SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(x) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1994
( ) Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission file number 0-15525
CAPITAL ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1055327
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7175 WEST JEFFERSON AVENUE, LAKEWOOD, COLORADO 80235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 980-1000
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. Yes X No
The number of shares outstanding of the Registrant's $.008 par value common
stock at September 30, 1994, was 10,029,747.
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - August 31, 1994
and May 31, 1994 3
Consolidated Statements of Operations - Three Months
Ended August 31, 1994 and 1993 4
Consolidated Statements of Cash Flows - Three
Months Ended August 31, 1994 and 1993 5
Notes to Consolidated Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Exhibit Index 16
Signature 18
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ASSETS
AUGUST 31, MAY 31,
1994 1994
---------- -------
Cash, including restricted funds of
$971 and $1,567, respectively $ 1,583 $ 2,072
Accounts receivable, net of allowance for doubtful
accounts of $264 and $343, respectively 942 1,375
Income tax refunds receivable 428 250
Equipment held for sale or re-lease 5,249 5,242
Residual values and other receivables arising from
equipment under lease sold to private investors 5,477 5,098
Net investment in direct finance leases 15,992 18,106
Leased equipment, net 15,622 15,615
Investments in affiliated limited partnerships 11,489 12,178
Other 5,164 5,779
Notes receivable arising from sale-leaseback
transactions 29,665 32,417
Discounted lease rentals assigned to lenders
arising from equipment sale transactions 92,264 111,593
-------- --------
$183,875 $209,725
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving Credit Facility $ 101 $ 49
Accounts payable and other liabilities 8,412 8,187
Term Loan 16,365 18,718
Deferred income taxes 753 830
Obligations under capital leases arising from
sale-leaseback transactions 29,604 32,337
Discounted lease rentals 107,166 128,505
-------- --------
162,401 188,626
-------- --------
Stockholders' equity:
Common stock 62 60
Additional paid-in capital 16,899 16,689
Retained earnings 4,564 4,401
Treasury stock, at cost (51) (51)
-------- --------
Total stockholders' equity 21,474 21,099
-------- --------
$183,875 $209,725
======== ========
The accompanying notes are an integral part
of these consolidated financial statements.
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED
AUGUST 31, AUGUST 31,
1994 1993
---------- ----------
Revenue:
Equipment sales to affiliated limited partnerships $ 8,706 $ 27,643
Other equipment sales 3,218 15,643
Leasing 2,098 4,229
Interest 3,364 3,511
Other 1,383 1,316
--------- ----------
Total revenue 18,769 52,342
--------- ----------
Costs and expenses:
Equipment sales 10,502 40,847
Leasing 927 1,731
Operating and other expenses 2,865 3,082
Provision for losses 200 915
Interest:
Non-recourse debt 3,716 4,743
Recourse debt 288 555
---------- ----------
Total costs and expenses 18,498 51,873
---------- ----------
Net income before income taxes 271 469
Income tax expense 108 188
---------- ----------
Net income $ 163 $ 281
========== ==========
Earnings per common and common equivalent share $ .02 $ .03
========== ==========
Weighted average number of common and
dilutive common equivalent shares outstanding
used in computing earnings per share 10,820,000 11,053,000
========== ==========
The accompanying notes are an integral part
of these consolidated financial statements.
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
AUGUST 31, AUGUST 31,
1994 1993
---------- ----------
(Note 3)
Net cash provided by operating activities $ 2,971 $ 11,595
--------- ---------
Cash flows from investing activities:
Equipment purchased for leasing (1,462) (985)
Net receipts from affiliated public income
funds ("PIFs") 625 695
Sale of a portion of the investment in
Corporate Express, Inc. 263 -
--------- ---------
Net cash used for investing activities (574) (290)
--------- ---------
Cash flows from financing activities:
Proceeds from discounting of lease rentals 1,093 2,478
Principal payments on discounted lease rentals (1,890) (5,982)
Proceeds from sales of common stock 212 -
Net payments on recourse debt (2,301) (8,085)
--------- ---------
Net cash used for financing activities (2,886) (11,589)
--------- ---------
Net decrease in cash (489) (284)
Cash at beginning of period 2,072 3,210
--------- ---------
Cash at end of period $ 1,583 $ 2,926
========= =========
Supplemental schedule of cash flow information:
Recourse interest paid $ 296 $ 584
Non-recourse interest paid 334 1,139
Income taxes paid 200 -
Income tax refunds received 15 1,614
Supplemental schedule of non-cash investing and
financing activities:
Discounted lease rentals associated with equipment
sold to third-party investors 713 18,734
Assumption of discounted lease rentals in lease
acquisitions 18 6,661
Increase in other receivables relating to equipment
sale transactions 1,434 1,460
Defeasance of discounted lease rentals related
to bankrupt lessee 518 -
The accompanying notes are an integral part
of these consolidated financial statements.
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and disclosures required by generally accepted accounting
principles for annual financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. For further
information, please refer to the financial statements of Capital
Associates, Inc. (the "Company"), and the related notes, included within
the Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1994 (the "1994 Form 10-K"), previously filed with the Securities and
Exchange Commission.
The balance sheet at May 31, 1994 has been derived from the audited
financial statements included in the Company's 1994 Form 10-K.
Certain reclassifications have been made in the 1994 financial statements
to conform to the 1995 presentation.
2. Debt Facility
The Company's recourse operating credit facility ("Debt Facility") consists
of two facilities, a revolving credit facility (the "Revolving Credit
Facility") and a term facility (the "Term Loan"). The availability under
the Revolving Credit Facility is equal to (1) the lesser of $10.75 million
or (2) the Borrowing Base amount, reduced by the outstanding indebtedness
under the Revolving Credit Facility. As of August 31, 1994, the Borrowing
Base amount was approximately $3.9 million, and the outstanding
indebtedness under the Revolving Credit Facility was $.1 million, leaving
approximately $3.8 million of availability under the Revolving Credit
Facility to fund the Company's working capital needs.
The outstanding principal balance of the Term Loan as of August 31, 1994
was $16,365,000. Principal reductions under the Term Loan are scheduled to
occur as follows (in thousands):
Nine months ending May 31, 1995 $ 12,430
Balance remaining at May 31, 1995 (the scheduled
termination date of the Debt Facility) 3,935
--------
$ 16,365
========
As of the time these financial statements were prepared, there were no
defaults existing under the Debt Facility.
The Revolving Credit Facility bears interest at the Mellon Bank, N.A. Prime
Rate plus 1%, payable monthly, in arrears. On August 31, 1994, Mellon's
Prime Rate was 7.75%. The Term Loan bears interest at a fixed rate of
6.0%, payable monthly, in arrears.
3. Consolidated Statements of Cash Flow
In the Consolidated Statements of Cash Flows for the three months ended
August 31, 1994 and 1993, the principal portion of receipts of direct
financing leases and proceeds from sales of equipment have been classified
as "Cash flows from operating activities". Previously, such amounts were
reported as "Cash flows from investing activities".
The effect of the reclassifications on previously issued financial
statements is as follows:
Three months ended
August 31, 1993
Previously Restated
Reported Amounts
---------- --------
Net cash provided by operating activities $ 3,964 $ 11,595
Net cash provided by (used for) investing activities 7,341 (290)
Net cash used for financing activities (11,589) (11,589)
-------- --------
Net decrease in cash and
cash equivalents $ (284) $ (284)
======== ========
I. Results of Operations
Presented below are schedules (prepared solely to facilitate the discussion
of results of operations that follows) showing condensed income statement
categories and analyses of changes in those condensed categories derived
from the Consolidated Statements of Operations.
Condensed Consolidated
Statements of Operations The effect on
for the Three Months net income of
Ended August 31, changes between
1994 1993 periods
-------- -------- ---------------
(in thousands)
Equipment sales margin $ 1,422 $ 2,439 $ (1,017)
Leasing margin (net of
interest expense on
discounted lease rentals) 819 1,266 (447)
Other income 1,383 1,316 67
Operating and other expenses (2,865) (3,082) 217
Provision for losses (200) (915) 715
Interest expense on recourse debt (288) (555) 267
Income taxes (108) (188) 80
-------- -------- --------
Net income $ 163 $ 281 $ (118)
======== ======== ========
Equipment Sales
Equipment sales revenue (and related equipment sales margin) consists of
the following (in thousands):
<TABLE>
<CAPTION> Three Months Ended August 31,
1994 1993 Increase
(Decrease)
Revenue Margin Revenue Margin Revenue Margin
------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Transactions during initial lease term:
Equipment under lease sold to PIFs $ 8,706 $ 221 $ 27,643 $ 733
Equipment under lease sold to
private investors 1,797 187 13,079 419
------- ------- -------- ------
10,503 408 40,722 1,152 $(30,219) $ (744)
------- ------- -------- ------ -------- -------
Transactions subsequent to initial lease
termination:
Sales of off-lease equipment 406 259 1,413 501
Sales-type leases 478 218 744 379
Excess collections (cash collections in excess
of the associated residual value from equipment
under lease sold to private investors) 537 537 407 407
------- ------- -------- ------
1,421 1,014 2,564 1,287 (1,143) (273)
Provision for losses (200) (915) 715
------- ------- -------- ------ -------- -------
Remarketing sales results in excess of
provision for losses 1,421 814 2,564 372 (1,143) 442
------- ------- -------- ------ -------- -------
Total equipment sales $11,924 $ 1,222 $43,286 $1,524 $(31,362) $ (302)
======= ======= ======= ====== ======== =======
</TABLE>
Provision for losses result from the realization of less than the carrying
value of equipment (which is typically not known until remarketing
subsequent to the initial lease termination has occurred). The remarketing
of equipment for an amount greater than its book value is reported as
equipment sales margin or as leasing margin. As shown above, the
realizations from sales exceeded the provision for losses for the first
fiscal quarter 1995, even without considering realizations from remarketing
activities recorded as leasing margin, as discussed below.
During the first fiscal quarter of fiscal 1995, the Company sold
significantly less transactions during their initial lease term to the
Company sponsored PIFs or to private investors. As shown in the table
above, the result was a comparative decrease in sales margin of $744,000.
However, as shown in the table above, during the same fiscal quarter, the
Company realized $442,000 more on remarketing of the lease portfolio.
The changes in the Company's lease portfolio during the three months ended
August 31, 1994 consisted of the following:
<TABLE>
<CAPTION> Discounted lease
Direct finance rentals, net of
leases, operating discounted lease
leases, net and rentals assigned Net investment
equipment held to lenders arising in leased
for sale or re-lease from equipment sales equipment
-------------------- -------------------- --------------
<S> <C> <C> <C>
As of May 31, 1994 $ 38,963 $ (16,912) $ 22,051
Leases added to the Company's
lease portfolio (and sold
in September 1994) 2,159 (380) 1,779
Provision for losses (200) - (200
Change as a result of
portfolio run-off (4,059) 2,390 (1,669)
--------- --------- ---------
As of August 31, 1994 $ 36,863 $ (14,902) $ 21,961
========= ========= =========
</TABLE>
A significant portion of the Company's net assets consists of aircraft. To
reduce the concentration of aircraft in its portfolio, the Company intends
to sell one or more aircraft. The following table summarizes the Company's
investment in aircraft as of August 31, 1994 and May 31, 1994 (in
thousands):
August 31, May 31,
1994 1994
---------- -------
Leased equipment, net of accumulated depreciation $ 7,912 $ 8,017
Associated non-recourse debt (3,070) (3,077)
-------- --------
Investment in aircraft on-lease 4,842 4,940
Equipment held for sale or re-lease 5,000 5,000
-------- --------
9,842 9,940
Residual values and other receivables arising from
equipment under lease sold to private investors 449 518
-------- --------
Net investment in aircraft $ 10,291 $ 10,458
======== ========
Approximately $2.7 million (net of non-recourse debt of $2.3 million) of
the Company's current $4.8 million of net investment in aircraft on-lease
is represented by one jet aircraft. The lease on this aircraft expires
December 31, 1996. On September 30, 1994, the Company sold the aircraft
for $5 million, which was approximately equal to it's carrying value.
Another jet aircraft having a net book value of $5 million is included in
Equipment Held for Sale or Re-Lease. The Company is attempting to remarket
the aircraft through re-lease or sale.
Equipment Sales to PIFs
Equipment sales to PIFs significantly decreased during the three months
ended August 31, 1994, as compared to the similar period in fiscal 1994,
principally because fewer leases were identified and closed that satisfied
the PIF's underwriting standards. During the first quarter fiscal 1995,
the Company appointed a National Sales Manager to enhance its lease
origination efforts.
Under applicable regulatory guidelines, the Company is entitled to receive
various fees and distributions in connection with its activities related to
its sponsored PIFs. One such fee, an acquisition fee payable upon sale of
equipment under lease to a PIF, is, in general, subject to a regulatory
maximum amount over the term of a PIF. Acquisition fees payable to the
Company reached the regulatory maximum for one PIF during fiscal year 1992
and, for a second PIF in the first fiscal quarter 1994. These
circumstances will have an impact on reported equipment sales margins in
future periods, but are not expected to impact total PIF-related income
(after costs of equipment sales) in future periods because other allowable
fees and distributions are expected to increase during such periods.
Equipment Sales to Private Investors
Equipment sales to private investors for the first fiscal quarter 1994
included sales of approximately $12.7 million of "seasoned" leases (i.e.,
previously originated leases held in the Company's portfolio). As the
Company's lease portfolio has declined in size (sometimes referred to
herein as "portfolio run-off"), fewer seasoned leases have been available
for sale. During the first fiscal quarter 1995, equipment sales to private
investors consisted primarily of new leases originated for sale to private
investors, and the Company sold no material amount of seasoned leases to
private investors.
Remarketing Sales
Margins from remarketing sales (i.e., sales occurring after the initial
lease term) are affected by the amount of equipment leases that matures in
a particular quarter. In general, as the size of the Company's lease
portfolio has declined in size, fewer leases have matured and less
equipment has been available for remarketing each quarter. As a result,
remarketing revenue declined during the first fiscal quarter 1995 compared
to the comparable period in fiscal 1994. However, as shown above, the
margin from remarketing sales increased during first fiscal quarter 1995.
The Company's ability to remarket additional amounts of equipment and
realize a greater amount of remarketing revenue in future periods is
dependent on adding additional leases to its portfolio. Accordingly, the
Company is pursuing financing opportunities to obtain funds to add to its
own lease portfolio. See the discussion of financing possibilities under
"Business Plan" below.
Provision for Losses
Residual values are established equal to the estimated value to be received
from the equipment following termination of the lease. In estimating such
values, the Company considers all relevant facts regarding the equipment
and the lessee, including, for example, the likelihood that the lessee will
re-lease the equipment. The Company performs ongoing quarterly assessments
of its assets to identify other than temporary losses in value.
During the first fiscal quarter 1995, a lessee returned an IBM mainframe
computer to the Company. The Company had previously expected to realize
the carrying value of this equipment through additional month-to-month
rents and proceeds from the sale of the equipment. However, the lessee
stopped paying rent after the date of the filing of the 1994 Form 10-K and,
as a result, the month-to-month rents actually collected and the value of
the equipment now expected to be recovered from sale, are less than
initially anticipated. The first fiscal quarter 1995's provision for loss
principally relates to this item of equipment.
During the first fiscal quarter 1994, a greater than expected amount of
equipment under lease that the Company expected to be released was,
instead, terminated and returned to the Company. The amounts recovered
(and expected to be recovered) from the sale of such equipment were less
than the previously estimated residual value, and accordingly, an
appropriate provision for loss was recorded during first fiscal quarter
1994. The Company also recorded a provision for loss of $180,000 for the
possible sale of one of its aircraft during the first fiscal quarter 1994.
LEASING MARGIN
Leasing margin consists of the following (in thousands):
Three Months Ended
August 31,
1994 1993
---- ----
Leasing revenue $ 2,098 $ 4,229
Leasing costs and expenses (927) (1,731)
Net interest expense on related discounted
lease rentals (352) (1,232)
------- -------
Leasing margin $ 819 $ 1,266
======= =======
Leasing margin ratio 39% 30%
== ==
Leasing margin has declined and is expected to decline further as a result
of portfolio run-off. See the discussion under "Business Plan" below. The
leasing margin ratio has increased as a result of remarketing activities,
which include the rental proceeds from renewing, extending or re-leasing
equipment before and after the end of the initial lease term.
OTHER INCOME
Other Income consists of the following (in thousands):
Three Months Ended
August 31,
1994 1993
---- ----
Fees and distributions from the
Company-sponsored PIFs $ 777 $ 790
Sale of a portion of the investment
in Corporate Express, Inc. stock 260 -
Interest on income tax refunds 178 431
Other, principally recovery of sales
and property tax amounts previously expensed 168 95
------ ------
$1,383 $1,316
====== ======
In August 1994, the Internal Revenue Service ("IRS") notified the Company
that it had completed its audit of the Company's fiscal year 1992 federal
income tax return and had approved an income tax refund, previously
recorded as "Income tax refunds receivable". The Company recorded the
interest on the refund, in the amount of $178,000, as a receivable at
August 31, 1994.
OPERATING AND OTHER EXPENSES
Operating and other expenses decreased $.2 million (7%) for the first
fiscal quarter 1995 as compared to the comparable period in fiscal year
1994. The decrease principally reflects a reduction in salaries and wages,
accomplished, in part, through a reduction-in-force of 29 full-time
employees during June 1994. As of August 31, 1994, the Company had 86
full-time employees compared to 118 full-time employees at August 31, 1993.
As the portfolio has run-off, the Company has decreased the size of its
back office staff and increased the number of revenue producing lease
origination and private equity syndication personnel.
INTEREST INCOME AND EXPENSE
Interest revenue arises when equipment financed with non-recourse debt is
sold to investors. The Consolidated Statements of Operations reflect an
equal amount of interest expense. The decline in interest expense on non-
recourse debt (net of the associated interest revenue) is due to portfolio
run-off.
The decrease in interest expense on recourse debt reflects the decline in
the outstanding balance of the Debt Facility.
II. Liquidity and Capital Resources
The Company's activities are principally funded by the Revolving Credit
Facility, rents, proceeds from sales of on-lease equipment, non-recourse
debt, fees and distributions from its PIFs and sales or re-leases of
equipment during and after the expiration of the initial lease terms and
other cash receipts.
Currently, only one PIF, Capital Preferred Yield Fund-III, ("CPYF-III") is
selling units to the public. Through August 31, 1994 CPYF III sold $7.1
million of units ($6.2 million during the first fiscal quarter 1995). Four
of the Company's PIFs including CPYF-III are using a portion of their
available cash to purchase additional equipment from the Company. Two of
the Company's PIFs are in the liquidation stage and are no longer
purchasing equipment. The cash held by the PIFs available for purchase of
equipment from the Company is:
August 31, 1994 August 31, 1993
Available cash $ 8,962 $ 13,538
Cash committed for equipment purchases (3,132) (9,312)
-------- --------
Uncommitted cash $ 5,830 $ 4,226
======== ========
Management believes the Company's ability to generate cash from operations
is sufficient to fund operations, particularly when operations are viewed
as including investing and financing activities. In this context, it
should be noted that through August 31, 1994, the Company reduced its
aggregate outstanding indebtedness under its Debt Facility by $2.3 million
since May 31, 1994 and has improved its recourse debt-to-equity ratio as
follows:
August 31, 1994 May 31, 1994
Recourse debt outstanding under the
Debt Facility $ 16,466 $ 18,767
Stockholders' equity $ 21,474 $ 21,099
Recourse debt/stockholders' equity .77 to 1 .89 to 1
III. Business Plan
As discussed in the 1994 Form 10-K, during fiscal year 1991, the Company
agreed with its Lenders to begin repaying its Debt Facility. Since that
time, the Company has used substantially all of its cash flow after payment
of operating expenses to repay its Debt Facility. As a result of making
these repayments, the Company has not had the funds necessary to
significantly add to its leasing portfolio. Because of portfolio run-off,
the Company's leasing portfolio and related revenue have declined since
1991. The Debt Facility provides a limited amount of funds to the Company
to invest in new leases. However, this level of funds is not sufficient to
maintain the current portfolio and, accordingly, the current level of
profitability may not be achievable in the future. In order to maintain
the current level of profitability the Company must, among other things,
(1) increase lease originations with a resultant increase in equipment
sales margins from such new lease originations (2) reduce operating costs
and (3) develop new sources of revenue related to the Company's core
business.
The Company's current business plan is designed to maintain profitable
operations. The amount of longer-term future profits, if any, will largely
depend on the amount of new capital available to the Company. Such capital
may be in a variety of forms including new recourse debt, additional equity
(which could include a sale of the Company, possibly coupled with an
infusion of new funds into the Company from the purchaser), securitized
financing vehicles or equity provided from private purchases of equipment
originated by the Company or strategic alliances/combinations with other
leasing companies. The Company is involved in discussions with several
commercial lenders to provide a new recourse credit facility with the
objective of replacing the present Debt Facility and obtaining additional
recourse debt financing for operating purposes and to increase the size of
the lease portfolio under management. No assurance can be given, however,
that the Company will be successful in operating profitably, developing new
sources of revenue or in obtaining access to new financing.
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
CAII and CIS filed a Settlement Agreement with the bankruptcy court on
or about August 31, 1994. Pursuant to the Agreement, CAII has agreed
to pay CIS $220,000 in exchange for (i) dismissal of all claims
pending between the parties in the bankruptcy court and (ii) execution
of mutual general releases. The bankruptcy court approved the
agreement in September 1994.
There have been no material developments (other than that discussed
above regarding the CIS litigation) during first fiscal quarter 1995
with respect to the legal proceedings described in the Company's
fiscal 1994 Form 10-K.
Item 6. Exhibits and Reports on Form 8-K
a. Included as exhibits are the items listed in the Exhibit Index.
The Company will furnish to its shareholders a copy of any of the
exhibits listed therein upon payment of $.25 per page to cover the
costs to the Company of furnishing the exhibits.
b. There were no reports on Form 8-K filed during the three months
ended August 31, 1994.
Item No. Exhibit Index
11A Computation of Primary Earnings Per Share. A computation of fully diluted
earnings per share is not presented as it is the same as the computation of
primary earnings per share.
Exhibit 11A
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY EARNINGS PER SHARE
THREE MONTHS ENDED
August 31, August 31,
1994 1993
---------- ----------
Shares outstanding at beginning of period 9,759,000 9,654,000
Shares issued during the period
(weighted average) 298,000 -
Shares earned, but not issued under the
CEO Bonus Plan - 50,000
Dilutive shares contingently issuable
upon exercise of options
(weighted average) 2,045,000 2,310,000
Less shares assumed to have been
purchased for treasury with assumed
proceeds from exercise of stock options
(weighted average) (1,282,000) (961,000)
---------- ----------
Total shares, primary 10,820,000 11,053,000
========== ==========
Net income $ 163,000 $ 281,000
========== ==========
Income per common and common equivalent
share, primary $ 0.02 $ 0.03
========== ==========
CAPITAL ASSOCIATES INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL ASSOCIATES, INC.
Registrant
Date: October 6, 1994 By: /s/Anthony M. DiPaolo
-----------------------------
Anthony M. DiPaolo,
Senior Vice-President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 1,583
<SECURITIES> 0
<RECEIVABLES> 1,370
<ALLOWANCES> 264
<INVENTORY> 5,249
<CURRENT-ASSETS> 0
<PP&E> 15,622
<DEPRECIATION> 0
<TOTAL-ASSETS> 183,875
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 62
0
0
<OTHER-SE> 21,037
<TOTAL-LIABILITY-AND-EQUITY> 183,875
<SALES> 11,924
<TOTAL-REVENUES> 18,769
<CGS> 10,502
<TOTAL-COSTS> 11,429
<OTHER-EXPENSES> 2,865
<LOSS-PROVISION> 200
<INTEREST-EXPENSE> 4,004
<INCOME-PRETAX> 271
<INCOME-TAX> 108
<INCOME-CONTINUING> 163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
