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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1996, or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition period from _______ to _______
Commission file number 1-10263
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T/SF COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 73-1341805
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2407 East Skelly Drive, Tulsa, Oklahoma 74105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 747-2600
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N/A
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(Former Name of Registrant)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.10
Par Value Per Share.
At May 14, 1996, there were 3,351,501 shares of the registrant's Common Stock
outstanding.
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
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T/SF COMMUNICATIONS CORPORATION
INDEX
Page No.
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PART I Financial Information
Item 1
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Consolidated Balance Sheets - March 31, 1996
(unaudited) and December 31, 1995 4-5
Consolidated Statements of Operations -
Three Months Ended March 31, 1996 and 1995
(unaudited) 6
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995
(unaudited) 7-8
Notes to Consolidated Financial Statements 9
Item 2
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Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10-11
PART II Other Information
Item 6
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Exhibits and Reports on Form 8-K 11
2
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PART I
Item 1. Financial Information
3
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 14,795 $ 13,383
Short-term investments 1,000 1,000
Accounts receivable, less reserve for doubtful accounts
of $560 in 1996 and $516 in 1995 9,187 8,209
Inventories 184 181
Deferred tax assets 706 494
Current contract receivable and other current assets 3,311 3,050
Refundable income taxes 2,644 3,239
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Total current assets 31,827 29,556
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Contract and Notes Receivable and Investments 2,636 2,721
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Property, Plant and Equipment, at cost:
Exposition equipment 3,033 2,987
Data processing and office furniture and equipment 6,985 6,653
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10,018 9,640
Less - accumulated depreciation 5,301 4,739
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4,717 4,901
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Deferred Tax Assets 1,456 1,456
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Intangibles and Other Assets, net 14,658 14,810
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$ 55,294 $ 53,444
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,887 $ 4,200
Accrued liabilities 4,973 5,509
Deferred revenue 4,831 3,255
Current portion of long-term debt 1,261 1,266
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Total current liabilities 15,952 14,230
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Long-Term Debt 4,090 4,529
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Deferred Contract Liabilities and Credits 2,032 2,199
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Stockholders' Equity, per accompanying statement:
Preferred stock, $10 par value, 1,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.10 par value, 10,000 shares authorized,
3,351 and 3,349 shares issued and outstanding 332 332
Additional paid-in capital 13,503 13,475
Retained earnings 19,385 18,679
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Total stockholders' equity 33,220 32,486
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$ 55,294 $ 53,444
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
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(Unaudited)
<S> <C> <C>
Revenues:
Operating revenues $ 13,684 $ 13,773
Interest income and other 420 240
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14,104 14,013
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Costs and Expenses:
Operating costs 8,738 9,108
General and administrative 3,147 2,932
Interest 151 192
Depreciation and amortization 884 911
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12,920 13,143
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Income before income taxes 1,184 870
Provision for income taxes (478) (420)
Minority interest in consolidated subsidiaries - (132)
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Income from continuing operations 706 318
Discontinued operations, net - (22)
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Net income $ 706 $ 296
========= =========
Earnings per common and
common equivalent share:
Continuing operations $ 0.20 $ 0.08
Discontinued operations - -
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$ 0.20 $ 0.08
========= =========
Cash dividends per common share $ - $ -
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
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(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 706 $ 296
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Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 884 911
Accretion of interest expense 59 14
(Gain) loss on sale of assets - 19
Changes in assets and liabilities:
Accounts receivable and refundable
income taxes (382) (2,553)
Inventories (3) 147
Current contract receivable and
other current assets (483) (576)
Intangibles and other assets - (396)
Accounts payable and accrued liabilities 152 (1,906)
Deferred revenue 1,576 2,303
Deferred income taxes (213) (36)
Minority interests - 132
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Total adjustments 1,590 (1,941)
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Net cash provided by (used in) operating
activities 2,296 (1,645)
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</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
7
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
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(Unaudited)
<S> <C> <C>
Cash flows from investing activities:
Net sales of short-term investments - 1,000
Collections on contract and notes receivable 306 2,533
Capital expenditures (548) (1,125)
Proceeds from sale of assets - 141
Payments on deferred contract liabilities (184) (231)
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Net cash provided by (used in) investing activities (426) 2,318
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Cash flows from financing activities:
Principal payments of long-term debt (486) (240)
Issuance of common stock 28 -
Repurchase of common stock - (73)
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Net cash used in financing activities (458) (313)
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Net increase in cash and cash equivalents 1,412 360
Cash and cash equivalents at beginning of period 13,383 4,585
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Cash and cash equivalents at end of period $ 14,795 $ 4,945
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
8
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T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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For the three months ended March 31, 1996 and 1995
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 with the instructions to Form 10-Q and Article 10 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, the
financial statements do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Results of operations for the three months ended March 31, 1996, are not
necessarily indicative of the results to be expected for the year ending
December 31, 1996. For further information, refer to the consolidated financial
statements and related notes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
The unaudited consolidated statements of operations and cash flow for the
three months ended March 31, 1995, are the financial statements of Tribune/Swab-
Fox Companies, Inc. ("Tribune/Swab-Fox") which was merged (the "Merger") with
and into the Company effective May 25, 1995. While the Merger was structured for
legal purposes as a merger of Tribune/Swab-Fox with and into the Company, for
accounting purposes, the Merger has been treated as a recapitalization of
Tribune/Swab-Fox, with Tribune/Swab-Fox as the survivor (downstream merger).
Accordingly, the historical financial statements of the Company, as the
surviving entity, are the historical financial statements of Tribune/Swab-Fox.
Earnings per share for the period prior to the Merger have been restated to
reflect the number of equivalent shares giving effect to the recapitalization.
2. Common Stock and Earnings Per Share
Weighted average common and common equivalent shares issued and outstanding
during the three months ended March 31, 1996, were 3,518,000 and the weighted
average equivalent shares for the three months ended March 31, 1995, were
3,867,000.
3. Income Taxes
The income tax provision for the three months ended March 31, 1996 and
1995, does not bear a normal relationship to the statutory federal income tax
rate of 34%, mainly as a result of amortization of goodwill related to
acquisitions and state income taxes.
4. Reclassification
Certain reclassifications have been made to the 1995 financial statements to
conform to the presentation in the 1996 financial statements. These
reclassifications have no effect on results of operations for 1995.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Results of Operations
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Revenues of $14,104,000 for the three months ended March 31, 1996, were
$91,000 higher than the three months ended March 31, 1995. Exposition services
revenue increased $1,668,000 to $7,495,000 related to an increase in
registrations for 1996 along with the effect in 1996 of higher rates for "reader
box" rental that were effective in mid-1995. Information services revenue
increased approximately $1,000,000 to $5,238,000 attributable to continued
growth in employment histories volume and criminal record volume. The three
trade journals sold in August, 1995, had revenues of approximately $2,900,000
for the three months ended March 31, 1995, which resulted in a decrease in
publishing revenues to $951,000 for the three months ended March 31, 1996.
Interest income and other for the three months ended March 31, 1996, is
higher than the same period in 1995, substantially all related to interest
earned on cash and short-term investments.
Operating costs for the three months ended March 31, 1996, are $370,000
lower than the same period in 1995. Exposition services costs increased
approximately $800,000 to $4,774,000 during the three months ended March 31,
1996, as compared with the same period in 1995, consisting of costs related to
the increase in registration volume and the payroll costs of operating personnel
which had been hired throughout 1995 at both exposition services divisions.
Information services costs increased approximately $330,000 to $3,031,000 for
the three months ended March 31, 1996, as compared with 1995. These cost
increases consist of criminal records volume increase and personnel for new
products or expanded markets reduced by lower costs related to non-trucking
employment screening services, which costs had been pared back in late 1995 in
connection with a more focused marketing of these services. Publishing costs
attributable to the three trade journals sold in mid-1995 were approximately
$1,800,000 during the three months ended March 31, 1995. Expansion into Europe
and additional international seminars in 1996 have resulted in additional
personnel and publishing costs at International Gaming and Wagering Business
trade journal which partially offset the decrease from the trade journals sold.
General and administrative expenses are $215,000 higher for the three
months ended March 31, 1996, as compared with the same period in 1995. The
reduction in expenses during 1996 attributable to the trade journals sold in
1995 were more than offset by increases in expenses of the other divisions
related to continued growth, and a provision for possible losses of prepaid
production costs, which prepayments were made to a digital information vendor
during 1995 and early 1996.
Interest expense is $41,000 lower during three months ended March 31, 1996,
as compared with the same period in 1995, mainly related to principal payments
on debt during the past year.
Depreciation and amortization did not substantially change for the three
months ended March 31, 1996, as compared with the same period in 1995.
10
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Provision for income taxes as a percent of income before income taxes is
higher than the statutory federal income tax rate since goodwill amortization
related to acquisitions is not deductible for income tax purposes.
Financial Condition
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The changes in the Company's financial condition during the three months
ended March 31, 1996, are mainly seasonal changes related to the Company's
exposition services and trade publishing operations. A $16,000,000 line of
credit commitment has been obtained from a bank that can be used for
acquisitions and would replace the Company's other bank lines of credit.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27 Financial data schedule
(b) Reports on Form 8-K.
No report on Form 8-K was filed during the quarter ended
March 31, 1996.
11
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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.
T/SF COMMUNICATIONS CORPORATION
(Registrant)
Date: May 14, 1996 By: /s/ Howard G. Barnett, Jr.
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Howard G. Barnett, Jr.
Chairman, Chief Executive Officer
and President
Date: May 14, 1996 By: /s/ J. Gary Mourton
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J. Gary Mourton, Senior Vice
President-Finance and Chief
Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 14,795
<SECURITIES> 1,000
<RECEIVABLES> 9,747
<ALLOWANCES> 560
<INVENTORY> 184
<CURRENT-ASSETS> 31,827
<PP&E> 10,018
<DEPRECIATION> 5,301
<TOTAL-ASSETS> 55,294
<CURRENT-LIABILITIES> 15,952
<BONDS> 4,090
0
0
<COMMON> 332
<OTHER-SE> 32,888
<TOTAL-LIABILITY-AND-EQUITY> 55,294
<SALES> 13,684
<TOTAL-REVENUES> 14,104
<CGS> 8,738
<TOTAL-COSTS> 12,769
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 151
<INCOME-PRETAX> 1,184
<INCOME-TAX> 478
<INCOME-CONTINUING> 706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 706
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
