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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended March 31, 1995
Commission File No. 0-7765
CROWELL & CO., INC.
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(Exact Name of small business issuer as specified in its charter)
GEORGIA 58-1021933
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
432 South Belair Road, Augusta, Georgia 30907
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(Address of principal executive offices)
Issuer's telephone number, including area code (706) 855-1099
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of issuer's common equity as of May 10, 1995
is 2,520,835.
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CROWELL & CO., INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements ......................... 4
ITEM 2 - Management's Discussion and Analysis .......... 8
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following condensed consolidated financial statements of Crowell & Co.,
Inc., and Subsidiaries are included in Item I:
Condensed Consolidated Balance Sheet
March 31, 1995
Condensed Consolidated Statements of Operations and Accumulated
Deficit - Three months ended March 31, 1995 and 1994
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements
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CROWELL & CO., INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
PROPERTIES HELD FOR RESALE & DEVELOPMENT
Homes under construction and for sale $ 3,843,051
Developed residential 1,192,589
Land held for future development and other 482,086
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5,517,726
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CASH, INCLUDING ESCROW FUNDS OF $92,505 205,158
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RECEIVABLES 579,874
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PROPERTY AND EQUIPMENT, NET OF DEPRECIATION 568,938
------------
OTHER ASSETS 169,092
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$ 7,040,788
============
LIABILITIES AND STOCKHOLDERS' EQUITY
NOTES PAYABLE TO BANKS $ 5,514,153
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ACCOUNTS PAYABLE AND ACCRUED EXPENSES 291,135
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STOCKHOLDERS' EQUITY
Preferred stock 1,011,899
Common stock 682,805
Paid-in capital 47,619
Accumulated deficit (506,823)
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1,235,500
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$ 7,040,788
============
</TABLE>
See notes to condensed consolidated financial statements.
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CROWELL & CO., INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
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1995 1994
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<S> <C> <C>
REVENUES
Home sales $ 936,940 $ 3,384,536
All other revenues 433,753 620,037
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1,370,693 4,004,573
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COST OF REVENUES
Homes 851,165 2,982,232
All other costs 137,105 278,937
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988,270 3,261,169
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OPERATING EXPENSES 508,665 718,571
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OPERATING INCOME (LOSS) (126,242) 24,833
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NET FINANCIAL EXPENSE 95,263 49,712
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LOSS BEFORE INCOME TAXES (221,505) (24,879)
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INCOME TAX (EXPENSE) BENEFIT (1,500) 61,499
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NET INCOME (LOSS) (223,005) 36,620
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ACCUMULATED DEFICIT
Beginning of period (283,818) (610,578)
Preferred dividends 0 59,952
End of period $ (506,823) $ (633,910)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,520,835 2,520,835
NET INCOME (LOSS) PER COMMON SHARE $ (0.10) $ 0.01
</TABLE>
See notes to condensed consolidated financial statements.
5
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CROWELL & CO., INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
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1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (223,005) $ 36,620
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 29,932 40,708
Deferred tax benefit 0 (65,283)
Net (increase) decrease in inventory,
receivables, prepaids, payables and accruals 111,538 (401,214)
----------- -----------
Net cash used in operating activities (81,535) (389,169)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (12,638) (26,501)
Receipts on notes 69,883 0
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Net cash provided by (used in) investing activities 57,245 (26,501)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 617,767 3,438,974
Payments of borrowings (618,651) 3,045,321
Payments of preferred stock dividends 0 59,952
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Net cash provided by (used in) financing activities (884) 333,701
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NET DECREASE IN CASH (25,174) (81,969)
CASH AT BEGINNING OF PERIOD 230,332 428,521
CASH AT END OF PERIOD $ 205,158 $ 346,552
=========== ===========
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 1,500 $ 3,784
Interest paid, net of amount capitalized 98,761 49,057
</TABLE>
See notes to condensed consolidated financial statements.
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CROWELL & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements are presented in accordance with the
requirements of Form 10-QSB and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the Company's annual Form 10-KSB filing. Accordingly,
the reader of this Form 10-QSB may wish to refer to the Company's Form 10-KSB
for the year ended December 31, 1994 for further information.
The financial information has been prepared in accordance with the Company's
customary accounting practices and has not been audited. In the opinion of
management, the information presented reflects all adjustments necessary for a
fair statement of interim results. All such adjustments are of a normal and
recurring nature.
NOTE 2 - INCOME (LOSS) PER SHARE
The income or loss per common share has been computed using the weighted
average of the number of shares outstanding during the three months ended March
31, 1995 and 1994. Because inclusion of convertible preferred stock would have
an anti-dilutive effect on the income or loss per common share, the convertible
preferred stock is excluded from the computation of the income or loss per
common share assuming full dilution for the quarters ended March 31, 1995 and
1994.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 1995 AND 1994
The primary sources of revenue of Crowell & Co., Inc., and Subsidiaries (the
"Company") are the development of residential properties for resale,
homebuilding and providing real estate brokerage services.
Other sources of revenue include sales of computer software and hardware,
operation of a pool and tennis facility, and various other real estate related
activities.
Total revenues for the quarter ended March 1995 are $2,633,880 less than
revenues for the quarter ended March 1994. Management believes the uncertainty
regarding large layoffs at Savannah River Site caused the decrease in sales. As
the uncertainty regarding the layoffs is alleviated, management believes sales
activity will increase.
Currently sales backlog on Company constructed homes is $1,102,285.
Construction on these homes is 82% complete. Backlog represents signed
contracts for the purchase of homes where the property has not been closed.
Therefore, the Company still holds legal title and has not recognized any
income.
The gross profit margin on home sales decreased in the 1995 quarter as compared
to 1994 from 11.9 % to 9.2 % because of competitive pressures caused by the
Savannah River Site layoffs. Management believes gross profit margin will
improve when sales activity increases.
Operating expenses decreased by $209,906 for the quarter ended March 31, 1995,
as compared to the same quarter last year. This is a result of decreases in
legal fees, salaries, advertising and sales promotion and general decreases in
several other operating expense categories. Management believes operating
expenses will remain at first quarter levels for the second quarter. Operating
expenses include salaries, office expenses, occupancy, depreciation,
advertising and promotion, taxes and licenses, legal and accounting,
communications, and other expenses. These expenses are fixed in nature and
normally do not fluctuate with different revenue levels.
The Company had a net loss for the 1995 quarter of $223,005 compared to net
income of $36,620 for the 1994 quarter. Management believes the company will
sustain another loss for the second quarter of 1995 based on sales activity in
new home sales.
LIQUIDITY AND CAPITAL RESOURCES
The Company has obtained financing historically by borrowing from conventional
lending sources using land acquired for development as security for loans.
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Current and future liquidity needs are expected to be met by use of the
proceeds from home, lot, and land sales and the proceeds from loans, using
lands purchased for development as collateral. Existing development loans and
commitments available to the Company have been made by various financial
institutions and are secured by raw land and the improved lots held for resale.
Payments of interest are due monthly or quarterly and a portion of the
principal is repaid as each lot is sold. The Company has approximately $188,000
in unused development loan commitments available to use in the development of
residential properties as of March 31, 1995.
Residential home construction costs are expected to be met through the use of
existing commitments aggregating approximately $530,000 as of March 31, 1995,
and through the use of additional commitments also using the improved lots as
collateral. Lot acquisition costs and home construction costs are financed by
construction loans from a number of conventional lending sources, generally
lending 90-95% of the costs of the home, secured by the lot and improvements.
These loans are repaid upon the sale of the home. These loans are negotiated
and closed on a project-by-project and lot-by-lot basis.
In addition to the development loans, the Company has a loan agreement with an
Augusta, Georgia, savings and loan institution in the amount of approximately
$338,000 which is secured by real property.
The Company also has several other loans with various lenders which are secured
by various Company assets.
Financing arrangements for long-term needs have not been made. Such
arrangements in the land development business are generally made on a
project-by-project basis. Debt service on all existing loans (loan balances
totaled $5,514,153 as of March 31, 1995) and funds for operations are expected
to be met from the proceeds of home, lot and land sales, and brokerage
commissions. Notes maturing in the next twelve months total approximately
$5,000,000. At March 31, 1995, available cash and proceeds from home, lot, and
land sales were expected to be sufficient to meet the Company's requirements
for the following quarter. The Company historically has renewed these notes as
is common in the development business. The notes will eventually be repaid from
proceeds of land, lot, and home sales.
The Company expects to, as it has done in the past, sell land it presently owns
to meet liquidity needs. Coupled with revenues from normal sources, such sales
would be expected to generate sufficient cash to meet liquidity requirements.
The Company has net operating loss carryforwards available of approximately
$1,370,000 to offset against future federal and state taxable income. The
current value of these carryforwards computed at maximum federal and state
income tax rates is approximately $530,000. This amount is not reflected in
the financial statements.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended March 31, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CROWELL & CO., INC.
May 15, 1995 By: Mark L. Gilliam
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Mark L. Gilliam
Vice President on Behalf of
the registrant and as Chief
Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CROWELL & CO. FOR THE THREE MONTHS ENDED MARCH 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 205,158
<SECURITIES> 0
<RECEIVABLES> 579,874
<ALLOWANCES> 0
<INVENTORY> 5,517,726
<CURRENT-ASSETS> 0
<PP&E> 568,938
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,040,788
<CURRENT-LIABILITIES> 0
<BONDS> 5,514,153
<COMMON> 682,805
0
1,011,899
<OTHER-SE> (459,204)
<TOTAL-LIABILITY-AND-EQUITY> 7,040,788
<SALES> 936,940
<TOTAL-REVENUES> 1,370,693
<CGS> 851,165
<TOTAL-COSTS> 988,270
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,263
<INCOME-PRETAX> (221,505)
<INCOME-TAX> 1,500
<INCOME-CONTINUING> (221,505)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (223,005)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
