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:
August 31, 1996 0-15588
CANTERBURY CORPORATE SERVICES, INC.
FORMERLY CANTERBURY EDUCATIONAL 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: 14,969,009 shares.
<PAGE>
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED BALANCE SHEET
--------------------------
[CAPTION]
<TABLE>
ASSETS
- ------
August 31, 1996
(Unaudited) November 30, 1995
--------------- -----------------
<S> <C> <C>
Current Assets:
Cash $ 1,238,429 $ 1,471,702
Accounts receivable net of
allowance for doubtful accounts
of $2,544,000 and $2,276,000 6,943,331 5,281,731
Note receivable 138,856 531,072
Prepaid expenses and
other assets 970,193 782,136
Refundable income taxes - 326,000
Deferred income tax benefit 926,155 794,676
---------- -----------
Total Current Assets 10,216,964 9,187,317
Property and equipment
at cost, net of accumulated
depreciation and amortization
of $7,764,000 and $7,015,000 3,920,747 3,756,242
Goodwill net of accumulated amortization
of $1,297,000 and $886,000 9,029,939 9,440,645
Note receivable 3,945,967 4,028,921
Other assets 525,672 414,484
----------- -----------
Total Assets $27,639,289 $26,827,609
=========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED BALANCE SHEET
[CAPTION]
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
August 31, 1996 November 30,
(Unaudited) 1995
--------------- -------------
<S> <C> <C>
Current Liabilities:
Accounts payable - trade $ 723,574 $ 697,768
Accrued expenses 951,007 1,369,169
Income taxes payable 485,000 132,000
Unearned tuition income 1,006,033 1,186,886
Current portion, long-term debt 2,415,592 2,837,279
------------ ------------
Total Current Liabilities 5,581,206 6,223,102
Long-term debt 5,518,500 6,572,701
Deferred income tax liability 544,000 919,000
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;
14,969,000 and 13,060,000
issued outstanding 14,969 13,060
Additional paid in capital 14,867,150 12,915,730
Retained earnings 1,269,899 68,963
Treasury stock (156,435) (143,435)
------------ ------------
Total Shareholders' Equity 15,995,583 13,112,806
------------ ------------
Total Liabilities and
Shareholders' Equity $ 27,639,289 $ 26,827,609
============ ============
</TABLE>
See Accompanying Notes
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
The following Consolidated Statements of Income for the three-month and
nine-month periods ended August 31, 1996, and August 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>
Three months ended Nine months ended
August 31, August 31,
-------------------------------------------------
(Unaudited) (Unaudited)
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net revenues $7,793,701 $7,119,598 $21,967,010 $21,030,110
Costs and expenses 5,006,788 4,394,979 13,190,233 12,068,426
---------- ---------- ----------- -----------
Gross profit 2,786,913 2,724,619 8,776,777 8,961,684
Selling 631,104 584,502 1,655,752 1,416,389
General and administrative 1,546,640 1,721,779 4,620,572 5,105,939
Provision for
doubtful accounts 91,751 59,700 268,063 173,398
---------- ---------- ----------- ----------
Total operating expenses 2,269,495 2,365,981 6,544,387 6,695,726
Other (income)/expenses
Interest income (92,467) (23,421) (232,104) (50,640)
Interest expense 141,270 194,107 509,243 661,056
Other (9,767) (38,267) (25,061) (84,059)
---------- ---------- ----------- ----------
Income before provision for
income taxes and
discontinue operation 478,382 226,219 1,980,312 1,739,601
Provision for income taxes 188,000 85,746 772,000 660,896
---------- ---------- ----------- -----------
Income from continuing
operations 290,382 140,473 1,208,312 1,078,705
Discontinued operation
Income from discontinued operation
less applicable income taxes of
$1,254 and $281,104 - 2,047 - 458,643
---------- ---------- ----------- -----------
Net income $ 290,382 $ 142,520 $ 1,208,312 $ 1,537,348
========== ========== =========== ===========
Net income per common share
and common share equivalents:
Primary:
Income from continuing
operations .02 .01 .09 .09
Discontinued operation - - - .04
---------- ---------- ----------- -----------
Net income per share $ .02 $ .01 $ .09 $ .13
========== ========== =========== ===========
Fully diluted:
Income from continuing
operations .01 .08
Discontinued operation - .04
---------- -----------
Net income per share $ .01 $ .12
========== ===========
Common and common share
equivalents (weighted average):
Primary 14,947,000 12,805,100 14,277,700 12,323,700
========== ========== =========== ===========
Fully diluted 13,491,600 13,010,200
========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTHS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
August 31, August 31,
1996 1995
---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $19,856,494 $20,737,965
Cash paid to suppliers and
employees (19,572,459) (18,956,227)
Interest received 232,104 50,640
Interest paid (509,243) (661,056)
----------- -----------
Net cash provided by continuing
operating activities $ 6,896 $ 1,171,322
Cash flows from investing activities:
Capital expenditures (913,916) (461,961)
Collection on notes
receivable 475,170 -
----------- -----------
Net cash used in investing
activities (438,746) (461,961)
Cash flows from financing activities:
Principal payments on long-term debt (377,783) (146,020)
Proceeds from revolving
credit facility 425,000 -
Repayment of revolving
credit facility (389,000) (500,000)
Proceeds from long-term debt 422,145 352,773
Proceeds from exercise of stock
options and warrants 11,150 26,250
Repayment on term loan (1,556,250) (2,075,000)
Payment of dividends on
preferred stock (7,376) (27,869)
Purchase of treasury stock (13,000) (61,904)
Proceeds from issuance of
common stock, net 1,683,691 2,151,943
----------- -----------
Net cash provided by/(used in)
financing activities 198,577 (279,827)
----------- -----------
Net cash provided by
discontinued operation - 106,500
Net increase/(decrease) in cash (233,273) 590,034
Cash at beginning of period 1,471,702 1,384,030
----------- -----------
Cash at end of period $ 1,238,429 $ 1,974,064
=========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTHS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
August 31, August 31,
1996 1995
---------- ----------
<S> <C> <C> <C> <C>
Reconciliation of income from
continuing operations to net cash
provided by continuing
operating activities:
Net income $1,208,312 $1,078,705
Adjustments to reconcile
to net cash provided by operating
activities:
Depreciation and amortization 1,160,117 982,676
Provision for doubtful accounts 268,063 188,998
Deferred income tax benefit (506,479) 615,609
Change in operating assets
and liabilities:
Increase in accounts receivable (1,929,663) (388,442)
Increase in prepaid expenses
and refundable income taxes 137,943 201,368
Increase in other assets (111,188) (121,111)
Increase(decrease) in
accounts payable 25,806 (661,980)
Decrease in accrued expenses (418,162) (687,765)
Decrease in unearned
tuition income (180,853) (361,861)
Increase in income
taxes payable 353,000 325,125
---------- ----------
Total adjustments (1,201,416) 92,617
---------- ----------
Net cash provided by continuing
operating activities $ 6,896 $1,171,322
========== ==========
</TABLE>
See Accompanying Notes
<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
August 31, 1996, and revenues and expenses for the nine months ended August
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.
<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.
<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>
Income Depreciation
Before Capital &
Nine Months Ended 8/31/96 Revenues Taxes Assets Expenditures Amortization
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Computer Software Training $ 8,760,213 $ 698,931 $ 3,157,608 $ 475,236 $ 326,882
Management Training 1,291,579 467,911 254,419 - 867
Vocational Training/Corporate 1,256,921 127,464 20,348,151 - 396,886
Business Maintenance Services 10,658,297 686,006 3,879,111 438,680 435,482
----------- ---------- ----------- ---------- -----------
$21,967,010 $1,980,312 $27,639,289 $ 913,916 $ 1,160,117
=========== ========== =========== ========== ===========
</TABLE>
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
<TABLE> Income Depreciation
Before Capital &
Nine Months Ended 8/31/95 Revenues Taxes Assets Expenditures Amortization
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Computer Software Training $ 8,774,344 $1,196,420 $ 3,770,382 $ 277,214 $ 291,395
Management Training 1,155,976 141,522 401,333 - 674
Vocational Training/Corporate 3,171,321 219,040 16,822,741 15,617 325,166
Business Maintenance Services 7,928,469 182,619 4,155,490 169,130 365,441
----------- ---------- ----------- ---------- ----------
$21,030,110 $1,739,601 $25,149,946 $ 461,961 $ 982,676
=========== ========== =========== ========== ==========
</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 nine
months ended August 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:
<TABLE> Nine Months ended
August 31, 1995
-----------------
<S> <C>
Revenue $ 2,533,123
Income from operations
(net of taxes of $281,104) 458,643
</TABLE>
Cost and expenses for this discontinued segment include approximately $310,000
representing allocated costs from corporate for the nine months ended August
31, 1995.
The net assets of discontinued operation were as follows:
<TABLE> August 31, 1995
---------------
<S> <C>
Current assets $ 511,250
Current liabilities (237,430)
Property, plant and equipment, net 834,720
Other, net 256,362
----------
Total $1,364,902
==========
</TABLE>
<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:
<TABLE> August 31, 1996 November 30, 1996
--------------- -----------------
<S> <C> <C>
Land $ 725,910 $ 785,910
Buildings and improvements - 680,171
Equipment 8,224,523 7,351,103
Furniture and fixtures 1,179,571 1,134,866
Leased property under capital
leases and leasehold improvements 941,674 819,230
----------- -----------
11,071,678 10,771,280
Less: accumulated depreciation and amortization (6,930,931) (6,424,380)
Reserve on disposition of assets (220,000) (590,658)
----------- -----------
Net property and equipment $ 3,920,74 $ 3,756,242
=========== ===========
5. Long-Term Debt
--------------
August 31, 1996 November 30, 1995
--------------- -----------------
Long-term obligations consist of:
Mortgages payable $ - $ 36,299
Term loan 4,150,000 5,706,250
Revolving credit line 3,155,620 3,119,620
Unsecured notes payable, other - 144,000
Capital lease obligations 628,472 403,811
---------- ----------
7,934,092 9,409,980
Less: Current maturities (2,415,592) (2,837,279)
---------- ----------
$5,518,500 $6,572,701
</TABLE> ========== ==========
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 December, 1995, March,
1996, June 1996 and September, 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 30 day LIBOR rate at
August 31, 1996 was 5.4375%.
At August 31, 1996 the Company borrowed $3,155,620 under the revolving credit
facility; the unused portion of the line was $344,380. 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.
<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 August 31, 1996
are as follows:
<TABLE>
<S> <C>
Year ending November 30, 1996 $117,463
Year ending November 30, 1997 313,484
Year ending November 30, 1998 169,567
Year ending November 30, 1999 117,141
--------
Total minimum lease payments 717,655
Less amount representing interest (89,183)
--------
Present value of long-term obligations
under capital leases $628,472
========
</TABLE>
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 August 31, 1996 was $4,637,700. 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.
<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 from continuing operations for the nine months ended August 31, 1996
was $7,000 a decrease of $1,171,000 over the same period last year. This was
attributable to increased construction revenue resulting 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 $1,683,000 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 August 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 nine months ended August 31, 1996 increased by $937,000 (4%)
to $21,967,000 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. Also, maintenance
<PAGE>
FORM 10-Q
CANTERBURY CORPORATE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
service contracts have increased by approximately $700,000 over 1995 due to
increased referred business.
Offsetting the increase in snow removal revenue was a decrease in
vocational training revenues of approximately $1,914,000. 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 nine months ended August 31, 1996
increased $1,122,000 (9%) over the same period last year. The increase
was due to additional staffing and course development in the computer
software training segment, as well as the additional costs associated with
performing the increased business segment revenue.
Selling expense for the six and nine months ended August 31, 1996
increased $47,000 (8%) and $239,000 (17%), 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 and nine month period ended
August 31, 1996 increased $175,000 (10%) and $486,000 (10%) over the same
period last year. This was due primarily to reduced administrative staffing
and more efficient support as well as a reduction in corporate overhead.
Interest income for the three and nine months ended August 31, 1996
increased $69,000 and $182,000, 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 six and nine months ended August 31, 1996 decreased
$53,000 and $152,000, respectively, over the same period last year. This was
due to a reduction in principal balances of the Company's term loan 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 department.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
<TABLE>
<S> <C>
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
</TABLE>
<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)
October 15, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000794927
<NAME> CANTERBURY CORPORATE SERVICES, INC.
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> AUG-31-1996
<PERIOD-TYPE> 9-MOS
<CASH> 1,238,429
<SECURITIES> 0
<RECEIVABLES> 9,487,567
<ALLOWANCES> 2,544,236
<INVENTORY> 0
<CURRENT-ASSETS> 10,216,964
<PP&E> 11,071,678
<DEPRECIATION> 7,150,931
<TOTAL-ASSETS> 27,639,289
<CURRENT-LIABILITIES> 5,581,206
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,995,583
<TOTAL-LIABILITY-AND-EQUITY> 27,639,289
<SALES> 21,967,010
<TOTAL-REVENUES> 21,967,010
<CGS> 13,190,233
<TOTAL-COSTS> 19,466,557
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 268,063
<INTEREST-EXPENSE> 509,243
<INCOME-PRETAX> 1,980,312
<INCOME-TAX> 772,000
<INCOME-CONTINUING> 1,208,312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,208,312
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.00
</TABLE>
