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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended February 28, 1997
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 1-9312
AMERICAN LIST CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 11-2050322
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
330 Old Country Road, Mineola, NY 11501
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 248-6100
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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Common Stock, par value $.01 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 the
filing requirements for the past 90 days. Yes X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of May 28, 1997 was $98,652,064.
The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share, as of May 28, 1997 was 4,412,008.
DOCUMENTS INCORPORATED BY REFERENCE.
None
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FORWARD-LOOKING STATEMENTS
Certain statements made in this Report on Form 10-K are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995). Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of American List Corporation ("American List" or the "Company") to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
PART I
ITEM 1. BUSINESS.
GENERAL
American List, through its wholly-owned subsidiary, American
Student List Company, Inc., develops, maintains and markets one of the largest
and most comprehensive databases of high school, college and pre-school through
junior high school students in the United States. The Company rents lists
derived from its database for use primarily in direct mail and telemarketing
programs. During the fiscal year ended February 28, 1997, the Company rented its
lists to approximately 3,840 customers, including list brokers and advertising
agencies, financial institutions, retailers and educational institutions.
The Company's computerized database contains information such as
name, address, gender and, if available, date of birth and telephone number of
the individuals included. From this database, the Company extracts, manipulates
and sorts information to create its multiple list products which are available
in a variety of formats, including prospect lists, mailing labels, 3" x 5" index
cards and computer magnetic tapes, cartridges and disks. The Company's computer
processing facility provides it with the ability to customize its lists to best
serve each customer's marketing goals.
The information contained in the Company's database is derived
from a number of sources which are the result of long-term relationships
developed by the Company over the past 30 years, as well as from certain
publicly available sources. The Company believes that its relationships with
many of its information sources make it difficult for others to obtain
comparable data and, accordingly, provide the Company with a competitive
advantage.
PRODUCTS AND SERVICES
The Company markets a variety of products and services, which are
created from the information contained in its database. The Company has devoted
significant time and effort to developing, maintaining and enhancing its
database. The Company utilizes a state-of-the-art computer system for data
compilation and list production. Data inputting is outsourced to third party
vendors, and is backed up as information is updated and then stored off site.
Sophisticated computer hardware and software enable the rapid compilation,
processing, storage, sorting and quality control of inputted data. The Company
also utilizes software to check the accuracy of the
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inputted data, including spelling, zip code information, address and date of
birth, as well as to perform the valuable tasks of removing duplication from the
Company's list products. Each of the Company's lists is guaranteed to be at
least 95% deliverable if the mailing takes place within 30 days after receipt of
the list. To date, refunds pursuant to this guarantee arrangement have not been
material.
The Company typically will rent its lists for a one-time use
unless other arrangements are made. Rental prices for a one-time use generally
range from $60 to $120 per thousand names depending upon the criteria selected.
Rates for unlimited use of a list for a one-year period typically range from
$150 to $250 per thousand names. The Company takes precautions to protect
against unauthorized usage of lists by seeding its lists with decoy names.
The Company currently markets lists in the following categories:
High School Students
The Company believes it maintains the most complete and accurate
list of high school students available. For fiscal 1997, rentals of high school
student lists accounted for approximately 60% of the Company's revenues. The
high school student list is used by marketers of credit cards, scholarships,
colleges, the armed services, catalogue items, formal wear, magazines,
computers, software and accessories. This segment, as well as the college
segment of the Company's database, has significant appeal to direct marketing
companies, which place a strong emphasis on reaching younger consumers
effectively, as they are seen as important first-time buyers who form their own
long-term buying habits and develop brand loyalties. The Company updates this
list as new information becomes available, which is generally on a monthly
basis.
College Students
The college student market is attractive to direct marketing
companies because of the significant amount of money college students have
available for discretionary spending. Marketers generally wish to cultivate the
development of first-time buying habits of this group. Furthermore, marketers
view information on this segment of the population as extremely valuable because
the transient nature of college students often makes them difficult to
locate and reach. The Company offers to its customers, college student lists
segmented by school, class and/or major. Customers purchasing these lists
include companies marketing automobiles, credit cards, clothing and
scholarships. The Company updates its college student list primarily in the late
fall and winter when new student information becomes available.
Pre-School Through Junior High School Students
The Company has compiled a database of approximately 35%, or 15
million names, of children between the ages of two and 13. Applications of this
list include the marketing of encyclopedias and books, children's magazines,
children's catalogue items, summer camps and amusement parks. The Company
updates this list as information becomes available, generally on a monthly
basis.
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Young Adults
The Company has compiled a database of young adults between the
ages of 19 and 36. Applications of this list include the marketing of
automobiles, trade schools and the armed services. The Company updates this list
as information becomes available which is generally on a monthly basis.
Historically, this list has accounted for less than 5% of the Company's
revenues.
Other List Products and Services
In order to expand its customer base and increase sales to its
existing customers, the Company is focusing on new list products and new
applications of its database. The Company introduced the following list
compilations: (i) a list of newly engaged couples which it markets for use by
caterers, musicians, photographers, and other product and service providers in
the wedding market as well as to insurance companies and others seeking to
target newlyweds; and (ii) religious and ethnic compilations which it markets
for use by religious and ethnic publications, and colleges and universities, as
well as existing customers. These lists are designed to further a company's
ability to target customers distinctly through direct marketing programs.
Additionally, the Company offers its customers a full range of
data processing services which enable them to maintain their current customer
files and prospect files for ongoing mailings. Among the services offered by the
Company are carrier route coding, address standardization, postal presorting,
file overlays, back end mailing analysis, tape/diskette conversions, telephone
appending, merge/purge and custom programming.
In June 1995, the Company, through GeoDemX Corporation, a
Michigan corporation and wholly-owned subsidiary, acquired certain assets and
liabilities of an early stage business engaged in the sale of computer software
that incorporates computerized maps and electronic demographic data to generate
sales leads. The GeoDemX software is designed to permit an organization to
target selectively a prospective customer base that is similar to that
organization's existing customer base.
New Products and Services
In January 1997, the Company entered into an agreement with
Creative Media Generations, Inc. ("CMG") which provides for an exclusive
arrangement to introduce to the Company's college student marketing customers a
system developed by CMG to maximize postal efficiencies. This arrangement allows
the Company to offer these customers the opportunity to save up to 50% of their
current postage costs in mailings to college students.
CUSTOMERS
The Company's customer base is comprised of list brokers and
advertising agencies which resell the Company's list products as well as end
users employing direct mail and telemarketing campaigns as part of their
marketing efforts. Among the numerous large and small
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entities who have utilized the Company's lists over the years are banks and
other financial institutions, educational institutions such as colleges and
trade schools, the armed forces, record companies, publishers, catalogue
companies, retailers and consumer goods marketers. A significant portion of the
Company's recent growth has been the result of increased marketing expenditures
by financial institutions relating to the promotion of credit cards and other
financial products. List brokers and advertising agencies, which are resellers
of the Company's products, generally account for between 40% and 50% of annual
revenues. These customers generally receive a 20% brokerage commission on their
sales. The Company's revenues are calculated net of such brokerage commissions.
In each of the past 10 years, no single customer has accounted for more than 5%
of the Company's revenues.
To date, the Company's experience has been that first-time
customers rent only a small portion of the Company's database and generally
increase their usage over time. The Company believes this results from
customers' increasing familiarity and experience with the effectiveness of the
Company's products in their direct marketing programs.
SALES AND MARKETING
The Company markets its products and services to existing and
prospective customers through an in-house marketing staff which conducts
telemarketing and direct sales, and through third party resellers such as
independent list brokers and advertising agencies. The Company also continually
seeks to broaden its customer base by attending trade shows and conventions. The
Company has recently increased expenditures for in-house advertising and
expanded its in-house sales force.
COMPETITION
The Company competes with a number of small and large companies,
many of which have substantially greater resources and provide a broader array
of services than does the Company. These companies include list compilers, list
brokers, marketing consultants and advertising agencies, and include companies
such as Metromail Corporation, Donnelley Marketing, Inc., TRW, Inc. and Equifax
Inc. The primary competitive factors in the children and student list business
are the reliability of the information, the level of service provided and price.
The Company believes the accuracy and breadth of its database, its service and
its prices enable it to remain competitive. The Company maintains long-term
relationships with many of its customers and information sources, and considers
them a competitive advantage. Although Educational Testing Services of
Princeton, New Jersey also compiles and provides lists of high school students,
it does so only to non-profit institutions and, accordingly, competes with the
Company solely in this limited market.
RIGHTS TO DATA
The Company attempts to protect its database and certain of its
software by relying on trade secret laws and seeding its lists with decoy names
to identify unauthorized usage. To date, the Company has not filed for copyright
protection of its database or list products. There can be no assurance that the
steps taken by the Company will be adequate to
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deter misappropriation of its data or independent third party development of
substantially similar products and technology.
A patent application relating to the GeoDemX software product was
filed with the United States Patent and Trademark Office (the "PTO") in November
1995 and is still pending. There can be no assurance that this patent
application will result in a patent being issued or that any issued patent will
afford adequate protection to the Company in the event that the GeoDemX product
is successfully commercialized.
PRIVACY LEGISLATION
In recent years, numerous legislation has been introduced in the
United States Senate and various state legislatures, 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 opposed the current
legislation, and have proposed alternative terms and provisions to the
legislation. The direct marketing industry and the Company have been working
closely with representatives from the state legislatures and Congress to apprise
them of the consequences of the proposed legislation to the entire direct mail
industry. The direct marketing industry and the Company believe that a policy
designed to respect the privacy of households that do not want direct mail can
be developed and implemented through industry self-regulation rather than
government legislation. At present it cannot be determined what effect, if any,
the proposed legislation would have on the Company if adopted.
EMPLOYEES
As of May 28, 1997, the Company had 38 employees, including 12
in marketing and sales, nine in administration, five in data compilation, eight
in data processing operations and four in its GeoDemX operations. None of the
Company's employees is subject to a collective bargaining agreement nor has the
Company ever experienced a work stoppage. The Company believes that its employee
relations are generally good.
PENDING MERGER
On March 18, 1997, the Company entered into an Agreement and Plan
of Merger (the "Agreement") with Snyder Communications, Inc. ("Snyder"), a
Delaware corporation and Snyder Z Acquisition, Inc., a Delaware corporation and
wholly-owned subsidiary of Snyder ("Sub"). Pursuant to the Agreement, Sub will
merge (the "Merger") with and into the Company, and the Company will survive as
a wholly-owned subsidiary of Snyder. Snyder is a provider of outsourced targeted
marketing solutions primarily for Fortune 500 companies. Snyder designs and
implements marketing programs utilizing a range of complementary resources,
including field sales, medical detailing, database marketing, teleservices,
WallBoard'r' information displays and product sampling. For a discussion of the
pending Merger, see Item 7 of this Report on Form 10-K.
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ITEM 2. PROPERTIES.
The Company's principal executive offices and computer facility
are located in approximately 9,400 square feet of space at 330 Old Country Road,
Mineola, New York, and are occupied pursuant to a lease which terminates on June
15, 2001. Rent expense was $351,000 during the year ended February 28, 1997. The
lease contains an escalation clause relating to increases in real estate taxes.
The Company maintains a branch sales office located in
approximately 1,500 square feet of space at 2900 North Military Trail, Suite
140, Boca Raton, Florida, and is occupied pursuant to a lease which terminates
on June 30, 2001. Rent expense was $17,125 during the year ended February 28,
1997. The lease contains an escalation clause relating to increases in operating
expenses.
GeoDemX currently occupies approximately 2,300 square feet of
office space at 17117 West Nine Mile Road, Southfield, Michigan on a
month-to-month basis after expiration of its lease on such premises on May 31,
1996. The base monthly rent is $2,204. The Company believes it will be able to
renew its lease or lease new space in the same building should it determine to
do so.
ITEM 3. LEGAL PROCEEDINGS.
An officer of the Company, who was subject to an employment
agreement expiring in March 2001, was terminated in February 1997. The employee
has challenged the basis for termination under the terms of such agreement
before an independent arbitrator and accordingly seeks reinstatement, back pay
and benefits. As of the date of this Report on Form 10-K, the Company's counsel
with respect to this matter believes that the Company has meritorious defenses
and is pursuing the matter vigorously. Furthermore, the Company does not
currently believe that this action will have a material adverse affect on the
Company's results of operations, cash flow or financial condition.
From time to time, the Company is subject to ordinary routine
litigation and various other legal proceedings, claims and liabilities which are
incidental to the business. The Company believes that none of these other legal
proceedings has had or is likely to have a material adverse affect on the
Company's results of operations, cash flow or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of the fiscal
year covered by this Report on Form 10-K to a vote of the security holders of
the Company.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock, par value $.01 per share (the "Common
Stock"), is traded on the American Stock Exchange under the symbol AMZ. The
following sets forth the high and low closing prices for the last two fiscal
years as reported by the American Stock Exchange.
Closing Prices
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High Low
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Year Ended
February 28, 1997
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First Quarter $34.25 $20.25
Second Quarter 28.63 24.50
Third Quarter 29.75 26.13
Fourth Quarter 31.00 21.75
Year Ended
February 29, 1996
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First Quarter 25.13 20.13
Second Quarter 30.75 23.63
Third Quarter 29.63 24.50
Fourth Quarter 37.50 25.50
The number of holders of record of Common Stock as of May 28,
1997 was 281.
The Company currently pays regular quarterly dividends to holders
of its Common Stock. In the first quarter of fiscal 1996, a dividend of $.20 per
share was paid. For the remainder of fiscal 1996, the Company declared and paid
quarterly dividends of $.25 per share. For fiscal 1997, the Company declared
quarterly dividends of $.30 per share, for an aggregate total of $5,354,816. The
first quarter dividend of fiscal 1998 of $.30 per share was declared on April
25, 1997, payable on May 16, 1997 to stockholders of record on May 6, 1997.
On March 22, 1995, the Board of Directors authorized the
repurchase of up to 200,000 shares of Common Stock. In April 1995, the Company
purchased 24,600 shares of Common Stock for an aggregate price of $509,238. An
additional 300 shares were repurchased in November 1995 for an aggregate price
of $7,634. In May 1996, the Company purchased 110,000 shares of Common Stock for
an aggregate price of $2,768,009. On May 23, 1996, the Board of Directors
increased the total number of shares that may be repurchased to 300,000
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shares of Common Stock. In January 1997, the Company purchased 55,000 shares of
Common Stock in the open market for an aggregate price of $1,325,815. In
connection with the Merger Agreement entered into on March 18, 1997 with Snyder,
the Company discontinued its repurchase program.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
February 28, February 29, February 28, February 28, February 28,
1997 1996 1995 1994 1993
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Statement of Earnings Data:
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<S> <C> <C> <C> <C> <C>
Revenues $18,471,146 $18,886,844 $15,494,219 $12,634,919 $10,108,463
Operating income 10,465,167 11,746,310 9,678,107 7,251,566 5,389,435
Pre-tax income 10,701,423 12,037,022 9,927,050 7,445,146 5,660,357
Net earnings 6,748,423 7,609,022 6,176,050 4,574,146 3,512,357
Net earnings per
Common Share 1.51 1.68 1.36 1.00 .77
Weighted average shares
outstanding 4,462,421 4,542,397 4,557,445 4,556,881 4,556,881
Balance Sheet Data:
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Total assets $20,038,816 $22,510,072 $20,112,429 $15,534,142 $12,621,291
Long-term debt (including
current maturities) 1,914,230 2,338,909 2,739,459 -- --
Stockholders' equity 16,999,293 19,217,300 16,370,365 12,908,546 11,924,643
Cash dividend per
Common Share 1.20 .95 .60 .79 .61
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1997, the Company had cash, cash equivalents and
marketable securities of approximately $9.4 million and working capital of
approximately $14.7 million. Cash, cash equivalents and marketable securities
decreased by approximately $2 million during fiscal 1997 primarily due to net
cash used in financing activities of $9.6 million and capital expenditures of
$.3 million offset by $8.1 million of net cash provided by operations.
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The net cash used in financing activities of $9.6 million
reflects the payment of dividends of $5.4 million, the acquisition of treasury
stock of $4.1 million and the payment of long-term debt of $.6 million pursuant
to the licensing agreement described below. Cash flows from financing activities
of $.5 million resulted from the issuance of common stock in connection with the
exercise of stock options.
Historically, the Company has financed its cash flow requirements
with funds generated from operations. Net cash flows from operating activities
amounted to approximately $8.1 million and $6.6 million during fiscal 1997 and
1996, respectively. This increase in cash flows from operating activities is
primarily attributable to a decrease in accounts receivable of $.4 million
during fiscal 1997 as compared to an increase of $1.4 million during fiscal
1996. The changes in accounts receivable directly relate to the fluctuations in
sales for the year.
On March 22, 1995, the Board of Directors authorized the
repurchase of up to 200,000 shares of the Company's Common Stock. In April 1995,
the Company purchased 24,600 shares of its Common Stock for an aggregate price
of $509,238. An additional 300 shares were repurchased in November 1995 for an
aggregate price of $7,634.
On May 23, 1996, the Board of Directors increased the number of
shares that may be repurchased to 300,000 shares of Common Stock. In May 1996,
the Company purchased 110,000 shares of its Common Stock for an aggregate price
of $2,768,009. In January 1997, the Company purchased 55,000 shares of its
Common Stock for an aggregate price of $1,325,815. In connection with the Merger
Agreement entered into on March 18, 1997 with Snyder, the Company discontinued
its repurchase program.
Effective July 1, 1994, the Company entered into a licensing
agreement with Metromail Corporation, pursuant to which it became obligated to
pay a total of $4,200,000 in decreasing annual installments through July 2003.
See Note E to the Consolidated Financial Statements.
On June 22, 1995, the Company consummated an agreement (the
"GeoDemX Agreement") pursuant to which it acquired, through GeoDemX, the assets
of a business engaged in the sale of geodemographic computer software -- an
emerging category of software designed by combining computerized maps with
electronic demographic data --for use in the generation of sales leads. Pursuant
to the GeoDemX Agreement, the Company advanced GeoDemX $750,000 to fund its
working capital requirements and other operating expenses. Although it is the
Company's present position that the GeoDemX technology is a viable product and
can be marketed successfully, the Company cannot assure that it will continue
funding future operations of the GeoDemX business. The Company is actively
pursuing a purchaser of GeoDemX. Accordingly, an adjustment to expense the
unamortized portion of goodwill as of February 28, 1997 of approximately
$100,000 was recorded to reflect the possible discontinuance of the operations
of the GeoDemX business. Management believes that the remaining net assets of
approximately $133,000 are fully recoverable.
Pursuant to the GeoDemX Agreement, additional consideration, if
any, for the acquisition of the GeoDemX business will involve the issuance by
the Company of shares of its
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Common Stock having a market value equal to between 40% and 50% of the Pre-Tax
Earnings (as defined in the GeoDemX Agreement), if any, of the GeoDemX business
during the fiscal years ending February 28 or 29, 1996, 1997, 1998 and 1999. Any
payment required during the second year will be reduced in the event the GeoDemX
operations generate a Pre-Tax Loss (as defined in the GeoDemX Agreement) during
the first year. The GeoDemX Agreement grants the sellers the option to receive a
portion of any payments earned in cash. No payment was required for the fiscal
year ended February 28, 1997.
The Company believes that available cash, together with revenues
generated from operations, will be sufficient to fund the Company's continuing
operations and the payment of dividends on a short and long term basis. The
Company may also from time to time consider the acquisition of complementary
businesses, products or technologies which may require it to obtain additional
financing. The Company has no present understandings, commitments or agreements,
nor is it engaged in any discussions or negotiations, with respect to any such
transactions. In addition, certain of such transactions would be subject to the
prior approval of Snyder until consummation or termination of the Merger
Agreement.
See Note A-11 to the Consolidated Financial Statements for
disclosure of the impact of the issuance of Statement of Financial Accounting
Standards No. 128, Earnings Per Share.
RESULTS OF OPERATIONS
Revenues from list sales are recognized upon the shipment of
lists to customers on computerized labels, magnetic tape, cartridges or
diskettes, or the electronic transfer of the list. For fiscal 1997, high school
student lists and college student lists accounted for approximately 60% and 26%,
respectively, of the Company's revenues. Revenues from the sale of software are
recognized upon installation and acceptance by the customer. The GeoDemX
operations accounted for approximately 3% of fiscal 1997 revenues.
Costs of operations consists of all costs relating to list
production and maintenance, such as salaries, depreciation and supplies, and the
cost of data acquisition, which includes the amortization of list costs and
royalties due third parties for the sale of certain lists.
Selling, general and administration expenses consist primarily of
officer, sales and administrative salaries, employee benefits, rent and
professional fees.
PENDING MERGER
On March 18, 1997, the Company entered into the Merger Agreement
with Snyder and Sub. Pursuant to the Merger Agreement, Sub will merge with and
into the Company and the Company will survive as a wholly-owned subsidiary of
Snyder (the "Merger").
In the Merger, each share of Common Stock outstanding immediately
prior to the Merger will be converted into and represent the right to receive
that number of shares of common stock, par value $.001 per share, of Snyder
("Snyder Common Stock") equal to the exchange
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ratio (the "Exchange Ratio") determined in the following manner: (i) if the
Average Final Closing Price (as defined below) of the Snyder Common Stock equals
or exceeds $32.00, the Exchange Ratio will be 1.00; (ii) if the Average Final
Closing Price equals or exceeds $28.00 but is less than $32.00, the Exchange
Ratio will equal the quotient of $32.00 divided by the Average Final Closing
Price; (iii) if the Average Final Closing Price equals or exceeds $26.00 but is
less than $28.00, the Exchange Ratio will be 1.14; and (iv) if the Average Final
Closing Price is less than $26.00, the Exchange Ratio will equal the quotient
(rounded to four decimal places) of $29.71 divided by the Average Final Closing
Price. Snyder has the right to terminate the Merger Agreement if the Average
Final Closing Price is less than $24.00. American List has the right to
terminate the Merger Agreement if the Average Final Closing Price is less than
$20.00.
"Average Final Closing Price" means the average of the closing
prices (or, if the Snyder Common Stock does not trade on any Trading Day, the
average of the high bid and low asked prices therefor on such day), regular way,
per share of Snyder Common Stock, as reported on the New York Stock Exchange
("NYSE") Composite Tape during the twenty consecutive Trading Days ending on
(and including) the third Trading Day prior to the Merger. "Trading Day" means a
day on which the NYSE is open for trading.
The Merger is subject to the affirmative majority vote of the
stockholders of the Company and to customary regulatory approval. The
transaction is intended to be accounted for under the pooling-of-interests
method of accounting. Management expects that the proposed Merger will have a
material effect on the Company's results of operations and liquidity and capital
resources. These include, but are not limited to, the effect of the transaction
costs and other related costs of combining Snyder and the Company.
FISCAL YEAR ENDED FEBRUARY 28, 1997
COMPARED TO FISCAL YEAR ENDED FEBRUARY 29, 1996
Revenues decreased by approximately $416,000 (2%) to $18.5
million for fiscal 1997 as compared to fiscal 1996. For the three months ended
February 28, 1997, revenues decreased by approximately $634,000 (11%) to $5.0
million from the comparable period in fiscal 1996. Revenues were below prior
year comparative results for both fiscal 1997 and the fourth quarter of fiscal
1997 due primarily to a decrease in sales to the credit card industry, the
scholarship industry and a decline in new sales to major customers. According to
industry sources, credit card default rates rose in 1996, and as a result,
certain credit card issuers (which include customers of American List) tightened
credit requirements which resulted in lower mail quantities or, in some cases,
the postponement of an entire mailing program.
Cost of operations increased by approximately $163,000 (6%) for
fiscal 1997 as compared to fiscal 1996 primarily due to purchases of additional
data processing equipment, and increased software costs and royalties due to
third parties on certain list rentals. As a percentage of sales, costs of
operations increased to 16.6% during fiscal 1997 as compared to 15.4% during
fiscal 1996 as a result of the lower sales volume in fiscal 1997.
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Selling, general and administrative expenses increased by
approximately $702,000 (17%) for fiscal 1997 as compared to fiscal 1996
primarily due to expenses associated with the opening of a branch sales office,
professional fees, personnel expenses and the write-off of goodwill associated
with GeoDemX. Professional fees were up over $300,000 from the prior year due to
legal and accounting fees associated with the pending merger with Snyder,
lobbying costs relating to proposed privacy legislation and personnel matters.
This increase in costs were partially offset by the modification of the
President's employment agreement lowering his fiscal 1997 salary by $200,000. As
a percentage of sales, such expenses increased during fiscal 1997 to 26.7% as
compared to 22.4% during fiscal 1996.
The lobbying costs were incurred in connection with legislation
that was recently introduced in the United States Senate and various state
legislatures, which would require, among other things, parental consent for the
sale or rental of lists of children. The Company incurred lobbying costs of
approximately $92,000 during fiscal 1997 and expects these costs to increase in
the future. For a discussion of the proposed legislation, see Item 1 of this
Report on Form 10-K.
Investment income decreased approximately $86,000 (18%) to
$390,611 for the fiscal year ended February 28, 1997 from the comparable 1996
period primarily due to a decrease in the amount of funds available for
investment and a decrease in interest rates.
Interest expense for the year ended February 28, 1997 decreased
by approximately $31,000 (17%) to $154,355 from the comparable 1996 period
primarily due to a reduction in debt associated with normal loan repayments.
There was no material change in the effective tax rate for fiscal
1997, which increased to 36.9% for such year, as compared to 36.8% for fiscal
1996.
FISCAL YEAR ENDED FEBRUARY 29, 1996
COMPARED TO FISCAL YEAR ENDED FEBRUARY 28, 1995
Revenues increased by approximately $3.4 million (22%) for the
fiscal year ended February 29, 1996 from the fiscal year ended February 28,
1995. The increase in revenues is primarily attributable to increased sales to
existing and new customers, price increases which took effect in September 1994
and April 1995 and revenues generated by GeoDemX.
Cost of operations increased by approximately $702,000 (32%) for
fiscal 1996 as compared to fiscal 1995 primarily due to the amortization of
deferred license costs and costs associated with GeoDemX. As a percentage of
sales, cost of operations remained relatively constant during fiscal 1996 and
1995, reflecting the inclusion of sales of lower margin GeoDemX products.
Selling, general and administrative expenses increased by
approximately $623,000 (17%) for fiscal 1996 as compared to fiscal 1995
primarily due to expenses associated with GeoDemX and the Company's hiring of
additional personnel. As a percentage of sales, such expenses decreased during
fiscal 1996 to 22.4% as compared to 23.3% during fiscal 1995.
- 13 -
<PAGE>
<PAGE>
Investment income increased by approximately $98,000 (26%) for
fiscal 1996 from fiscal 1995 primarily due to an increase in interest rates and
a greater amount of funds available for investment.
Interest expense increased by approximately $56,000 (43%) for
fiscal 1996 as compared to fiscal 1995 as a result of the debt associated with a
license agreement entered into in July 1994. See Note E to the Consolidated
Financial Statements.
The effective tax rate decreased to 36.8% for fiscal 1996 as
compared to 37.8% for fiscal 1995 primarily due to increased non-taxable
municipal bond interest income.
FISCAL YEAR ENDED FEBRUARY 28, 1995
COMPARED TO FISCAL YEAR ENDED FEBRUARY 28, 1994
Revenues increased by approximately $2.9 million (23%) for fiscal
1995 from fiscal 1994. The increase in revenues is primarily attributable to
increased sales to existing and new customers, price increases which took effect
in January and September 1994 and a license agreement entered into in July 1994.
See Note E to the Consolidated Financial Statements.
Cost of operations increased by approximately $209,000 (10%) for
fiscal 1995 as compared to fiscal 1994 primarily due to the amortization of
deferred license costs. See Note E to the Consolidated Financial Statements. As
a percentage of sales, cost of operations decreased from 16% during fiscal 1994
to 14% during fiscal 1995 due to increased sales volume in excess of the growth
in cost of operations.
Selling, general and administrative expenses increased by
approximately $224,000 (7%) for fiscal 1995 from fiscal 1994 primarily due to an
increase in personnel costs and consulting fees related to the upgrade of the
Company's computer networking system. As a percentage of revenues, such expenses
decreased during fiscal 1995 to 23% as compared to 27% during fiscal 1994. This
decrease resulted from changes to an executive officer's compensation agreement
which kept such costs constant for fiscal 1995 as compared to fiscal 1994.
Investment income increased by approximately $184,000 (95%) for
fiscal 1995 from fiscal 1994 primarily due to an increase in interest rates and
to a lesser extent the adoption of Statement of Financial Accounting Standards
No. 115 "Accounting for Certain Investments in Debt and Equity Securities" which
requires the Company to record any unrelated gains and losses from securities
available for sale as a component of stockholders' equity. In contrast, during
fiscal 1994, the Company recorded an unrealized loss as a reduction of
investment income.
Interest expense of approximately $129,000 for fiscal 1995
resulted from a license agreement entered into in July 1994. See Note E to the
Consolidated Financial Statements.
The effective tax rate decreased to 37.8% for fiscal 1995 as
compared to 38.6% for fiscal 1994 as a result of an increase of tax-free
municipal bond interest earned in fiscal 1995.
- 14 -
<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
This information appears in a separate section of this Report
following Part III.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS IN ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
15
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following sets forth the names and ages of the six directors
and executive officers of the Company, their respective principal occupations or
employments during the past five years and the period during which each has
served as a director and/or executive officer of the Company.
MARTIN LERNER (64) has been Chairman of the Board of Directors,
President and Treasurer of the Company since 1965. Mr. Lerner also serves on the
Board of Directors of the National Center for Missing and Exploited Children.
J. MORTON DAVIS (68) has been Chairman of D.H. Blair Investment
Banking Corp., a member of the New York Stock Exchange, or its predecessor
entity for more than the last five years. He has been a Director of the Company
since 1983.
KENTON WOOD (50) has been Chairman or President of D.H. Blair &
Co., Inc., a member of the New York Stock Exchange for more than the last five
years. He has been a Director of the Company since 1991.
BEN ERMINI (61) has been Director of Case Management or Director
of the Missing Children's Division of the National Center for Missing and
Exploited Children for more than the last five years. He has been a Director of
the Company since 1992.
PHILIP LUBITZ (64) has been President of the Dover Group, an
employee benefits consulting firm, for more than the last five years. He has
been a Director of the Company since 1992.
DONALD DAMORE (38) has been Vice President of Finance of the
Company since March 1996. Prior to this, he served as Controller since joining
the Company in 1990.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers, directors and persons who
beneficially own more than 10% of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of the Company. Such executive officers, directors, and
greater than 10% beneficial owners are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms filed by such reporting persons.
Based solely on the Company's review of such forms furnished to
the Company and written representations from certain reporting persons, the
Company believes that all filing requirements applicable to the Company's
executive officers, directors and greater than 10% beneficial owners were
complied with.
- 16 -
<PAGE>
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Chief Executive Officer and
to executive officers whose annual compensation exceeded $100,000 for the fiscal
year ended February 28, 1997 (collectively, the "named executive officers") for
services during the fiscal years ended February 28 or 29, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-----------------------------------------
Name and All Other
Principal Position Year Salary Bonus Options (#) Compensation (1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Martin Lerner 1997 $224,076 $525,924 -- $24,386
President and
Chief Executive 1996 218,187 731,813 -- 24,372
Officer
1995 212,881 737,119 50,000 24,250
- --------------------------------------------------------------------------------------------------
Donald Damore 1997 104,250 11,000 4,000 17,909
Vice President
of Finance 1996 -- -- -- --
1995 -- -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes amounts paid pursuant to pension and profit sharing plans. The
pension plan contributions by the Company are credited to the account of
each employee and are based upon a percentage of salary. Contributions
for the profit sharing plan are determined each year by the Board of
Directors and are allocated proportionately by salaries to each
employee's account.
- 17 -
<PAGE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect
to individual grants of stock options made during the fiscal year ended February
28, 1997 to each of the named executive officers:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Potential Realizable Value At
Assumed Annual Rates Of
Stock Price Appreciation
Individual Grants For Option Term(1)
- -------------------------------------------------------------------------------------------------------------
Number of % of
Securities Total Options
Underlying Granted to Exercise
Options Employees or Base Expiration
Name Granted (#) in Fiscal Year Price ($/Sh) Date 5%($) 10%($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Martin Lerner -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------
Donald Damore 4,000 57% $26.88 10/16/06 $5,360 $10,760
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts for the named executive officers shown under the "Potential
Realizable Value" columns above have been calculated by multiplying the
exercise price by the annual appreciation rate shown (compounded for the
term of the options), subtracting the exercise price per share and
multiplying the gain per share by the number of shares covered by the
options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table sets forth certain information with respect
to the number and value of unexercised options held by the named executive
officers as of February 28, 1997:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options at
at FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Martin Lerner -- -- 50,000/0 $625,000/$ --
- -------------------------------------------------------------------------------------------------------
Donald Damore 2,950 -- 14,950/0 --
- -------------------------------------------------------------------------------------------------------
</TABLE>
- 18 -
<PAGE>
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
On August 15, 1983, Martin Lerner entered into an employment
agreement (the "Lerner Agreement") with the Company to serve as President of the
Company for a base annual salary of $218,187 (as adjusted for changes in the
Cost of Living Index) plus, for each fiscal year during which the Company has
pre-tax net income of at least $1,943,082 (adjusted, commencing in fiscal 1987,
for changes in the Cost of Living Index), an incentive bonus equal to 5% of the
pre-tax net income of the Company, 7 1/2% of the next $200,000 of pre-tax net
income and 10% of any pre-tax net income in excess thereof (in each case subject
to the cost of living adjustment referred to above). In addition, commencing
August 15, 1986, the Lerner Agreement provides for an annual cost of living
increase, based on the increase in the Cost of Living Index as of July of each
employment year over the Cost of Living Index for the month of July, 1985. The
initial term of the Lerner Agreement was for eight years expiring on
August 14, 1991. The Lerner Agreement is currently subject to automatic renewal
from year to year unless either the Company or Mr. Lerner gives six months
written notice of termination which shall become effective as of August 15 in
any year. In addition, the Lerner Agreement contains confidentialIty provisions
and post-termination non-competition provisions.
On April 10, 1995, the Lerner Agreement was amended to provide
that the maximum amount payable to Mr. Lerner for any employment year would be
$950,000. In addition, Mr. Lerner was granted 10-year options to purchase 50,000
shares of Common Stock at an exercise price of $21.00 per share.
On September 25, 1996, Mr. Lerner entered into a Waiver Agreement
with the Company, whereby Mr. Lerner agreed that for the fiscal year ended
February 28, 1997, his aggregate compensation would not exceed $750,000.
- 19 -
<PAGE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Set forth below is information concerning stock ownership of all
persons known by the Company to own beneficially 5% or more of Common Stock,
each executive officer named under "Executive Compensation," each director and
all directors and executive officers of the Company as a group, based upon the
number of outstanding shares of Common Stock as of May 28, 1997. For the
purposes of this Report on Form 10-K, beneficial ownership is defined in
accordance with the rules of the Securities and Exchange Commission and
generally means the power to vote or to dispose of the securities regardless of
any economic interest therein.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Shares of Common Stock
Name of Beneficial Owner Beneficially Owned Percent of Class (1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
D.H. Blair Investment Banking Corp. 711,021(2) 16.12%
44 Wall Street
New York, NY 10005
- ----------------------------------------------------------------------------------------------
Martin Lerner 227,089(3) 5.09
330 Old Country Road
Mineola, NY 11501
- ----------------------------------------------------------------------------------------------
J. Morton Davis 711,021(2) 16.12
44 Wall Street
New York, NY 10005
- ----------------------------------------------------------------------------------------------
Donald Damore 14,950(4) *
- ----------------------------------------------------------------------------------------------
Philip Lubitz 610 *
- ----------------------------------------------------------------------------------------------
Ben Ermini * *
- ----------------------------------------------------------------------------------------------
Kenton Wood * *
- ----------------------------------------------------------------------------------------------
Fidelity Investment 435,180 9.86
82 Devonshire Street
Boston, MA 02109
- ----------------------------------------------------------------------------------------------
Massachusetts Financial Services Company 287,470 6.52
500 Boylston Street
Boston, MA 02116
- ----------------------------------------------------------------------------------------------
Dimensional Fund Advisors, Inc. 238,840 5.41
1299 Ocean Avenue
Santa Monica, CA 90401
- ----------------------------------------------------------------------------------------------
All directors and executive officers as a 953,670 21.30
group (six persons)(3)(4)
- ----------------------------------------------------------------------------------------------
</TABLE>
- 20 -
<PAGE>
<PAGE>
- -------------------
* Less than 1%
(1) Based upon 4,412,008 shares of the Company's Common Stock outstanding.
Except as otherwise set forth below, the named owner has the sole voting
power and investment power of the shares set forth.
(2) Consists of shares of the Company's Common Stock owned by D. H. Blair
Investment Banking Corp. of which J. Morton Davis, a director of the
Company, is Chairman, Chief Executive Officer and sole shareholder.
(3) Includes 3,564 shares of the Company's Common Stock held by his wife, as
to which Mr. Lerner disclaims beneficial interest, and immediately
exercisable options to purchase 50,000 shares of the Company's Common
Stock.
(4) Consists of immediately exercisable options to purchase 14,950 shares of
the Company's Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has no knowledge of any transaction or series of
transactions or any currently proposed transactions, or series of transactions,
to which the Company was or is to be party, in which the amount involved exceeds
$60,000 involving management, or any person owning 5% or more of the Common
Stock, or any member of the immediate family of any of the foregoing persons.
- 21 -
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits and Financial Statement Schedules
------------------------------------------
2.1 Agreement and Plan of Merger among American List Corporation,
Snyder Communications, Inc. and Snyder Z Acquisition, Inc., dated
as of March 18, 1997 (1)
3.1 Articles of Incorporation, as amended August 31, 1983 (2)
3.la Certificate of Amendment to Articles of Incorporation filed
September 19, 1983 (3)
3.lb Certificate of Amendment to Articles of Incorporation filed
September 9, 1987 (4)
3.2 By-laws as amended to date (2)
10.1 Profit-sharing Plan (2)
10.2 Pension Plan (2)
10.3 Lease Agreement (5)
10.4 Stock Option Plan (6)
10.5 Employment Agreement, as amended, between the Registrant and
Martin Lerner (7)
- ------------------------
(1) Incorporated by reference to exhibits filed with the Registrant's Report
on Form 8-K dated March 31, 1997.
(2) Incorporated by reference to the Annual Report on Form 10-K for the year
ended February 28, 1981.
(3) Incorporated by reference to the Annual Report on Form 10-K for the year
ended February 29, 1984.
(4) Incorporated by reference to the Annual Report on Form 10-K for the year
ended February 29, 1988.
(5) Incorporated by reference to the Annual Report on Form 10-K for the year
ended February 29, 1992.
(6) Incorporated by reference to the Annual Report on Form 10-K for the year
ended February 28, 1993.
- 22 -
<PAGE>
<PAGE>
10.6 Agreement of Sale and Purchase of Assets between the Registrant
and GeoDemX Corporation (8)
10.7 Database License Agreement dated July 1, 1994 (9)
21 Subsidiaries of the Registrant (10)
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
On March 31, 1997, the Company filed a Current Report on Form 8-K
related to the Merger with Snyder Communications, Inc.
- --------------------------------------------------------------------------------
(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 November 30, 1996.
(10) Incorporated by reference to the Quarterly Report on Form 10-Q for the
three months ended August 31, 1995.
- 23 -
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
AMERICAN LIST CORPORATION
Date: May 29, 1997
By: /s/ Martin Lerner
-------------------------------------------
Martin Lerner - Chairman of the
Board of Directors, President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
/s/ Martin Lerner May 29, 1997
- --------------------------------------------
Martin Lerner - Chairman of the
Board of Directors, President and
Treasurer (Principal Executive and
Financial Officer)
/s/ Donald Damore May 29, 1997
- --------------------------------------------
Donald Damore - Vice President of Finance
(Principal Accounting Officer)
/s/ J. Morton Davis May 29, 1997
- --------------------------------------------
J. Morton Davis - Director
/s/ Kenton Wood May 29, 1997
- --------------------------------------------
Kenton Wood - Director
/s/ Ben Ermini May 29, 1997
- --------------------------------------------
Ben Ermini - Director
/s/ Philip Lubitz May 29, 1997
- --------------------------------------------
Philip Lubitz - Director
- 24 -
<PAGE>
<PAGE>
American List Corporation
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets
February 28, 1997 and February 29, 1996 F-3
Consolidated Statements of Earnings
Year Ended February 28, 1997,
February 29, 1996 and February 28, 1995 F-5
Consolidated Statement of Stockholders' Equity
Year Ended February 28, 1997,
February 29, 1996 and February 28, 1995 F-6
Consolidated Statements of Cash Flows
Year Ended February 28, 1997,
February 29, 1996 and February 28, 1995 F-7
Notes to Consolidated Financial Statements F-9
Report of Independent Certified Public Accountants
on Financial Statement Schedule F-22
Schedule II - Valuation and Qualifying Accounts F-23
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
AMERICAN LIST CORPORATION
We have audited the accompanying consolidated balance sheets of American List
Corporation and Subsidiaries as of February 28, 1997 and February 29, 1996, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the years in the three-year period ended February 28, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American List
Corporation and Subsidiaries as of February 28, 1997 and February 29, 1996, and
the consolidated results of their operations and their consolidated cash flows
for each of the years in the three-year period ended February 28, 1997 in
conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Melville, New York
April 11, 1997
F-2
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, February 29,
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,101,520 $ 3,611,609
Marketable securities 6,297,412 7,775,051
Trade accounts receivable, net of allowance
for doubtful accounts of $80,000 and
$50,000, respectively 5,469,023 5,781,175
Unamortized costs of lists 856,943 869,899
Prepaid income taxes 407,894 192,152
Prepaid expenses and other 59,187 127,380
----------- -----------
Total current assets 16,191,979 18,357,266
PROPERTY AND EQUIPMENT - AT COST
Furniture and fixtures 362,753 294,783
Computer equipment 1,137,021 1,000,824
Leasehold improvements 86,979 10,959
----------- -----------
1,586,753 1,306,566
Less accumulated depreciation 1,075,079 845,121
----------- -----------
511,674 461,445
DEFERRED LICENSE COST, net of accumulated
amortization of $884,000 and $549,000, respectively 2,455,782 2,790,369
UNAMORTIZED COSTS OF LISTS 522,186 494,200
OTHER ASSETS 357,195 406,792
----------- -----------
$20,038,816 $22,510,072
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, February 29,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 374,113 $ 445,645
Accounts payable 354,921 240,973
Accrued pension and profit-sharing contributions 227,517 202,773
Accrued salaries 196,562 270,564
Accrued expenses 346,293 239,553
------------ ------------
Total current liabilities 1,499,406 1,399,508
LONG-TERM DEBT 1,540,117 1,893,264
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
authorized 20,000,000 shares; issued
4,466,678 and 4,541,403 shares, respectively 44,667 45,414
Additional paid-in capital 4,174,899 6,459,011
Unrealized gain on marketable securities 3,747 4,687
Retained earnings 14,101,795 12,708,188
----------- -----------
18,325,108 19,217,300
Less treasury stock at cost - 55,000 shares (1,325,815) -
----------- -----------
16,999,293 19,217,300
----------- -----------
$20,038,816 $22,510,072
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
Year ended
<TABLE>
<CAPTION>
February 28, February 29, February 28,
1997 1996 1995
----------- ----------- ------------
<S> <C> <C> <C>
Revenues $18,471,146 $18,886,844 $15,494,219
Costs and expenses
Cost of operations 3,065,750 2,902,328 2,200,784
Selling, general and administrative expenses 4,940,229 4,238,206 3,615,328
----------- ----------- -----------
8,005,979 7,140,534 5,816,112
----------- ----------- -----------
Operating income 10,465,167 11,746,310 9,678,107
Other income (expense)
Investment income 390,611 476,142 378,430
Interest expense (154,355) (185,430) (129,487)
----------- ----------- -----------
Earnings before provision for
income taxes 10,701,423 12,037,022 9,927,050
Provision for income taxes 3,953,000 4,428,000 3,751,000
----------- ----------- -----------
NET EARNINGS $ 6,748,423 $ 7,609,022 $ 6,176,050
=========== =========== ===========
Net earnings per common share $1.51 $1.68 $1.36
===== ===== =====
Weighted average shares outstanding 4,462,421 4,542,397 4,557,445
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended February 28, 1997, February 29, 1996 and February 28, 1995
<TABLE>
<CAPTION>
Unrealized
Additional gain (loss)
paid-in on marketable Retained Treasury
Shares Amount capital securities earnings stock Total
--------- -------- ---------- ------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 1, 1994 4,142,556 $41,426 $12,867,120 $12,908,546
Issuance of common stock in
connection with
10% stock dividend 414,157 4,141 $6,881,219 (6,885,360)
Issuance of common stock in
connection with
exercise of stock options 3,300 33 32,092 32,125
Unrealized loss on marketable
securities $(11,833) (11,833)
Net earnings 6,176,050 6,176,050
Cash dividends declared on common
stock - $.60 per share (2,734,523) (2,734,523)
--------- ------- ---------- --------- ----------- ------------
Balance at February 28, 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 6,290 63 62,323 62,386
Purchase and retirement of treasury
stock (24,900) (249) (516,623) (516,872)
Unrealized gain on marketable
securities 16,520 16,520
Net earnings 7,609,022 7,609,022
Cash dividends declared on common
stock - $.95 per share (4,324,121) (4,324,121)
--------- ------- ---------- --------- ----------- ------------
Balance at February 29, 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 35,275 353 482,797 483,150
Purchase and retirement of treasury
stock (110,000) (1,100) (2,766,909) (2,768,009)
Purchase of common stock for
treasury $(1,325,815) (1,325,815)
Unrealized loss on marketable
securities (940) (940)
Net earnings 6,748,423 6,748,423
Cash dividends declared on common
stock - $1.20 per share (5,354,816) (5,354,816)
--------- ------- ---------- --------- ----------- ------------ -----------
BALANCE AT FEBRUARY 28, 1997 4,466,678 $44,667 $4,174,899 $ 3,747 $14,101,795 $(1,325,815) $16,999,293
========= ======= ========== ========= =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-6
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
<TABLE>
<CAPTION>
February 28, February 29, February 28,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net earnings $6,748,423 $ 7,609,022 $ 6,176,050
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 693,997 510,102 302,244
Provision for losses on accounts receivable (73,691) (17,734) (22,955)
Amortization of bond premium 200,299 220,937 256,992
Gain on sale of investments (12,745)
Changes in operating assets and liabilities,
net of acquisition in fiscal 1996
Accounts receivable 385,843 (1,355,854) (1,431,636)
Unamortized costs of lists (15,030) 223,972 195,837
Prepaid income taxes (215,742) (192,152)
Prepaid expenses and other 68,193 (84,338) 28,436
Other assets (79,855) (116,489) (52,219)
Accounts payable 113,948 (64,168) (34,764)
Accrued pension and profit-sharing
contributions 24,744 10,724 5,536
Accrued salaries (74,002) (118,996) (176,973)
Accrued expenses 282,061 183,454 156,980
Income taxes payable (170,337) (745,259)
--------- --------- ---------
Net cash provided by operating
activities 8,059,188 6,625,398 4,658,269
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Year ended
<TABLE>
<CAPTION>
February 28, February 29, February 28,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from investing activities
Capital expenditures $ (280,187) $ (156,969) $ (71,176)
Sale (purchase) of marketable securities 1,276,400 (680,756) (1,959,812)
Acquisition of subsidiary, net of cash acquired (69,534)
Proceeds from sale of marketable securities 75,443
Deferred license costs (600,000)
---------- ---------- ----------
Net cash provided by (used in)
investing activities 996,213 (831,816) (2,630,988)
---------- ---------- ----------
Cash flows from financing activities
Proceeds from issuance of common stock 483,150 62,386 32,125
Cash dividends paid (5,354,816) (4,324,121) (3,563,034)
Acquisition of common stock (4,093,824) (516,872)
Payment of long-term debt (600,000) (600,000)
---------- ---------- ----------
Net cash used in financing activities (9,565,490) (5,378,607) (3,530,909)
---------- ---------- ----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (510,089) 414,975 (1,503,628)
Cash and cash equivalents at beginning of year 3,611,609 3,196,634 4,700,262
---------- ---------- ----------
Cash and cash equivalents at end of year $3,101,520 $3,611,609 $3,196,634
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF
ACCOUNTING POLICIES
American List Corporation ("ALC"), through its wholly-owned subsidiary,
American Student List Company, Inc. ("ASL"), primarily develops, maintains
and markets databases of high school, college and pre-school through junior
high school students in the United States. ASL rents lists to its customers
derived from its database for use primarily in direct mail and marketing
programs. ASL's customers consist mainly of list brokers and advertising
agencies, financial institutions, retailers and educational institutions.
These customers are located primarily in the United States. ALC's
wholly-owned subsidiary, GeoDemX Corporation ("GeoDemX"), is engaged in the
sale of software that incorporates computerized mapping and electronic
demographic data for the generation of sales leads.
A summary of the significant accounting policies applied on a consistent
basis in the preparation of the accompanying consolidated financial
statements follows:
1. Principles Applied in Consolidation
The consolidated financial statements include the accounts of American
List Corporation and its wholly-owned subsidiaries, American Student
List Company, Inc. and GeoDemX Corporation, (the "Company"). All
significant intercompany balances and transactions have been eliminated.
2. Depreciation and Amortization
Depreciation and amortization of property and equipment are provided
primarily on the straight-line basis over the estimated useful lives of
the respective assets, generally ranging from three to seven years.
3. Revenue Recognition
Revenues from the sale of lists are recognized upon the shipment to
customers of lists on computerized labels, magnetic tape or computer
diskettes for a one-time usage. Additional billings are made by the
Company for additional usage by the customers. Revenues from the sale of
software use are recognized upon installation by the Company and
acceptance from customers. Historically, actual sales returns and
allowances have not been material.
F-9
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF
ACCOUNTING POLICIES (CONTINUED)
4. Costs of Lists
Costs of purchased lists are amortized on a straight-line basis over
their estimated useful lives, generally one to five years. The Company
determines the useful lives of its lists based upon the estimated period
of time such lists are marketable. The portion of the list amortized
within one year from the balance sheet date is classified as a current
asset. The Company periodically reviews the marketability of its lists
and, accordingly, the respective estimated useful lives. Such reviews,
to date, have not resulted in revised estimates of useful lives of the
lists.
5. Earnings per Share
Earnings per share are based upon the weighted average number of shares
of common stock outstanding during the year. Common stock equivalents
are not included in the computation as they are not materially dilutive.
6. Income Taxes
Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
7. Marketable Securities
The Company's investments are classified into three categories. Those
securities classified as "trading" or "available-for-sale" are reported
at market value. Debt securities are classified as "held to maturity"
which are reported at amortized cost. Cost is determined using the
specific identification method. Unrealized gains and losses from
securities "available-for-sale" are reported as a separate component of
stockholders' equity, net of related tax effects.
F-10
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF
ACCOUNTING POLICIES (CONTINUED)
8. Statement of Cash Flows
The Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents. The
Company paid income taxes for the years ended February 28, 1997,
February 29, 1996 and February 28, 1995 of $4,211,395, $4,832,044, and
$4,553,686, respectively. During fiscal 1995, the Company had noncash
investing and financing activities in connection with the acquisition of
a licensing agreement of approximately $3,339,000.
9. Financial Instruments and Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily cash and cash equivalents,
marketable securities and accounts receivable. The Company places its
investments in highly rated financial institutions, United States
Treasury bills, investment grade short-term debt instruments and state
and local municipalities, while limiting the amount of credit exposure
to any one entity. Concentrations of credit risk with respect to
accounts receivable are limited due to the large number of customers,
generally short payment terms, and their dispersion across geographic
areas.
10. Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements, and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
11. New Accounting Standards Not Yet Adopted
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share," which is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Early
F-11
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF
ACCOUNTING POLICIES (CONTINUED)
adoption of the new standard is not permitted. The standard eliminates
primary and fully diluted earnings per share and requires presentation
of basic and diluted earnings per share together with disclosure of how
the per share amounts were computed. The adoption of this new standard
is not expected to have a material impact on the disclosure of earnings
per share in the consolidated financial statements.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 129 ("SFAS No. 129"), "Disclosure of
Information About Capital Structure." The Company does not anticipate
that SFAS No. 129 will have a material impact on the consolidated
financial statements.
NOTE B - MARKETABLE SECURITIES
The amortized cost, unrealized gains and losses, and market values of the
Company's held-to-maturity and available-for-sale securities are summarized
as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
February 28, 1997
Held to maturity, maturing in
less
than one year
State and municipal bonds $5,571,856 $4,493 $ (5,945) $5,570,404
Certificates of deposit 188,656 (547) 188,109
---------- ------ -------- ----------
$5,760,512 $4,493 $ (6,492) $5,758,513
========== ====== ======== ==========
Available for sale
Equity securities $ 104,452 $1,192 $(23,739) $ 81,905
Government income
securities 498,162 (43,167) 454,995
---------- ------ -------- ----------
$ 602,614 $1,192 $(66,906) $ 536,900
========== ====== ======== ==========
</TABLE>
F-12
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE B - MARKETABLE SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
February 29, 1996
Held to maturity, maturing in
less
than one year
State and municipal bonds $6,484,774 $ 8,116 $ (718) $6,492,172
U.S. Treasury bills 500,353 (116) 500,237
Certificates of deposit 281,955 (541) 281,414
---------- ------- -------- ----------
$7,267,082 $ 8,116 $ (1,375) $7,273,823
========== ======= ======== ==========
Available for sale
Equity securities $ 102,882 $ 1,091 $(30,760) $ 73,213
Government income securities 469,808 (35,052) 434,756
---------- ------- -------- ----------
$ 572,690 $ 1,091 $(65,812) $ 507,969
========== ======= ======== ==========
February 28, 1995
Held to maturity, maturing in
less
than one year
State and municipal bonds $6,214,203 $ 3,566 $(15,947) $6,201,822
U.S. Treasury bills 613,840 14,362 628,202
---------- ------- -------- ----------
$6,828,043 $17,928 $(15,947) $6,830,024
========== ======= ======== ==========
Available for sale
Equity securities $ 173,293 $ 803 $(43,763) $ 130,333
Government income securities 439,968 (46,934) 393,034
---------- ------- -------- ----------
$ 613,261 $ 803 $(90,697) $ 523,367
========== ======= ======== ==========
</TABLE>
As a result of changes in market value of the available-for-sale security
portfolio, a valuation adjustment of $3,747, $4,687 and $(11,833), net of
deferred taxes, is recorded as a separate component of stockholders' equity
at February 28, 1997, February 29, 1996 and February 28, 1995, respectively.
F-13
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE C - INCOME TAXES
The Company files a consolidated Federal income tax return.
Income tax expense is comprised of the following elements:
1997 1996 1995
---------- ---------- ----------
Current
Federal $3,374,000 $3,817,000 $3,126,000
State 579,000 611,000 625,000
---------- ---------- ----------
$3,953,000 $4,428,000 $3,751,000
========== ========== ==========
The difference between these amounts and amounts computed by applying the
statutory Federal income tax rate to earnings before taxes is as follows:
<TABLE>
<CAPTION>
Year ended February 28, Year ended February 29, Year ended February 28,
1997 1996 1995
---------------------- ---------------------- ----------------------
% of % of % of
pretax pretax pretax
Amount income Amount income Amount income
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected"
tax expense $3,638,484 34.0% $4,092,587 34.0% $3,375,200 34.0%
Increases (reductions) in
taxes resulting from
State income taxes,
net of Federal
income tax benefit 382,140 3.5 403,260 3.4 412,500 4.2
Other (67,624) (.6) (67,847) (.6) (36,700) (.4)
---------- ---- ---------- ---- ----------- ----
Actual tax expense $3,953,000 36.9% $4,428,000 36.8% $3,751,000 37.8%
========== ==== ========== ==== ========== ====
</TABLE>
F-14
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE D - PENSION AND PROFIT-SHARING PLANS
Effective March 1, 1974, the Company adopted both pension and profit-sharing
plans covering all full-time employees, as defined, which provide for death
and retirement benefits. The noncontributory plans are funded through the
purchase of insurance policies and contributions to trust funds.
Contributions and trust earnings of the plans are credited to the account of
each employee. The plans are defined contribution plans and, accordingly,
individual benefits are limited to the balance of the trust funds and
amounts payable under the insurance policies.
Pension and profit-sharing expenses have been charged as follows for the
years ended:
February 28, February 29, February 28,
1997 1996 1995
----------- ----------- -----------
Pension expense $195,311 $178,306 $174,222
Profit-sharing expense 30,000 25,000 23,000
-------- -------- --------
$225,311 $203,306 $197,222
======== ======== ========
NOTE E - LICENSE AGREEMENT
Effective July 1, 1994, the Company entered into an exclusive licensing
agreement, whereby the Company obtained a ten-year license to use, reproduce
and distribute a defined segment of the licensor's lists and to use their
sources and customer list to compile and market the Company's own lists. The
licensor will have the nonexclusive right to broker the licensed list to
third parties in return for a commission.
As consideration for the granting of the license, the Company will pay a
total of $4,200,000. The license fee is payable in three annual installments
of $600,000 which began July 1994; three annual installments of $500,000
beginning July 1997; three annual installments of $250,000 beginning July
2000; and a final installment of $150,000 in July 2003.
F-15
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE E - LICENSE AGREEMENT (CONTINUED)
The Company has recorded the cost and related obligation for the license,
net of imputed interest at 7.25%, which approximated $3.3 million. The net
cost of the license is being amortized on a straight-line basis over the
ten-year term of the license agreement.
In the event that facts and circumstances indicate that the deferred cost of
the license may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future undiscounted
cash flows associated with the license would be compared to the asset's
carrying amount to determine if a write-down to market value or discounted
cash flow value is required. Impairment would be recognized in operating
results if a permanent diminution in value were to occur. At February 28,
1997, the value of the asset ("deferred license cost") is estimated to be
fully recoverable.
NOTE F - COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company currently occupies an office and computer facility under an
operating lease which commenced June 15, 1991 and expires June 15, 2001. The
lease, as amended on July 1, 1996, currently provides for an annual base
rent of $285,812 which will increase ratably over the term of the lease to a
maximum of $331,050. The lease contains an escalation clause relating to
increases in real estate taxes.
The Company also maintains a branch sales office under an operating lease
which commenced on July 1, 1996 and expires June 30, 2001. The lease
currently provides for an annual base rent of $16,500, which will increase
ratably over the term of the lease to a maximum of $19,738.
F-16
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE F - COMMITMENTS AND CONTINGENCIES (CONTINUED)
The approximate minimum rental commitments under these operating leases are
as follows:
Years ending February 28,
1998 $ 322,000
1999 331,000
2000 341,000
2001 351,000
2002 101,000
----------
Total minimum payments required $1,446,000
==========
Total rent expense for the years ended February 28, 1997, February 29, 1996
and February 28, 1995 including escalation payments, amounted to
approximately $394,000, $294,000 and $288,000, respectively.
Legal Proceedings
An officer of the Company, who was subject to an employment agreement
expiring in March 2001, was terminated in February 1997. The employee has
challenged the basis for termination under the terms of such agreement
before an independent arbitrator and accordingly seeks reinstatement, back
pay and benefits. As of the date of this Report on Form 10-K, the Company's
counsel with respect to this matter believes that the Company has
meritorious defenses and is pursuing the matter vigorously. Furthermore,
the Company does not believe that this action will have a material adverse
affect on the Company's results of operations, cash flow or financial
position.
From time to time, the Company is subject to ordinary routine litigation
and various other legal proceedings, claims and liabilities which
are incidental to the business. The Company believes that none of these
other legal proceedings has had or is likely to have a material adverse
affect on the Company's results of operations, cash flow or financial
position.
NOTE G - STOCKHOLDERS' EQUITY
The Company's 1992 Stock Option Plan (the "Plan") provides for the issuance
of options to purchase up to 300,000 shares, as adjusted, of common stock.
The Plan provides for the issuance of both incentive stock options to
purchase the Company's common stock at not less than fair market value on
the date of the grant and nonqualified options to purchase shares at
exercise prices determined by the Board of Directors.
F-17
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE G - STOCKHOLDERS' EQUITY (CONTINUED)
A summary of stock option activity related to the Company's Plan is as
follows:
<TABLE>
<CAPTION>
Incentive Stock Options Nonqualified Stock Options
----------------------------------------- --------------------------
Weighted -
average
exercise Price
Price Range Shares price Range Shares
--------------- ------- ---------- ------ ------
<S> <C> <C> <C> <C> <C>
Outstanding at March 1, 1995 $ 9.39 - $18.00 135,145 $16.08 $11.89 1,650
Granted 21.00 - 29.88 57,500 22.01
Exercised 9.39 - 11.89 (6,290) 10.18
------- -----
Outstanding at February 29, 1996 9.39 - 29.88 186,355 18.12 11.89 1,650
Granted 26.88 7,000 26.88
Exercised 9.39 - 18.00 (35,275) 13.70
Expired 18.00 (75,000) 18.00
------- -----
Outstanding at February 28, 1997 $10.08 - $29.88 83,080 $20.85 $11.89 1,650
======= ====== ====== =====
Exercisable at February 28, 1997 $10.08 - $29.88 83,080 $20.85 $11.89 1,650
======= ====== ====== =====
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable incentive stock options:
<TABLE>
<CAPTION>
Weighted-average
Range of Number outstanding remaining contractual Weighted-average
exercise prices and exercisable life (years) exercise price
--------------- ------------------ --------------------- ----------------
<S> <C> <C> <C>
$10 - $20 18,415 6.8 years $14.95
20 - 30 64,665 8.26 years 22.54
------
83,080
======
</TABLE>
The weighted average option fair value on the grant date was $11.34 and
$9.09 for options issued during the years ended February 28, 1997 and
February 28, 1996, respectively.
The Company has adopted only the disclosure provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"); it applies APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and related Interpretations in accounting
for the Plan and does not recognize compensation expense for such Plan. If
the Company had elected to recognize compensation expense based upon the
fair value at the grant dates
F-18
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE G - STOCKHOLDERS' EQUITY (CONTINUED)
for awards under these plans consistent with the methodology prescribed by
SFAS No. 123, the Company's reported net earnings and earnings per share
would be reduced to the pro forma amounts indicated below for the years
ended:
February 28, February 29,
1997 1996
----------- -----------
Net earnings
As reported $6,748,423 $7,609,022
Pro forma 6,655,393 7,051,597
Earnings per common share
As reported $1.51 $1.68
Pro forma 1.49 1.55
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related
to grants made before fiscal 1996. The fair value of these options was
estimated at the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions for the fiscal years ended
February 28, 1997 and February 29, 1996, respectively: expected volatility
of 34 and 32 percent; risk-free interest rates of 6.51 and 6.39 percent; and
expected life of seven years for both years.
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the use of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.
On May 23, 1996, the Board of Directors increased the number of shares the
Company may repurchase under its common stock purchase plan to 300,000
shares of the Company's common stock. On April 7 and November 16, 1995, the
Company purchased 24,600 and 300 shares of its common stock for $509,238 and
$7,634, respectively. In May 1996, the Company purchased 110,000 shares of
its common stock in the open market for $2,768,009. In January 1997, the
Company purchased 55,000 shares of its common stock in the open market for
$1,325,815.
F-19
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE G - STOCKHOLDERS' EQUITY (CONTINUED)
In connection with the transaction described in Note I, the Company has
discontinued its common stock buy-back program.
NOTE H - ACQUISITION OF GEODEMX
On June 22, 1995, the Company acquired substantially all of the operating
assets and liabilities of GeoDemX 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 through the
issuance of the Company's common stock. However, the sellers may elect to
receive up to 50% of such additional consideration in cash. The cost in
excess of the fair value of the net assets acquired, approximating $125,000,
has been included in other assets, and was being amortized on a
straight-line basis over a five-year period. The Company periodically
reviews and evaluates whether there has been any permanent impairment in the
value of recorded amounts. Factors considered in the valuation include
current operating results, trends and anticipated undiscounted future cash
flows. During the fourth quarter of fiscal 1997, the Company recognized a
goodwill impairment charge of approximately $100,000 related to the June
1995 acquisition of GeoDemX.
At the date of acquisition, the Company set forth certain conditions and
expectations for the GeoDemX business. At present, it cannot assure that it
will continue to fund the operations of GeoDemX. However, the Company
expects to recover the carrying value of the net assets of GeoDemX
($133,000) at February 28, 1997.
NOTE I - SUBSEQUENT EVENT
On March 18, 1997, the Company entered into an Agreement and Plan of Merger
(the "Agreement") with Snyder Communications, Inc. ("Snyder") and will
become a wholly-owned subsidiary of Snyder.
F-20
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997, February 29, 1996 and February 28, 1995
NOTE I - SUBSEQUENT EVENT (CONTINUED)
In accordance with the Agreement, each share of the Company's common stock
outstanding immediately prior to the merger will be converted into shares of
Snyder common stock equal to the exchange ratio determined in the following
manner: (i) if the average final closing price of the Snyder common stock
equals or exceeds $32.00, the exchange ratio will be 1.00; (ii) if the
average final closing price equals or exceeds $28.00 but is less than
$32.00, the exchange ratio will equal the quotient of $32.00 divided by the
average final closing price; (iii) if the average final closing price equals
or exceeds $26.00 but is less than $28.00, the exchange ratio will be 1.14;
and (iv) if the average final closing price is less than $26.00, the
exchange ratio will equal the quotient (rounded to four decimal places) of
$29.71 divided by the average final closing price, as defined. Snyder has
the right to terminate the Agreement if the average final closing price of
its common stock is less than $24.00 per share. The Company has the right
to terminate the Agreement if the average final closing price of Snyder's
common stock is less than $20.00 per share.
The merger is subject to approval by the stockholders of the Company and to
customary regulatory approval.
F-21
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
Board of Directors and Stockholders
AMERICAN LIST CORPORATION
In connection with our audit of the consolidated financial statements of
American List Corporation and Subsidiaries referred to in our report dated April
11, 1997, we have also audited financial statement Schedule II for each of the
years in the three-year period ended February 28, 1997. In our opinion, the
financial statement schedule presents fairly, in all material respects, the
information required to be set forth therein.
GRANT THORNTON LLP
Melville, New York
April 11, 1997
F-22
<PAGE>
<PAGE>
American List Corporation and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
--------------------------
(1) (2)
Charged to
Balance at Charged to other Balance at
beginning costs and accounts - Deductions - end of
Description of period expenses describe describe period
----------- ---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
Year ended February 28, 1997 $50,000 $73,691 $43,691 (a) $80,000
======= ======= ======= =======
Year ended February 29, 1996 $50,000 $17,734 $17,734 (a) $50,000
======= ======= ======= =======
Year ended February 28, 1995 $90,000 $22,955 $62,955 (a) $50,000
======= ======= ======= =======
</TABLE>
(a) Uncollectible accounts written off.
F-23
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as ...................'r'
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the Consolidated Financial Statements and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<PERIOD-TYPE> 12-MOS
<CASH> 3,101,520
<SECURITIES> 6,297,412
<RECEIVABLES> 5,549,023
<ALLOWANCES> 80,000
<INVENTORY> 0
<CURRENT-ASSETS> 16,191,979
<PP&E> 1,586,753
<DEPRECIATION> (1,075,079)
<TOTAL-ASSETS> 20,038,816
<CURRENT-LIABILITIES> 1,499,406
<BONDS> 0
<COMMON> 44,667
0
0
<OTHER-SE> 16,954,626
<TOTAL-LIABILITY-AND-EQUITY> 20,038,816
<SALES> 18,471,146
<TOTAL-REVENUES> 18,471,146
<CGS> 3,065,750
<TOTAL-COSTS> 8,005,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,355
<INCOME-PRETAX> 10,701,423
<INCOME-TAX> 3,953,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,748,423
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 0
</TABLE>
