues of $801,203 for the corresponding prior year
period. Revenues of the Company's insurance inspection services business
increased by $340,000 due to the acquisitions consummated in the fourth quarter
of the prior fiscal year. This increase was offset by a decline in revenue of
$60,000 in the Company's telephone reseller division due primarily to reduced
network usage levels.
Operating Expenses
- ------------------
System and support costs for the three months ended February 28, 1995
increased by 114% to $441,068 from $205,957 for the prior year period. The
increase was primarily related to the increase in revenue of the Company's
insurance inspection services business.
Salaries and employee benefit expenses for the three months ended
February 28, 1995 increased by 33% to $531,459 from $398,800 for the prior year
period. The increase was primarily related to the increase in revenue of the
Company's insurance inspection services business.
Selling and administrative expenses for the three months ended February
28, 1995 decreased by 1% to $331,390 from $333,338 for the prior year period.
Depreciation and amortization expense for the three months ended
February 28, 1995 increased by 77% to $105,271 from $59,521 for the prior year
period. The increase was primarily due to depreciation and amortization of
acquisition costs associated with the Company's insurance inspection services
business.
Other (Income) Expenses
- -----------------------
Interest expense was $78,659, an increase of $33,954 over $44,705 for
the prior year period. This was directly related to the $4,000,000 subordinated
notes issued by the Company in January 1994 and notes payable issued in
connection with an acquisition in January 1994.
Interest income was $76,296, an increase of $32,713 over $43,583 for
the prior year period. This was directly attributable to the investment of the
proceeds of the $4,000,000 subordinated notes issued by the Company in January
1994.
Minority interest in net loss of partnership was $0 as compared with
$67,020 for the prior year period. The Company acquired the minority interest in
September 1994.
9
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Loss from Continuing Operations
- -------------------------------
Loss from continuing operations for the three months ended February 28,
1995 was $301,533 compared to $101,289 in the prior year period, an increase of
$200,244 or 198%. This increase is attributable to the reduction in the minority
interest in the net loss associated with the Company's insurance services
business ($67,000), the increase in depreciation and amortization of acquisition
costs associated with the Company's insurance services business ($46,000) and
the reduction in telephone reseller division revenues ($60,000).
Income from Discontinued Operations
- -----------------------------------
Income from discontinued operations for the three months ended February
28, 1995 was $837,994 compared to $816,871 in the prior year, an increase of
$21,123 or 3%.
Nine Months Ended February 28, 1995 and 1994
- --------------------------------------------
Revenues
- --------
For the nine month periods ended February 28, 1995 and 1994, the
Company's revenues were derived from the sale of insurance inspection services
(78% and 53% respectively) and the sale of long distance telephone services (22%
and 47% respectively). Total revenues for the nine months ended February 28,
1995 were $3,722,234, an increase of 24% or $722,637 over total revenues of
$2,999,597 for the corresponding prior year period. Revenues of the Company's
insurance inspection services business increased by $1,348,000 due to the
acquisitions consummated in the fourth quarter of the prior fiscal year. This
increase was offset by a decline in revenue of approximately $578,000 in the
Company's telephone reseller division.
Operating Expenses
- ------------------
System and support costs for the nine months ended February 28, 1995
increased by 87% to $1,508,664 from $806,558 for the prior year period. The
increase was primarily related to the increase in revenue of the Company's
insurance inspection services business.
Salaries and employee benefit expenses for the nine months ended
February 28, 1995 increased by 23% to $1,590,396 from $1,291,171 for the prior
year period. The increase was principally attributable to the increase in
revenue of the Company's insurance inspection services business.
Selling and administrative expenses for the nine months ended February
28, 1995 decreased by 23% to $970,378 from $1,188,805 for the prior year period.
These decreases were directly attributable to reduced selling costs associated
with the reduced revenues in the Company's telephone reseller division.
10
<PAGE>
Depreciation and amortization expense for the nine months ended
February 28, 1995 increased by 92% to $309,583 from $161,448 for the prior year
period. This was due to depreciation and amortization of acquisition costs
associated with the insurance inspection business services.
Other (Income) Expenses
- -----------------------
Interest expense was $237,993, an increase of $186,263 over $51,730 for
the prior year period. This was directly related to the $4,000,000 subordinated
notes issued by the Company in January 1994 and notes payable issued in
connection with an acquisition in January 1994.
Interest income was $229,053, an increase of $147,502 over $81,551 for
the prior year period. This was directly attributable to the investment of the
proceeds of the $4,000,000 subordinated notes issued by the Company in January
1994.
Minority interest in net loss of partnership was $67,133, a decrease of
$79,512 over $146,645 for the prior year period. This was the result of the
acquisition of the minority interest by the Company in September 1994.
Income
- ------
Loss from Continuing Operations
- -------------------------------
Loss from continuing operations for the nine months ended February 28,
1995 was $512,150 compared to $185,475 in the prior year period, an increase of
$326,675 or 176%. This increase is attributable to the impact of the reduction
in telephone reseller division revenues.
Income from Discontinued Operations
- -----------------------------------
Income from discontinued operations for the nine months ended February
28, 1995 was $2,256,674 compared to $2,499,264 in the prior year, a decrease of
$242,590 or 10%. This decrease was primarily related to lower margins on the
sale of computer systems ($179,000) and the impact of the reduced revenues from
the sales of automotive supplies ($50,000).
Trends and Uncertainties
- ------------------------
During the nine month period ending February 28, 1995, increased
competition had an adverse impact on the sale of computer systems and the
results of operations.
11
<PAGE>
AUTOINFO, INC.
PART II - OTHER INFORMATION
Item 2: Changes in Securities
- ------- ---------------------
On March 30, 1995, the Board of Directors of Autolnfo, Inc. (the
"Corporation") declared a dividend distribution of one right (a "Right") for
each outstanding share of Common Stock, par value $.01 per share (the "Common
Shares"), of the Corporation. The dividend is payable to the stockholders of
record on April 10, 1995 (the "Record Date"), and with respect to Common Shares
issued thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Shares issued after the Distribution Date.
Except as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Corporation one Common Share at a price
of $15.00 per one Common Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Corporation and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent"), dated as of March 30, 1995.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates (as
hereinafter defined) will be distributed. The Rights will separate from the
Common Shares upon the earliest to occur of (i) a person or group of affiliated
or associated persons having acquired beneficial ownership of 15% or more of the
outstanding Common Shares (except pursuant to a Permitted Offer, as hereinafter
defined); or (ii) 10 days (or such later date as the Board may determine)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in a person or
group becoming an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or group whose
acquisition of Common Shares causes a Distribution Date pursuant to clause (i)
above is an "Acquiring Person." The date that a person or group becomes an
Acquiring Person is the "Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights) new Common
Share certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares issued after the
Distribution Date), and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on March 30, 2005, unless earlier redeemed by
the Corporation as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Shares at a price and on terms which a majority of the disinterested directors
12
<PAGE>
(as hereinafter defined) and a majority of the entire Board determines to be
adequate and in the best interests of the Corporation, its stockholders and
other relevant constituencies, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer")), each holder of a Right will thereafter
have the right (the "Flip-In Right") to receive upon exercise the number of
Common Shares (or, in certain circumstances, other securities of the
Corporation) having a value (immediately prior to such triggering event) equal
to two times the exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or associate thereof
will be null and void.
If the Corporation does not have sufficient treasury stock or
authorized and unissued Common Shares fully to honor the Rights, the rights of
holders to purchase Common Shares may be proportionately reduced and the Board
of Directors may, in its discretion issue other equity or debt securities upon
exercise of the Rights. With the approval of a majority of the "disinterested
directors" and a majority of the entire Board, the Board may also issue Common
Shares in exchange for all of the exercisable Rights after the Distribution Date
at the rate of one Share for each Right.
In the event that, at any time following the Shares Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other person
in which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Shares are not
treated alike, any other person, then each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company having a value equal to two times the exercise price of the
Right. The holder of a Right will continue to have the Flip-Over Right whether
or not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities convertible
into Common Shares with a conversion price, less than the then current market
price of the Common Shares or (iii) upon the distribution to holders of the
Common Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and in lieu
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<PAGE>
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Corporation may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price") which redemption shall be
effective upon the approval of a majority of the "disinterested directors" and a
majority of the Board of Directors. Additionally, following the Shares
Acquisition Date, upon the approval of a majority of the "disinterested
directors" and a majority of the Board of Directors, the Corporation may redeem
the then outstanding Rights in whole, but not in part, at the Redemption Price,
provided that such redemption is in connection with a merger or other business
combination transaction or series of transactions involving the Corporation in
which all holders of Common Shares are treated alike but not involving an
Acquiring Person or its affiliates or associates.
All of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Corporation prior to the Distribution Date, upon the
approval of a majority of the "disinterested directors" and a majority of the
Board of Directors. After the Distribution Date, the provisions of the Rights
Agreement may be amended, upon the approval of a majority of the "disinterested
directors" and a majority of the Board of Directors in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten or lengthen
any time period under the Rights Agreement.
Any amendments of the Rights Agreement and/or any redemption of the
Rights permitted pursuant to the terms of the Rights Agreement under certain
specified circumstances must be approved by a majority of "disinterested
directors". The term "disinterested director" means any director of the
Corporation who is neither an officer or employee of the Corporation nor a
"significant stockholder" of the Corporation nor, any representative, Associate
or Affiliate (as such terms are defined in the Rights Agreement) of any
"significant stockholder" nor any person attempting to effect a business
combination or similar transaction nor any representative, Associate or
Affiliate of any such person. The term" significant stockholder" means any
stockholder who at any time on and/or subsequent to the date of the adoption of
the Plan is the beneficial owner of 10% of the outstanding Common Shares.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to (i) a Registration Statement on Form 8-A
dated March 31, 1995 and (ii) a Report on Form 8-K dated March 30, 1995. A copy
of the Rights Agreement is available free of charge from the Corporation. This
summary description of the Rights do not purport to be complete and is qualified
in its entirety. by reference to the Rights Agreement, which is hereby
incorporated by reference.
Item 6(a): The following exhibits are filed with this report.
- ---------
Exhibit 11 - Calculation of Earnings Per Share.
Item 6(b): No reports on Form 8-K were filed by the Registrant during the
- --------- quarter for which this report is filed.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
AUTOINFO, INC.
(Registrant)
/S/ Scott Zecher,
------------------------------
Scott Zecher,
President and Chief
Operating Officer
Date: April 13, 1995
/s/William I. Wunderlich,
------------------------------
William I. Wunderlich,
Treasurer, Secretary and
Principal Financial Officer
15
<PAGE>
Exhibit 11
AUTOINFO, INC.
Calculation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
February 28 February 28
----------- -----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary and Fully Diluted Earnings (Loss):
Earnings (Loss) from Operations
Applicable to Common Stock:
From Continuing Operations ........................ $ (196,992) $ (69,646) $ (333,205) $ (124,287)
From Discontinued Operations ...................... 547,441 561,699 1,468,176 1,674,725
----------- ----------- ----------- -----------
Net Income ........................................ $ 350,449 $ 492,053 $ 1,134,971 $ 1,550,438
----------- ----------- ----------- -----------
Shares:
Weighted Average Number of
Common Shares Outstanding ......................... 7,255,286 7,222,953 7,255,191 7,158,323
Add Shares Issuable from Assumed
Exercise of Options and Warrant ................... 93,295 287,124 100,823 265,577
----------- ----------- ----------- -----------
Weighted Average Number of
Common Shares as Adjusted ......................... 7,348,581 7,510,127 7,356,014 7,423,900
----------- ----------- ----------- -----------
Primary and Fully Diluted Earnings
Per Common Share:
From Continuing Operations ........................ $ (.02) $ (.01) $ (.05) $ (.02)
From Discontinued Operations ...................... .07 .08 .20 .23
----------- ----------- ----------- -----------
Net Income ........................................ $ .05 $ .07 $ .15 $ .21
----------- ----------- ----------- -----------
</TABLE>
