FORM 10-Q - QUARTERLY OR TRANSMITIONAL REPORT
|X| QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly
period ended August 31, 1996
|_| 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 Identification
incorporation or organization) 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: 4,432,403 shares of Common
Stock, $.01 par value, as of October 4, 1996.
<PAGE>
AMERICAN LIST CORPORATION
FORM 10-Q
Index
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at August 31, 1996 and
February 29, 1996
Consolidated Statements of Earnings for the three and six months
ended August 31, 1996 and 1995
Consolidated Statements of Stockholders' Equity for the six
months ended August 31, 1996
Consolidated Statements of Cash Flows for the six months ended
August 31, 1996 and 1995
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, Lists and Reports on Form 8-K
SIGNATURE
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. UNAUDITED FINANCIAL STATEMENTS
AMERICAN LIST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
August 31, February 29,
1996 1996
---------- -----------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,962,248 $ 3,611,609
Marketable cash securities 6,644,279 7,775,051
Trade accounts receivable, net 4,455,081 5,781,175
Unamortized costs of lists 545,243 869,899
Prepaid income taxes 908,406 192,152
Prepaid expenses and other 82,269 127,380
------------ ------------
Total current assets 15,597,526 18,357,266
Property and equipment, at cost (less accumulated depreciation of
$957,476 and $845,121) 601,471 461,445
Deferred license cost, net of accumulated amortization 2,621,701 2,790,369
Unamortized costs of lists 499,625 494,200
Other assets 398,391 406,792
------------ ------------
$ 19,718,714 $ 22,510,072
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 360,833 $ 445,645
Accounts payable 230,145 240,973
Accrued pension and profit-sharing contributions 330,567 202,773
Accrued salaries 230,500 270,564
Accrued expenses 140,013 239,553
------------ ------------
Total current liabilities 1,292,058 1,399,508
Long-term debt 1,553,397 1,893,264
Stockholders' Equity:
Common stock, par value $.01 per share;
Authorized 20,000,000 shares; issued and outstanding 4,432,403
and 4,541,403 shares, respectively 44,324 45,414
Additional paid-in capital 3,701,486 6,459,011
Unrealized gain (loss) on marketable securities (6,819) 4,687
Retained earnings 13,134,268 12,708,188
------------ ------------
16,873,259 19,217,300
------------ ------------
$ 19,718,714 $ 22,510,072
============ ============
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
August 31, August 31,
--------------------------- ---------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 3,740,930 $ 3,117,132 $ 8,842,849 $ 8,447,741
----------- ----------- ----------- -----------
Cost and expenses:
Cost of operations 790,193 701,419 1,718,522 1,372,519
Selling, general and
administrative expenses 1,195,766 1,079,979 2,285,977 2,054,759
----------- ----------- ----------- -----------
1,985,959 1,781,398 4,004,499 3,427,278
----------- ----------- ----------- -----------
Operating income 1,754,971 1,335,734 4,838,350 5,020,463
Other income (expense)
Investment income 103,593 113,404 206,926 238,859
Interest expense (38,299) (45,997) (83,054) (98,311)
----------- ----------- ----------- -----------
Earnings before provision for
income taxes 1,820,265 1,403,141 4,962,222 5,161,011
Provision for income taxes 687,000 531,000 1,844,000 1,953,000
----------- ----------- ----------- -----------
Net earnings $ 1,133,265 $ 872,141 $ 3,118,222 $ 3,208,011
=========== =========== =========== ===========
Net earnings per common share $ 0.26 $ 0.20 $ 0.70 $ 0.71
=========== =========== =========== ===========
Weighted average shares
outstanding 4,432,403 4,540,305 4,481,093 4,543,805
=========== =========== =========== ===========
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six months ended August 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Additional loss on
paid-in marketable Retained
Shares Amount capital securities earnings Total
--------- ----------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 1, 1996 4,541,403 $ 45,414 $ 6,459,011 $ 4,687 $12,708,188 $ 19,217,300
Issuance of common stock in
connection with exercise of
stock options 1,000 10 9,384 9,394
Purchase and retirement of
treasury stock (110,000) (1,100) (2,766,909) (2,768,009)
Cash dividends declared on
common stock - $.60 per share
(2,692,142) (2,692,142)
Unrealized loss on
marketable securities (11,506) (11,506)
Net earnings for the period 3,118,222 3,118,222
--------- ----------- ------------ ----------- ---------- ------------
Balance at August 31, 1996 4,432,403 $ 44,324 $ 3,701,486 $ (6,819) $13,134,268 $ 16,873,259
========= =========== ============ =========== =========== ============
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
August 31,
--------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities
Net earnings for the period $ 3,118,222 $ 3,208,011
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 295,815 218,231
Provision for losses on accounts receivable 10,000 10,000
Amortization of bond premiums 118,324 111,937
Decrease in operating assets 964,181 914,706
Increase (decrease) in operating liabilities 152,683 (412,440)
----------- -----------
Net cash provided by operating activities 4,659,225 4,050,445
----------- -----------
Cash flows from investing activities
Capital expenditures (252,381) (53,710)
Sale (purchase) of marketable securities 994,552 (88,609)
Acquisition of subsidiary, net of cash acquired (67,734)
----------- -----------
Net cash provided by (used in) investing activities 742,171 (210,053)
----------- -----------
Cash flows from financing activities
Issuance of common stock 9,394 49,668
Cash dividends paid (2,692,142) (2,053,677)
Purchase of treasury stock (2,768,009) (509,238)
Payment of long-term debt (600,000) (600,000)
----------- -----------
Net cash used in financing activities (6,050,757) (3,113,247)
----------- -----------
Net increase (decrease) in cash and cash equivalents (649,361) 727,145
Cash and cash equivalents at beginning of period 3,611,609 3,196,634
----------- -----------
Cash and cash equivalents at end of period $ 2,962,248 $ 3,923,779
=========== ===========
</TABLE>
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<PAGE>
AMERICAN LIST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1996
(unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements reflect all
adjustments which, in the opinion of management, are of a normal
recurring accrual nature and necessary for 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
Annual Report on Form 10-K for the year ended February 29, 1996.
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
In May 1996, the Company purchased 110,000 shares of its common
stock in the open market for an aggregate purchase price of
$2,768,009. The shares were retired in August 1996.
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<PAGE>
AMERICAN LIST CORPORATION
August 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(Statements in this Form 10-Q that are not descriptions of historical
fact are forward-looking statements that are subject to risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors, including risks
relating to competition; reliance on certain categories of customers;
potential government regulation arising from privacy issues; and other
factors impacting the direct marketing industry.)
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, 1996 and February 29, 1996 amounted to
approximately $14.3 million and $17.0 million, respectively. The
Company has no material commitments for capital expenditures.
Management is, however, continually seeking possibilities for
additional expansion into compatible business areas. The Company
believes that cash and cash equivalents and marketable securities as
of August 31, 1996 in the approximate amount of $9.6 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 $4.7 million and $4.1 million for
the six months ended August 31, 1996 and 1995, respectively. The
Company paid regular quarterly dividends of 30 cents ($.30) per share
on May 14, 1996 and August 9, 1996. On October 2, 1996, the Company
announced a quarterly dividend of 30 cents per share payable on
November 8, 1996 to stockholders of record on October 18, 1996. In May
1996, the Company purchased 110,000 shares of its common stock on the
open market for an aggregate purchase price of $2,768,009. Presently,
the Company does not anticipate any further purchases of its common
stock. However, depending on the market conditions, the Company, may,
from time to time, purchase additional shares of its common stock.
Further increases in cash and cash equivalents and marketable
securities are dependent upon future operating profits, the level of
dividends declared by the Board of Directors and further purchases of
its common stock.
Results of Operations
Revenues from operations increased during the three and six months
ended August 31, 1996 by approximately $624,000 (20%) and $395,000
(5%), respectively, from the comparable 1995 periods. The actual
number of orders processed during the six months ended August 31, 1996
increased 11% from the comparable 1995 period. This increase in
revenue is primarily attributable to the additions made to the
in-house sales force which resulted in an expansion of the Company's
customer base and an increase in sales to certain existing customers.
-8-
<PAGE>
AMERICAN LIST CORPORATION
August 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations (continued)
Costs of operations increased for the three and six months ended
August 31, 1996 by approximately $89,000 (13%) and $346,000 (25%),
respectively, from the comparable 1995 periods primarily due to an
increase in data processing costs and royalties due to third parties
on certain list rentals. As a percentage of sales, costs of operations
decreased to 21% for the quarter ended August 31, 1996 from 23% for
the comparable 1995 quarter primarily due to the increase in sales for
the quarter.
Selling, general and administrative expenses increased during the
three and six months ended August 31, 1996 by approximately $116,000
(11%) and $231,000 (11%) from the comparable 1995 periods primarily
due to expenses associated with the opening of a branch sales office,
professional fees and lobbying costs.
The lobby costs were in connection with legislation that was recently
introduced in Congress which would require, among other things,
parental consent for the sale or rental of lists of children. The
Company, along with the industry trade association, various
educational institutions and numerous other organizations, have
vigorously opposed the legislation. The Company believes that if
legislation is reintroduced when Congress convenes in January 1997,
its impact will be less intrusive than the original legislation. As
such, it cannot be determined what affect, if any, such legislation
would have on the Company. The Company has incurred lobbying costs of
approximating $25,000 during the quarter ended August 31, 1996 and
expects to incur additional costs in the future.
Martin Lerner, President, agreed to modify his employment agreement
reducing his fiscal 1997 compensation by $200,000. This decrease in
expenses was offset by the addition of several new salespeople during
the past twelve months.
Investment income decreased approximately $32,000 (13%) during the six
months ended August 31, 1996 from the comparable 1995 period primarily
due to a decrease in interest rates and the amount of funds available
for investment.
Interest expense for the six months ended August 31, 1996 decreased by
approximately $15,000 (16%) from the comparable 1995 period due to a
reduction in debt associated with normal loan repayments.
-9-
<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 Company's annual meeting of stockholders was held on August
5, 1996. At the meeting: (1) all five director nominees were
elected, (2) an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock from 10,000,000 shares to 20,000,000 shares 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 3,648,487 5,140
J. Mortin Davis 3,648,487 5,240
Kenton Wood 3,646,110 7,517
Ben Ermini 3,646,110 7,517
Philip Lubitz 3,647,245 6,382
The amendment to the Company's Certificate of Incorporation was
ratified by the following vote:
For Against Abstain
--------- ------ --------
2,968,846 677,124 7,657
The appointment of Grant Thornton LLP was ratified by the
following vote:
For Against Abstain
--------- ------ --------
3,642,625 5,377 5,625
Item 5. Other Information
Not applicable
-10-
<PAGE>
Item 6(a). Exhibits, Lists and Reports on Form 8-K.
3.1 Articles of Incorporation as amended to August 31,
1983(1)
3.1.a Certificate of Amendment to Articles of Incorporation
filed September 19,1983(2)
3.1.b 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 (9)
(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
(9) Incorporated by reference to the Quarterly Report on
Form 10-Q for the three months ended August 31, 1995.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the three months ended
August 31, 1996.
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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 14, 1996 By: /s/ Martin Lerner
---------------------------------
Martin Lerner, President
Principal Financial Officer
and Chief Executive
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000005385
<NAME> AMERICAN LIST CORP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 2,962,248
<SECURITIES> 6,644,279
<RECEIVABLES> 4,515,081
<ALLOWANCES> 60,000
<INVENTORY> 0
<CURRENT-ASSETS> 15,597,528
<PP&E> 1,558,947
<DEPRECIATION> 957,476
<TOTAL-ASSETS> 19,718,714
<CURRENT-LIABILITIES> 1,292,058
<BONDS> 0
0
0
<COMMON> 44,324
<OTHER-SE> 16,828,935
<TOTAL-LIABILITY-AND-EQUITY> 19,718,714
<SALES> 8,842,849
<TOTAL-REVENUES> 8,842,849
<CGS> 1,718,522
<TOTAL-COSTS> 4,004,499
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,054
<INCOME-PRETAX> 4,962,222
<INCOME-TAX> 1,844,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,118,222
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0
</TABLE>
