FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES ACT OF 1934
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 1-9312
AMERICAN LIST CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 11-2050322
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 Old Country Road, Mineola, New York 11501
(address of principal executive offices)
(516) 248-6100
(Registrant's telephone number, including area code)
Indicate by check whether the Registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Exchange Act 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) or the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes 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: 4,564,973 shares of Common
Stock, $.01 par value, as of October 2, 1995.
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<PAGE>
AMERICAN LIST CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at August 31, 1995 and February 28, 1995
Consolidated Statements of Earnings and Retained Earnings
for the three and six months ended August 31, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the six months
ended August 31, 1995
Consolidated Statements of Cash Flows for the six months ended
August 31, 1995 and 1994
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
AMERICAN LIST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
August 31, February 28,
1995 1995
ASSETS ---------- ------------
<S> <C> <C>
Current assets:
Cash and equivalents $ 3,923,779 $ 3,196,634
Marketable Securities 7,345,498 7,351,410
Trade accounts receivable, net 3,514,093 4,393,107
Unamortized costs of lists 611,603 933,669
Prepaid income taxes 369,770
Prepaid expenses and other 54,285 37,042
------------ ------------
Total current assets 15,819,028 15,911,862
---------- ----------
Property and equipment, at cost (less
accumulated depreciation of $733,348
and $690,427) 219,959 189,878
Deferred license cost, net of accumulated
amortization 2,957,205 3,125,873
Unamortized costs of lists 502,599 654,402
Other Assets 617,159 230,414
----------- -----------
$20,115,950 $20,112,429
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 429,826 $ 414,569
Accounts payable 139,655 97,653
Income taxes payable 170,337
Accrued pension and profit sharing
contribution 105,000 192,049
Accrued salaries 370,792 363,441
Accrued expenses 56,952 179,125
---------- ----------
Total current liabilities 1,102,225 1,417,174
Long-Term debt 1,937,430 2,324,890
Stockholders' Equity:
Common stock, par value $.01 per share;
Authorized - 10,000,000 shares; issued
4,564,973 and 4,560,013 shares,
respectively 45,650 45,600
Additional paid-in-capital 6,962,929 6,913,311
Unrealized loss on marketable securities (667) (11,833)
Retained earnings 10,577,621 9,423,287
----------- ----------
17,585,533 16,370,365
Less treasury stock at cost - 24,600 shares (509,238)
----------- -----------
17,076,295 16,370,365
----------- -----------
$20,115,950 $20,112,429
----------- -----------
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
---------------------------- ---------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $3,117,132 $2,782,881 $8,447,741 $7,072,373
---------- ---------- ---------- ----------
Costs and expenses:
Cost of operations 701,419 599,376 1,372,519 1,126,833
Selling, general and
administrative expense 1,079,979 922,470 2,054,759 1,808,214
--------- ------- --------- ---------
1,781,398 1,521,846 3,427,278 2,935,047
--------- --------- --------- ---------
Operating income 1,335,734 1,261,035 5,020,463 4,137,326
Investment income 113,404 109,803 238,859 164,439
Interest expense (45,997) (27,651) (98,311) (27,651)
----------- ------------ ------------ -----------
Earnings before provision for
income taxes 1,403,141 1,343,187 5,161,011 4,274,114
--------- --------- --------- ---------
Provision for income taxes 531,000 531,000 1,953,000 1,654,000
---------- ---------- --------- ---------
Net earnings $ 872,141 $ 812,187 $3,208,011 $2,620,114
---------- ---------- ---------- ----------
Net earnings per common share $0.20 $0.18 $0.71 $0.58
----- ----- ----- -----
Average shares outstanding 4,540,305 4,556,865 4,543,805 4,556,865
--------- --------- --------- ---------
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED AUGUST 31, 1995
(UNAUDITED)
<TABLE>
COMMON STOCK UNREALIZED
$.01 PAR VALUE ADDITIONAL LOSS ON
PAID-IN MARKETABLE RETAINED TREASURY
SHARES AMOUNT CAPITAL SECURITIES EARNINGS STOCK TOTAL
------------ -------- ------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 1, 1995 4,560,013 $45,600 $6,913,311 $(11,833) $9,423,287 $16,370,365
Issuance of common stock
in connection with exercise
of stock options 4,960 50 49,618 49,668
Purchase of common stock
for treasury $(509,238) (509,238)
Cash dividends declared
and paid on common stock
- - $.45 per share (2,053,677) (2,053,677)
Unrealized gain on
marketable securities 11,166 11,166
Net earnings 3,208,011 3,208,011
--------- --------- ----------- ----------- ------------ ---------- ------------
Balance at August 31, 1995 4,564,973 $45,650 $6,962,929 $ (667) $10,577,621 $(509,238) $17,076,295
--------- --------- ----------- ----------- ------------ ---------- ------------
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
SIX MONTHS ENDED
AUGUST 31,
-------------------------
1995 1994
------ ------
<S> <C> <C>
Cash flows from operating activities
Net earnings $3,208,011 $2,620,114
Adjustments to reconcile net earnings
to net cash provided by operating
activities, net of acquisition effects
Depreciation 42,921 42,759
Provisions for losses on accounts receivable 10,000
Amortization of bond premiums 111,937 131,379
Amortization of deferred license cost 168,668 47,706
Amortization of goodwill 6,642
Decrease in operating assets 914,706 510,522
(Decrease)in operating liabilities (412,440) (1,943,481)
---------- ----------
Net cash provided by operating activities 4,050,445 1,408,999
---------- ----------
Cash flows from investing activities
Capital expenditures (53,710) (53,669)
Purchase of marketable securities (88,609) (787,491)
Acquisition of subsidiary, net
of cash acquired (67,734)
Purchase of temporary investments (912,379)
Deferred license cost (600,000) (600,000)
---------- ----------
Net cash used in investing activities (810,053) (2,353,539)
---------- ----------
Cash flows from financing activities
Issuance of common stock 49,668 8,313
Dividends paid (2,053,677) (911,343)
Purchase of treasury stock (509,238)
Net cash used in financing activities (2,513,247) (903,030)
---------- ----------
Net increase (decrease) in cash and cash
equivalent 727,145 (1,847,570)
Cash and cash equivalents at beginning of
period 3,196,634 4,700,262
---------- ----------
Cash and cash equivalents at end of period $3,923,779 $2,852,692
---------- ----------
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
AUGUST 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements reflect all
adjustments which, in the opinion of management, are of a normal
recurring nature and necessary to a fair statement of the results for
the interim periods presented. These financial statements have been
prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all the information or note disclosures
necessary for a complete presentation. They should be read in
conjunction with the Company's audited financial statements and
accompanying notes which appear in the Company's Form 10-KSB for the
year ended February 28, 1995. The results of operations for the first
six months of the year are not necessarily indicative of the results
of operations for the full year.
Note B - STOCKHOLDERS' EQUITY
On June 28, 1995, the Company declared a 25 cents ($.25) per share
quarterly dividend payable July 31, 1995 to stockholders of record of
July 13, 1995.
On October 9, 1995, the Company declared a 25 cents ($.25) per share
quarterly dividend payable November 10, 1995 to stockholders of
record of October 20, 1995.
In May 1992, the Company adopted the 1992 Stock Option Plan which
provides for the issuance of options to purchase up to 82,500 shares,
as adjusted, of common stock. The plan provides for the issuance of
both incentive stock options and non-qualified options to purchase
shares at exercise prices determined by the Board of Directors. On
July 17, 1995, the Company's stockholders approved the increase in
the number of shares available for issuance under the plan to
300,000. During the six months ended August 31, 1995, the Company
granted incentive stock options to purchase 54,000 shares of its
common stock at prices ranging from $21.00 to $28.13 per share
representing the unadjusted quoted market price at the date of such
grant.
On April 17, 1995, the Company repurchased 24,600 of its common stock
on the open market for an aggregate purchase price of $507,375.
Note C - ACQUISITION
On June 22, 1995, the Company acquired substantially all of the
operating assets and liabilities of GeoDemX Corporation ("GeoDemX"),
a developer and marketer of geodemographic software; an emerging
category of software defined by the combination of computerized maps
with electronic demographic for nominal consideration. The purchase
agreement provides for, among other things, additional consideration
to be paid based on a percentage of GeoDemX's annual pretax earnings
through February 28, 1999. Such additional consideration shall be
paid by the Company through the issuance of common shares of the
Company's common stock, however, the sellers may elect to receive up
to 50% of such additional consideration in cash. The excess cost of
the net assets acquired has initially been recorded in other assets
and is subject to adjustment based upon the Company's final
determination of the components of such excess. Historical pro-forma
information is not presented as the pro-forma results would not be
materially different from those of the Company.
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<PAGE>
AMERICAN LIST CORPORATION
August 31, 1995
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FINANCIAL CONDITION
The Company continues to be in a favorable financial position and does
not require outside financing to support its operations. Working
capital as of August 31, 1995 and February 28, 1995 amounted to
approximately $14.7 million and $14.5 million, respectively. The
Company has no material commitments for capital expenditures.
Management is, however, continually seeking possibilities for
additional expansion into compatible business areas. On June 22, 1995,
the Company acquired substantially all of the operating assets and
liabilities of GeoDemX Corporation (see Note C to the consolidated
unaudited financial statements). The Company believes that cash and
cash equivalents and marketable securities as of August 31, 1995 in
the approximate amount of $11.3 million can provide adequate liquidity
for the Company's continuing operations and for such possible further
expansion. Net cash flows from operating activities amounted to
approximately $4.1 million and $1.4 million for the six months ended
August 31, 1995 and 1994, respectively. Operating cash flows increased
due to the payment of accrued dividends and income taxes during the
period ended August 31, 1994. Further increases in cash equivalents
and marketable securities are dependent upon future operating profits
and the level of dividends declared by the Board of Directors. On
October 9, 1995, the Company declared a quarterly dividend of 25 cents
($.25) per share, payable November10, 1995 to stockholders of record
on October 20, 1995. On April 17, 1995, the Company repurchased 24,600
of its common stock on the open market for an aggregate purchase price
of $507,375. Presently, the Company does not anticipate any further
purchases of its common stock, however, depending on market
conditions, the Company, may, from time to time, purchase additional
shares of its common stock.
RESULTS OF OPERATIONS
Revenues from operations increased during the three and six months
ended August 31, 1995 by approximately $334,000 (12%) and $1,375,000
(19%), respectively, from the comparable 1994 periods. This increase
in revenue is primarily attributable to an expansion of the Company's
customer base, a price increase which took effect in September 1994
and revenues generated by the newly acquired subsidiary, GeoDemX.
Costs of operations increased for the three and six months ended
August 31, 1995 by approximately $102,000 (17%) and $246,000 (22%),
respectively, from the comparable 1994 periods primarily due to the
amortization of deferred license costs and costs associated with the
newly acquired subsidiary, GeoDemX. As a percentage of sales, costs of
operations increased to 23% for the quarter ended August 31, 1995 from
22% for the comparable 1994 quarter primarily due to the amortization
of deferred license costs and lower margins on GeoDemX sales.
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<PAGE>
AMERICAN LIST CORPORATION
August 31, 1995
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS (Continued)
Selling, general and administrative costs increased during the three
and six months ended August 31, 1995 by approximately $158,000 (17%)
and $247,000 (14%) from the comparable 1994 periods primarily due to
expenses associated with the GeoDemX subsidiary and to additional
personnel recently hired by the Company.
Investment income increased approximately $74,000 (45%) during the six
months ended August 31, 1995 from the comparable 1994 period primarily
due to an increase in interest rates and a greater amount of funds
available for investment.
Interest expense for the six months ended August 31, 1995 increased by
approximately $71,000 (256%) from the comparable 1994 period due to
the debt associated with the Company's license agreement entered into
in July 1994.
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<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Companys' annual meeting of stockholders was held on July 17,
1995. At the meeting: (1) all six director nominees were elected, (2)
an amendment to the Company's 1992 Stock Option Plan to increase the
number of shares of Common Stock reserved for issuance from 82,500
shares to 300,000 shares was approved and (3) the appointment of Grant
Thornton LLP as independent auditors was ratified.
The following directors were elected for a one-year term by the votes
indicated.
FOR AGAINST ABSTAIN
--------- --------- ---------
Martin Lerner 3,973,687 18,886
Jan Stumacher 3,973,487 19,086
J. Mortin Davis 3,973,687 18,886
Kenton Wood 3,973,687 18,886
Ben Ermini 3,973,487 19,086
Philip Lubitz 3,973,487 19,086
The amendment to the Company's 1992 Stock Option Plan was ratified by
the following vote:
FOR AGAINST ABSTAIN
--------- --------- ---------
3,870,992 119,414 2,167
The appointment of Grant Thornton LLP was ratified by the following
vote:
FOR AGAINST ABSTAIN
--------- --------- ---------
3,989,066 265 3,242
Item 5. Other Information
Not applicable
<PAGE>
Item 6(a). Exhibits, Lists and Reports on Form 8-K.
3.1 Articles of Incorporation as amended to August 31, 1983(1)
3.1a Certificate of Amendment to Articles of Incorporation filed
September 19,1983(2)
3.1b Certificate of Amendment to Articles of Incorporation filed
September 9, 1987(3)
3.2 By laws as amended to date (1)
10.1 Profit-sharing Plan (1)
10.2 Pension Plan (1)
10.3 Lease Agreement (4)
10.4 Stock Option Plan (5)
10.5 Employment Agreement between the Registrant and Jan Stumacher (6)
10.6 Employment Agreement, as amended, between the Registrant and
Martin Lerner (7)
10.7 Agreement of Sale and Purchase of Assets between the Registrant
and GeoDemX Corporation (8)
22 Subsidiaries of the Registrant
(1) Incorporated by reference to the Annual Report on Form 10-K
for the year ended February 28, 1981.
(2) Incorporated by reference to the Annual Report on Form 10-K for
the year ended February 29, 1984.
(3) Incorporated by reference to the Annual Report on Form 10-K for
the year ended February 29, 1988.
(4) Incorporated by reference to the Annual Report on Form 10-K
for the year ended February 29, 1992.
(5) Incorporated by reference to the Annual Report on Form 10-K
for the year ended February 28, 1993.
(6) Incorporated by reference to the Annual Report on Form 10-KSB
for the year ended February 28, 1994.
(7) Incorporated by reference to the Annual Report on Form 10-KSB
for the year ended February 28, 1995.
(8) Incorporated by reference to the Quarterly Report on Form 10-Q
for the three months ended May 31, 1995
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the three months ended
August 31, 1995.
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<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.
AMERICAN LIST CORPORATION
Date: October 11, 1995 By: /S/MARTIN LERNER
---------------------------------
Martin Lerner, President
Principal Financial Officer
and Chief Executive
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EXHIBIT 22
SUBSIDIARIES
NAME State of Incorporation Ownership of Company
- ----------------------------- ---------------------- --------------------
American Student List Company, New York 100%
Inc.
GeoDemX Corporation Michigan 100%
-1-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 3,923,779
<SECURITIES> 7,345,498
<RECEIVABLES> 3,514,093
<ALLOWANCES> 60,000
<INVENTORY> 0
<CURRENT-ASSETS> 15,819,028
<PP&E> 953,307
<DEPRECIATION> 733,348
<TOTAL-ASSETS> 20,115,950
<CURRENT-LIABILITIES> 1,102,225
<BONDS> 0
<COMMON> 45,650
0
0
<OTHER-SE> 17,030,645
<TOTAL-LIABILITY-AND-EQUITY> 20,115,950
<SALES> 8,447,741
<TOTAL-REVENUES> 8,447,741
<CGS> 1,372,519
<TOTAL-COSTS> 3,427,278
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98,311
<INCOME-PRETAX> 5,161,011
<INCOME-TAX> 1,953,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,208,011
<EPS-PRIMARY> 1
<EPS-DILUTED> 0
</TABLE>
