FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: Commission File Number:
May 31, 1996 0-15588
CANTERBURY CORPORATE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2170505
------------ -----------
(State of Incorporation) (I.R.S. Employer Identification No.)
1600 Medford Plaza
Route 70 & Hartford Road
Medford, New Jersey 08055
(Address of principal executive office)
Telephone Number: (609) 953-0044
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
/X/ Yes / / No
The number of shares outstanding of the registrant's common stock as of the
date of the filing of this report: 14,946,509 shares.
EXHIBIT 13
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
May 31,
1996 November 30,
(Unaudited) 1995
----------- -----------
Current Assets:
Cash $ 879,423 $ 1,471,702
Accounts receivable net of
allowance for doubtful accounts
of $2,452,000 and $2,276,000 6,735,383 5,281,731
Notes receivable 123,486 531,072
Prepaid expenses and
other assets 1,099,407 782,136
Refundable income taxes 194,521 326,000
Deferred income tax benefit 926,155 794,676
----------- -----------
Total Current Assets 9,958,375 9,187,317
Property and equipment
at cost, net of accumulated
depreciation and amortization
of $7,213,000 and $7,015,000 3,980,740 3,756,242
Goodwill net of accumulated amortization
of $973,000 and $886,000 9,128,401 9,440,645
Note receivable 3,994,328 4,028,921
Other assets 546,653 414,484
----------- -----------
Total Assets $27,608,497 $26,827,609
=========== ===========
See Accompanying Notes
2
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
May 31,
1996 November 30,
(Unaudited) 1995
------------ ------------
Current Liabilities:
Accounts payable - Trade $ 816,472 $ 697,768
Accrued expenses 1,033,075 1,369,169
Income taxes payable 716,000 132,000
Unearned tuition income 1,106,176 1,186,886
Current portion, long-term
debt 2,295,314 2,837,279
------------ ------------
Total Current Liabilities 5,967,037 6,223,102
Long-term debt 5,812,164 6,572,701
Deferred income tax liability 644,000 919,000
Shareholders' Equity:
Convertible preferred stock, no par
value, authorized 1,600,000 shares,
at aggregate liquidation preference
Class A, 12.5%, 100,000 shares
issued and outstanding -- 93,482
Class B, 8%, 37,000 shares
issued and outstanding -- 35,000
Class C, 10%, 180,000,
shares issued and outstanding -- 130,006
Common stock, $.001 par value,
50,000,000 shares authorized;
14,546,509 and 13,060,000
issued outstanding 14,546 13,060
Additional paid in capital 14,342,471 12,915,730
Retained earnings 984,714 68,963
Treasury stock (156,435) (143,435)
------------ ------------
Total Shareholders' Equity 15,185,296 13,112,806
------------ ------------
Total Liabilities and
Shareholders' Equity $ 27,608,497 $ 26,827,609
============ ============
See Accompanying Notes
3
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
The following Consolidated Statements of Income for the three-month and
six-month periods ended May 31, 1996, and May 31, 1995, are unaudited, but the
Company believes that all adjustments (which consist only of normal recurring
accruals) necessary for a fair presentation of the results of operations for the
respective periods have been included. Quarterly results of operations are not
necessarily indicative of results for the full year.
<TABLE>
<CAPTION>
Three months ended Six months ended
May 31, May 31,
----------------------------- -----------------------------
(Unaudited) (Unaudited)
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 7,820,698 $ 8,169,850 $ 14,173,309 $ 13,910,512
Costs and expenses 4,934,756 4,765,269 8,183,445 7,673,447
------------ ------------ ------------ ------------
Gross profit 2,885,942 3,404,581 5,989,864 6,237,065
Selling 579,511 431,850 1,024,648 831,887
General and
administrative 1,795,542 1,590,860 3,073,932 3,078,738
Provision for
doubtful accounts 88,026 56,499 176,312 105,898
------------ ------------ ------------ ------------
Total operating expenses 2,463,079 2,079,209 4,274,892 4,016,523
Other (income)/expenses
Interest income (65,593) (27,246) (139,637) (29,879)
Interest expense 171,748 226,720 367,973 469,609
Other (3,112) (26,554) (15,294) (45,792)
------------ ------------ ------------ ------------
Income before provision for
income taxes and
discontinue operation 319,820 1,152,452 1,501,930 1,826,604
Provision for income taxes 135,000 447,278 584,000 694,175
------------ ------------ ------------ ------------
Income from continuing
operations 184,820 705,174 917,930 1,132,429
Discontinued operation
Income from discontinued
operation less applicable
income taxes of
$93,722 and $161,907 -- 152,914 -- 262,399
------------ ------------ ------------ ------------
Net income $ 184,820 $ 858,088 $ 917,930 $ 1,394,828
============ ============ ============ ============
Net income per common
share and common share
equivalents:
Primary:
Income from continuing
operations .01 .06 .07 .10
Discontinued operation -- .01 -- .02
------------ ------------ ------------ ------------
Net income per share $ .01 $ .07 $ .07 $ .12
============ ============ ============ ============
Fully diluted:
Income from continuing
operations -- .06 -- .09
Discontinued operation -- .01 -- .02
------------ ------------ ------------ ------------
Net income per share $ -- $ .07 $ -- $ .11
============ ============ ============ ============
Common and common
share equivalents
(weighted average):
Primary 14,360,600 12,378,000 13,944,100 12,077,000
============ ============ ============ ============
Fully diluted -- 13,064,000 -- 12,763,000
============ ============ ============ ============
</TABLE>
See Accompanying Notes
4
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 1996 AND May 31, 1995
May 31, May 31,
1996 1995
------------ ------------
Cash flows from operating activities:
Cash received from
customers $ 12,638,947 $ 13,143,050
Cash paid to suppliers and
employees (12,631,862) (12,033,882)
Interest received 139,637 29,916
Interest paid (367,973) (469,811)
------------ ------------
Net cash provided by/(used in)
operating activities $ (221,251) $ 669,273
Cash flows from investing activities:
Capital expenditures (665,265) (452,445)
Collection on notes receivable 442,179 --
------------ ------------
Net cash used in
investing activities (223,086) (452,445)
Cash flows from financing activities:
Principal payments on long-term debt (313,645) (67,315)
Proceeds from revolving
credit facility 100,000 --
Repayment of revolving
credit facility (389,000) (500,000)
Proceeds from long term debt 337,643 352,773
Proceeds from exercise of stock
options and warrants 11,150 26,250
Repayment on term loan (1,037,500) --
Payment of dividends on
preferred stock (7,376) (15,968)
Purchase of treasury stock (13,000) (61,905)
Proceeds from issuance of
common stock, net 1,163,786 688,681
------------ ------------
Net cash provided by/(used in)
financing activities (147,942) 422,516
Net cash provided by
discontinued operation -- 26,454
Net increase/(decrease) in cash (592,279) 665,798
Cash at beginning of period 1,471,702 1,384,030
------------ ------------
Cash at end of period $ 879,423 $ 2,049,828
============ ============
See Accompanying Notes
5
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 1996 AND MAY 31, 1995
May 31, May 31,
1996 1995
----------- -----------
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 917,930 $ 1,132,429
Adjustments to reconcile
to net cash provided by operating
activities:
Depreciation and amortization 753,011 650,562
Provision for doubtful accounts 176,312 105,898
Deferred income taxes benefit (406,479) 455,000
Change in operating assets and liabilities:
Increase in accounts receivable (1,629,964) (421,688)
Increase in prepaid expenses and
refundable income taxes (185,792) (246,830)
Increase in other assets (132,169) (69,364)
Increase/(decrease) in
accounts payable 118,704 (311,218)
Decrease in accrued expenses (336,094) (537,147)
Decrease in unearned
tuition income (80,710) (330,174)
Increase in income
taxes payable 584,000 241,805
----------- -----------
Total adjustments (1,139,181) (463,156)
----------- -----------
Net cash provided by/(used in)
operating activities $ (221,251) $ 669,273
=========== ===========
See Accompanying Notes
6
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all of its subsidiaries. All material intercompany transactions have been
eliminated.
Basis of Financial Statement Presentation and Material Uncertainty
On November 30, 1993 the Company issued 1,029,000 of its common shares to
the shareholders of Landscape Maintenance Services, Inc. in a business
combination accounted for as a pooling of interests. During 1994, the Company
instituted suit against the former Landscape Maintenance shareholders, alleging
misrepresentations and the omission of material facts (e.g. undisclosed
liabilities) thereby breaching the agreement to merge the Company and Landscape
Maintenance (the Acquisition Agreement). The Company seeks, among other
remedies, an adjustment to the number of shares issued, payment of certain
previously undisclosed liabilities and unspecified damages or the rescission of
the Acquisition Agreement.
The accompanying consolidated financial statements include Landscape
Maintenance for all periods presented under the pooling of interests method of
accounting for business combinations. Because the outcome of this litigation is
uncertain, the number of shares issued in the business combination or adjustment
of the accounting for the business combination and its effects on the
consolidated financial statements cannot be determined at this time.
The rescission of the Acquisition Agreement would result in a change in
reporting entity which would require restatement of the consolidated financial
statements for all periods presented, to eliminate the results of operations,
cash flows and financial position of Landscape Maintenance, currently included
under the pooling of interests method of accounting.
Landscape Maintenance represents the business maintenance services segment
of the Company. See Note 3 for selected financial information regarding this
segment.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at May
31, 1996, and revenues and expenses for the six months ended May 31, 1996. The
ultimate outcome and actual results could differ from the estimates and
assumptions used.
Revenue Recognition
The Company's computer software training segment records revenue at the time
an individual attends the training class.
7
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The Company's management training segment records revenue based on
performance of seminars to its clients.
The Company's vocational training segment records tuition revenues ratably
over the term of the courses which run for approximately two to eight weeks.
Receivables for students' tuition are recorded as of the students' first day of
class attendance. Unearned tuition income represents revenue to be recognized
over the term of the courses.
The Company's business maintenance services segment records revenues on a
pro rata basis over the contract term (typically three to nine months).
Statement of Cash Flows
For purposes of the Statement of Cash Flows, cash refers solely to demand
deposits with banks and cash on hand.
Depreciation and Amortization
The Company depreciates and amortizes its property and equipment for
financial statement purposes using the straight-line method over the estimated
useful lives of the property and equipment (useful lives of leases or lives of
leasehold improvements and leased property under capital leases, whichever is
shorter). For income tax purposes, the Company uses accelerated methods of
depreciation.
Amortization of Intangible Assets
Goodwill is being amortized over twenty-five years using the straight-line
method.
Deferred Income Taxes
Deferred income taxes are determined utilizing the liability method
prescribed by FAS 109. This method gives consideration to the future tax
consequences associated with the differences between financial accounting and
tax bases of assets and liabilities.
Earnings Per Share
Earnings per share is computed using the weighted average common shares
outstanding during the year and includes the dilutive effect of common stock
equivalents (options). Fully diluted earnings per share for 1995 is based on the
assumed conversion of preferred stock.
Accounting Changes
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 123, "Accounting for
Stock-Based Compensation." SFAS 123, which is required to be adopted by January
1, 1996, establishes financial accounting and reporting standards for
stock-based employee compensation plans, and establishes accounting standards
for issuance of equity instruments to acquire goods and services from
non-employees.
8
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS 121, which
is required to be adopted by January 1, 1996, establishes accounting standards
for the impairment of long-lived assets and certain intangible assets to be held
and used and for long-lived assets and certain identifiable intangibles to be
disposed of.
The Company does not expect that adoption of SFAS 121 and 123 will have a
material effect on its consolidated financial position, consolidated statement
of income, or liquidity.
2. Segment Reporting
The Company is organized into four operating segments: computer software
training, management training, vocational training and business maintenance
services.
The computer software training segment trains corporate workers and managers
as an authorized training center for Microsoft, Lotus, Borland, WordPerfect,
Aldus and Apple on DOS, Windows and Macintosh platforms.
The management training segment conducts corporate seminars in management
and team development, selling and negotiating, interpersonal communication,
executive development and organizational problem solving.
The Company's vocational training segment develops, markets and teaches
courses that focus upon job-related skills in vocations such as word processing
specialist, computer operator, tractor trailer driver, bartender, phlebotomy
technician and electrocardiography technician. Its clients are individuals who
wish to seek employment, corporations who need to hire these individuals, as
well as other corporations that hire Canterbury on a direct basis to train its
existing employees.
The business maintenance services segment specializes in corporate landscape
maintenance and design.
Selected financial information for each segment, which includes an
allocation of corporate expenses, is as follows:
<TABLE>
<CAPTION>
Income Depreciation
Before Capital &
Six Months Ended 5/31/96 Revenues Taxes Assets Expenditures Amortization
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Computer Software Training $ 5,782,715 $ 551,025 $ 2,925,020 $ 273,579 $ 215,238
Management Training 798,399 349,953 287,851 - 577
Vocational Training/Corporate 1,026,835 (2,472) 20,434,998 - 274,263
Business Maintenance Services 6,565,360 603,424 3,960,628 391,686 262,933
----------- ---------- ----------- ---------- -----------
$14,173,309 $1,501,930 $27,608,497 $ 665,265 $ 753,011
=========== ========== =========== ========== ===========
</TABLE>
9
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
<TABLE>
<CAPTION>
Income Depreciation
Before Capital &
Six Months Ended 5/31/95 Revenues Taxes Assets Expenditures Amortization
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Computer Software Training $ 5,940,183 $ 749,207 $ 3,729,321 $ 303,015 $ 191,075
Management Training 662,938 83,305 443,037 - 192
Vocational Training/Corporate 2,366,568 1,134,086 18,290,182 13,036 217,480
Business Maintenance Services 4,940,824 (139,994) 4,043,443 136,394 241,815
----------- ----------- ----------- ---------- -----------
$13,910,513 $1,826,604 $26,505,983 $ 452,445 $ 650,562
=========== =========== =========== ========== ===========
</TABLE>
3. Discontinued Operation
On November 30, 1995 the Company sold Star Label Products, Inc. and its
wholly owned subsidiary, Smartwork Graphics, which comprised the specialty
printing segment. Star Label was sold to its former owner. The proceeds of the
sale consisted of both cash and notes receivable amounting to $4,000,000. Also
the Company issued to the buyer an aggregate of 350,000 options to purchase the
common stock of Canterbury Corporate Services, Inc. at an exercise price of
$2.00 per share (bid price at date of grant). The said options expire on
November 9, 2000. In the opinion of management, the value assigned to these
options, if any, is not significant.
The results of operations and the gain on the sale of this segment has been
reported as a discontinued operation and the financial statements for the six
months ended May 31, 1995 have been restated to reflect the discontinuation of
the specialty printing segment.
The gain on sale of the discontinued operation for the year ended November
30, 1995 was $1,493,545 net of taxes of $1,309,922.
The following is a summary of the results of operations of the Company's
specialty printing segment:
Six Months ended
May 31, 1995
------------
Revenue $ 1,611,927
Income from operations
(net of taxes of $161,907) 262,399
Cost and expenses for this discontinued segment include approximately $233,000
representing allocated costs from corporate for the six months ended May 31,
1995.
The net assets of discontinued operation were as follows:
May 31, 1995
------------
Current Assets $ 905,027
Current liabilities (459,912)
Property, plant and equipment, net 794,182
Other, net 86,916
----------
Total $1,326,213
==========
10
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. Property and equipment
Property and equipment consists of the following:
May 31, November 30,
1996 1995
------------ ------------
Land $ 725,910 $ 785,910
Buildings and improvements -- 680,171
Equipment 8,047,453 7,351,103
Furniture and fixtures 1,162,300 1,134,866
Leased property under capital
leases and leasehold
improvements 887,361 819,230
------------ ------------
10,823,024 10,771,280
Less: accumulated depreciation
and amortization (6,622,285) (6,424,380)
Reserve on disposition of
assets (220,000) (590,658)
------------ ------------
Net property and equipment $ 3,980,739 $ 3,756,242
============ ============
5. Long-Term Debt
May 31, November 30,
1996 1995
----------- -----------
Long-term obligations consist of:
Mortgages payable $ -- $ 36,299
Term loan 4,668,750 5,706,250
Revolving credit line 2,830,620 3,119,620
Unsecured notes payable, other -- 144,000
Capital lease obligations 608,108 403,811
----------- -----------
8,107,478 9,409,980
Less: Current maturities (2,295,314) (2,837,279)
----------- -----------
$ 5,812,164 $ 6,572,701
=========== ===========
In April, 1995 the Company entered into a permanent restructuring of its
term-loan and revolving credit facilities with its bank. The term-loan
amortization and maturities remained identical to the original agreements. A
principal payment of this term loan was made in a lump sum payment of $2,075,000
in June, 1995. Twelve equal quarterly payments of $518,750 are due thereafter.
Quarterly payments of $518,750 were made in September, 1995, December, 1995,
March, 1996 and June 1996. The interest rate is LIBOR plus 3% or the bank's
prime rate plus 1/2%. The Company has the right to choose which rate is to be
utilized on a periodic basis. The interest rates can be reduced if certain
financial ratios are met in the future. The 90 day LIBOR rate at May 31, 1996
was 5.4375%.
At May 31, 1996 the Company borrowed $2,830,620 under the revolving credit
facility; the unused portion of the line was $669,390. Based on borrowing
limitations as set forth in the borrowing base calculation, the Company repaid
$350,000 in December, 1995, $25,000 in January, 1996 and $14,000 in April, 1996.
11
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The revolving credit line is secured by all accounts receivable, equipment,
furniture and fixtures.
Aggregate maturities on long-term debt for the next five years, exclusive
of obligations under capital leases, are approximately $2,075,000, $4,905,620,
$518,750, $0 and $0 respectively
6. Capital Leases
Capital lease obligations are certain equipment leases which expire in May,
1999. Future payments under capitalized leases together with the present value,
calculated at the respective leases' implicit interest rate of approximately
9.5% to 10.5% at their inception, as of May 31, 1996 are as follows:
Year ending November 30, 1996 $213,594
Year ending November 30, 1997 270,823
Year ending November 30, 1998 131,208
Year ending November 30, 1999 62,005
--------
Total minimum lease payments 677,630
Less amount representing interest (69,522)
--------
Present value of long-term obligations
under capital leases $608,108
========
7. Subsequent Events
On July 1, 1996 the Company acquired the business of ProSoft, LLC of
Charlotte, North Carolina for Canterbury Corporate Services, Inc. restricted
common stock and the opportunity to earn additional restricted common shares
over the next three years based on various levels of increasing profitability.
ProSoft provides computer software training and consulting, both in its own
classrooms and on-site to corporations in the Charlotte area.
Item 2. Management's Discussion of Financial Condition and Results of
Operations
Liquidity and Capital Resources
Working capital at May 31, 1996 was $3,991,338. This level of working
capital is expected to be maintained through Fiscal 1996; however, Landscape
Maintenance causes some seasonality in consolidated cash flows. The spring
season requires that Landscape Maintenance expend funds for labor and materials
in advance of billings as the business gears up for the summer months. The cash
shortfall will reverse itself in the late fall/early winter as the collection of
receivables exceeds the cost of operations.
12
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Two other factors will have a positive impact on consolidated liquidity.
CALC/Canterbury should have a significant positive influence on overall cash
flow for 1996. Strong margins coupled with the fact that receivables turn, on
average, in approximately 40 days, will contribute to a strong working capital
ratio. Also, as the vocational training segment becomes less of a significant
portion of consolidated operations, the very slow receivable turn attributed to
self-paying individuals will have less of a negative impact on overall
liquidity.
Management believes available working capital lines of credit, as well as
the ability to raise money through equity funding will be sufficient to cover
cash flow requirements for the Company for the next 12 months.
Cash flow used in continuing operations for the six months ended May 31,
1996 was $(221,000) a decrease of $891,000 over the same period last year. This
is attributable to the use of working capital to meet the demands of the snow
removal and spring start-up for the business maintenance customers. Also,
increased construction revenue resulted in an increase in business maintenance
segment accounts receivable due to a longer collection cycle caused by retention
and length of projects. Additionally, significant expenditures for staffing and
course development were made in the second quarter for CALC/Canterbury. Gearing
up to train on Windows 95 and other major new software products necessitated the
need to invest for the latter part of Fiscal 1996 and beyond.
From March through June 1996, the Company raised $1,671,386 net of
applicable costs, through private placements of its common stock sold to foreign
investors at prices ranging from $1.41 to $1.50. The equity raised was used for
general working capital needs and to repay bank debt.
The Company believes that the combination of cash provided by operating
activities, as well as the ability to borrow from the unused portion of its
credit line, will enable the Company to meet its liquidity needs in respect to
its current operations for the next 12 months. There was no material commitment
for capital expenditures as of May 31, 1996. Inflation was not a significant
factor in the Company's financial statements.
In 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
and SFAS 123, "Accounting for Stock-Based Compensation." Both of these
statements are required to be adopted by January 1, 1996. The Company does not
expect that adoption of SFAS 121 and 123 will have a material effect on its
consolidated financial position, consolidated statement of income, or liquidity.
For further discussion, see Note 1 of the Notes to Consolidated Financial
Statements.
Results of Operations
Revenues
Revenues for the six months ended May 31, 1996 increased by $263,000 (2%)
to $14,173,000 over the same period last year. This net increase was due to the
significant number of winter storms during the Winter of 1996. Hence, snow and
ice removal revenues increased in the business maintenance services segment by
approximately $1,624,000 over the same period last year.
13
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Offsetting the increase in snow removal revenue was a decrease in
vocational training revenues of approximately $1,040,000. This decrease is the
result of the planned closings and downsizing of many of the Company's
vocational training centers during 1995.
Costs and Expenses
Cost of sales expenses for the six months ended May 31, 1996 increased
$510,000 (7%) over the same period last year. The increase was due to additional
staffing and course development in the computer software training segment.
Selling expense for the three and six months ended May 31, 1996 increased
$148,000 (34%) and $193,000 (23%), respectively, over the same period last year.
This was primarily due to an increase in staffing for the computer software
training and management training segments. This increased staffing was employed
to sell into new markets as well as expand existing markets.
General and administrative expense for the three-month period ended May 31,
1996 increased $236,000 (14%) over the same period last year. This was due
primarily to increased staffing at CALC/Canterbury and increased insurance costs
at Landscape Maintenance Services.
Interest income for the three and six months ended May 31, 1996 increased
$38,000 and $110,000, respectively, over the same period last year. This was due
to note receivable interest income generated by the sale of the discontinued
operation.
Interest expense for the three and six months ended May 31, 1996 deceased
$55,000 and $102,000, respectively, over the same period last year. This was due
to a reduction in principal balances of the Company's term loan and revolving
credit facility.
This quarterly report contains forward looking statements. The actual
results might differ materially from those projected in the forward looking
statements. Additional information concerning factors that could cause actual
results to materially differ from those in forward looking statements is
contained in this and other Canterbury Corporate Services, Inc.'s SEC filings,
including periodic reports under the Securities Exchange Act of 1934, as
amended, copies of which are available upon the request from the Canterbury
investor relations departments.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
14
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CANTERBURY CORPORATE SERVICES, INC.
---------------------------------------------
(Registrant)
By /s/ STANTON M. PIKUS
---------------------------------------------
Stanton M. Pikus
President
(Chief Executive Officer and
duly authorized signer)
By /s/ KEVIN J. McANDREW
---------------------------------------------
Kevin J. McAndrew, C.P.A.
Chief Operating Officer, Executive Vice
President
(Chief Financial Officer and
duly authorized signer)
By /s/ MARC A. ORSIMARSI
---------------------------------------------
Marc A. Orsimarsi. C.P.A.
(Chief Accounting Officer and
duly authorized signer)
July 11, 1996
15
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
<CASH> 879,423
<SECURITIES> 0
<RECEIVABLES> 9,187,695
<ALLOWANCES> 2,452,312
<INVENTORY> 0
<CURRENT-ASSETS> 9,958,375
<PP&E> 11,103,740
<DEPRECIATION> 7,213,000
<TOTAL-ASSETS> 27,608,497
<CURRENT-LIABILITIES> 5,967,037
<BONDS> 0
0
0
<COMMON> 14,546
<OTHER-SE> 15,170,750
<TOTAL-LIABILITY-AND-EQUITY> 27,608,497
<SALES> 0
<TOTAL-REVENUES> 14,173,309
<CGS> 8,183,445
<TOTAL-COSTS> 12,303,406
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 176,312
<INTEREST-EXPENSE> 367,973
<INCOME-PRETAX> 1,501,930
<INCOME-TAX> 584,000
<INCOME-CONTINUING> 917,930
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 917,930
<EPS-PRIMARY> 0.07
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