<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-19239
-----------
LAW COMPANIES GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0537111
- --------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
114 TownPark Drive, Kennesaw, Georgia 30144
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 590-4600
------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 of Common Stock of the Company, par value $1.00 per share,
outstanding at September 30, 1996 was 1,905,422.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
as of September 30, 1996 and December 31, 1995 ................. 1
Condensed Consolidated Statements of Income
for the Quarters Ended September 30, 1996 and September 30,
1995 and Nine Month Periods Ended September 30, 1996
and September 30, 1995 ......................................... 3
Condensed Consolidated Statements of Cash Flows
for the Nine Month Periods Ended September 30, 1996 and
September 30, 1995.............................................. 4
Notes to Condensed Consolidated
Financial Statements............................................ 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ........................................... 6
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...... 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................... 12
SIGNATURE................................................................ 13
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
LAW COMPANIES GROUP, INC.
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,264 $ 4,913
Billed fees receivable,
net of allowance 55,058 58,399
Unbilled work in progress 31,521 32,863
Other receivables 714 1,970
Employee advances 574 560
Prepaid expenses 2,289 2,626
Deferred income taxes -- 1,616
-------- --------
Total current assets 97,420 102,947
Property and equipment:
Land and buildings 8,584 8,589
Equipment 35,100 34,621
Automobiles 3,833 4,345
Furniture and fixtures 14,032 14,028
Leasehold improvements 4,147 4,258
-------- --------
65,696 65,841
Less accumulated depreciation
and amortization 42,167 39,786
-------- --------
23,529 26,055
Other assets:
Equity investments 1,400 1,402
Goodwill, net of amortization 13,507 13,938
Deposits and other assets 2,117 3,962
-------- --------
17,024 19,302
-------- --------
$137,973 $148,304
======== ========
</TABLE>
See accompanying notes.
1
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CONDENSED CONSOLIDATED BALANCE SHEETS
LAW COMPANIES GROUP, INC.
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 30,
1996 1995
------------- ------------
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ 758 $ 1,201
Accounts payable 18,280 20,855
Billings in excess of costs and
fees earned on contracts in progress 11,939 9,515
Accrued payroll and other employee benefits 9,567 9,455
Accrued professional liability reserve 6,474 6,349
Other accrued expenses 18,711 17,248
Income taxes payable 4,370 4,181
Deferred income taxes 436 --
Current portion of long-term debt 30,775 3,759
-------- --------
Total current liabilities 101,310 72,563
Long-term debt 11,082 47,463
Deferred income taxes 7,589 10,948
Minority interest in equity of subsidiaries 1,206 1,504
Shareholders' equity:
Class A common stock--$10 par value:
stated at $1.00; authorized: 5,000,000 shares;
issued and outstanding: 0 shares in 1996
and 1,533,106 shares in 1995 - 1,533
Common stock--$1 par value: authorized: 10,000,000
shares; issued and outstanding: 1,913,227 shares
in 1996 and 361,266 in 1995 1,913 361
Additional paid in capital 15,123 14,823
Retained earnings 5,054 3,792
Foreign currency translation adjustment (5,304) (4,683)
-------- --------
16,786 15,826
-------- --------
$137,973 $148,304
======== ========
</TABLE>
See accompanying notes.
2
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LAW COMPANIES GROUP, INC.
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the Nine Month
For the Quarters Periods
Ended September 30, Ended September 30,
------------------- -------------------
1996 1995 1996 1995
--------- ------- --------- --------
<S> <C> <C> <C> <C>
Gross fees $78,607 $92,108 $243,864 $282,121
Less: Cost of outside services 8,960 12,256 28,662 39,534
------- ------- -------- --------
Net fees 69,647 79,852 215,202 242,587
Direct costs and expenses:
Payroll 20,506 23,232 63,410 69,199
Job related expenses 8,225 8,729 23,488 26,140
------- ------- -------- --------
Gross profit 40,916 47,891 128,304 147,248
Indirect costs and expenses:
Payroll 14,848 18,244 47,428 53,349
Other expenses 23,028 28,291 72,488 83,469
------- ------- -------- --------
Operating income 3,040 1,356 8,388 10,430
Other income (expense):
Interest expense (1,164) (1,452) (3,560) (4,377)
Deferred financing costs (315) (647) (1,947) (647)
Other income (expense) (22) 567 144 600
------- ------- -------- --------
Income (loss) before income taxes,
minority interests, and equity
investments 1,539 (176) 3,025 6,006
Income tax (provision) (983) 79 (1,830) (2,703)
Minority interests - 18 - (86)
Equity investments 18 (117) 67 (308)
------- ------- -------- --------
Net income (loss) $ 574 $ (196) $ 1,262 $ 2,909
======= ======= ======== ========
Net income (loss) per common share $ .30 $ (.10) $ .66 $ 1.45
======= ======= ======== ========
</TABLE>
See accompanying notes.
3
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LAW COMPANIES GROUP, INC.
(in thousands)
<TABLE>
<CAPTION>
For the Nine Month
Periods
Ended September 30,
-------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,262 $ 2,909
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 7,694 7,537
Provision for losses on receivables 748 1,710
Provision for losses on investments - 459
Provision for losses on claims 280 -
Provision for other non-cash expenses - 2,352
Deferred income taxes provision (benefit) (1,307) 514
Undistributed (income) losses from equity investments (67) 26
Minority interest in income of subsidiaries - 86
(Gain) loss on disposal of property and equipment (121) (307)
Changes in operating assets and liabilities:
Billed fees receivable 2,593 (3,091)
Unbilled work in progress 1,342 (10,897)
Other current assets 1,579 1,634
Accounts payable and accrued expenses (968) 1,156
Billings in excess of costs and fees
earned on contracts in progress 2,424 3,052
-------- --------
Net cash provided by operating activities 15,459 7,140
INVESTING ACTIVITIES
Purchases of property and equipment (3,333) (3,861)
Proceeds from disposal of property and equipment 28 1,689
Other, net 305 (1,540)
-------- --------
Net cash (used in) investing activities (3,000) (3,712)
FINANCING ACTIVITIES
Net (payments) proceeds on short-term borrowings (443) 1,089
Net (payments) proceeds on revolving line of credit
and long-term borrowings (9,365) (4,424)
Deferred financing costs (643) (647)
Issuance of shares of common stock 319 -
Treasury stock repurchases (1996-0 shares;
1995-12,265 shares) - (255)
-------- --------
Net cash provided by (used in) financing activities (10,132) (4,237)
Effect of exchange rate changes on cash 24 29
-------- --------
Increase (decrease) in cash and cash equivalents 2,351 (780)
Cash and cash equivalents at beginning of period 4,913 6,061
-------- --------
Cash and cash equivalents at end of period $ 7,264 $ 5,281
======== ========
</TABLE>
See accompanying notes.
4
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LAW COMPANIES GROUP, INC.
NOTE 1 - There have been no significant changes in the accounting policies of
the Company during the periods presented. For a description of these policies,
see Note 1 of Notes to Consolidated Financial Statements for the year ended
December 31, 1995 in the Company's Form 10-K.
NOTE 2 - The unaudited condensed consolidated financial statements presented
herein have been prepared in accordance with the instructions to Form 10-Q and
do not include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the Consolidated Financial Statements and Notes for the year ended December
31, 1995 included in the Company's Form 10-K, as amended. The accompanying
condensed consolidated financial statements as of and for the period ended
September 30, 1996 have not been audited by independent auditors in accordance
with generally accepted auditing standards, but in the opinion of management
such financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the Company's consolidated
financial position and results of operations. The results of operations for the
nine months ended September 30, 1996 may not be indicative of the results that
may occur during the year ending December 31, 1996.
NOTE 3 - On May 10, 1996, the Company obtained an amended credit facilities
commitment from its banks, extending the maturity date of the existing credit
facilities through January 15, 1997. Consequently, the long-term debt of
approximately $28 million under these amended credit facilities has been
classified as current as of September 30, 1996.
NOTE 4 - Effective as of January 1, 1996, pursuant to the Company's Third
Restated Articles of Incorporation, as amended, all shares of Class A stock
automatically converted into shares of Common Stock on a one-for-one basis.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, (i) the percentage of
net fees represented by certain items reflected in the Company's condensed
consolidated statements of income and (ii) the percentage increase or decrease
in each of such items in 1996 from the comparable period in the prior year. The
Company measures its operating performance on the basis of net fees since a
substantial portion of gross fees flow through to clients as costs of
subcontractors and other project-specific outside services. Net fees are
determined by deducting the cost of these outside services from gross fees. This
table and the subsequent discussion should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes to Condensed Consolidated
Financial Statements contained elsewhere in this Form 10-Q.
<TABLE>
<CAPTION>
Qtr to Qtr Nine Month Year to Year
Percentage Periods Percentage
Quarters Ended Increase Ended Increase
September 30, (Decrease) September 30, (Decrease)
-------------- ------------ ------ ------ ------------
1996 1995 1996 vs 1995 1996 1995 1996 vs 1995
------ ------ ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net fees 100.0% 100.0% (12.8)% 100.0% 100.0% (11.3)%
Gross profit 58.7 60.0 (14.6) 59.6 60.7 (12.9)
Indirect costs
and expenses 54.4 58.3 (18.6) 55.7 56.4 (12.4)
Operating
income 4.4 1.7 124.2 3.9 4.3 (19.6)
Net income 0.8 (0.2) 392.9 0.6 1.2 (56.6)
</TABLE>
RESULTS OF OPERATIONS
Consolidated net fees of $215.2 million for the first nine months of 1996
decreased 11.3% from net fees of $242.6 million for the same period in 1995.
Third quarter 1996 net fees decreased 12.8% to $69.6 million compared to third
quarter 1995 net fees of $79.9 million. The Domestic Group's net fees decreased
13.8% from $167.6 million for the first nine months of 1995 to $144.5 million
for the same period in 1996. Third quarter net fees for the Domestic Group
decreased 14.8% from $54.6 million in 1995 to $46.5 million in 1996. These
decreases were due to the following reasons: several weeks of inclement winter
weather in the North and East regions of the United States, the effects of the
Company's focus on its cost structure and competitiveness as opposed to growth,
lack of regulatory pressure to drive environmental markets, and overall
competitiveness in the markets for the Domestic Group's services. For 1996 and
future years, the Company has initiated a domestic national marketing
development program designed to increase the Company's market share and net
fees. Specifically, the goals are to position the Company to take further
advantage of major work opportunities that exist in the market for the Company's
6
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core competencies and services by targeting specific large national clients.
Another goal of this program is to develop a structure for quick and effective
response to marketing opportunities as they are identified at all levels--
national, regional, and local. A separate business development and project
management program is underway that is designed to assist local offices with
local business development capabilities and to improve local profitability
through better pricing strategies.
The International Group's net fees decreased 5.7% from $75.0 million in the
first nine months of 1995 to $70.7 million in 1996. Third quarter net fees for
the International Group decreased 8.3% from $25.3 million in 1995 to $23.2
million in 1996. These net fee changes were primarily a result of the runoff of
existing projects combined with the delay in startup of other projects, and
decreases in the average value of the dollar: 3.6% in the first nine months of
1996 and 1.8% in the third quarter of 1996.
The consolidated gross profit margin decreased from 60.7% in the first nine
months of 1995 to 59.6% for the same period in 1996. For the third quarter, the
consolidated gross profit margin also decreased from 60.0% in 1995 to 58.7% in
1996. The Domestic Group's gross profit margin decreased to 65.0% in the first
nine months of 1996 from 65.6% for the same period in 1995. This decrease was
attributable to a slight increase in non-billable job-related expenses and an
increase in direct labor costs. For the third quarter, the Domestic Group's
gross profit margin decreased slightly to 64.0% in 1996 from 64.5% in 1995. The
International Group's gross profit margin decreased slightly from 49.7% in the
first nine months of 1995 to 48.6% for the same period in 1996. For the third
quarter, the International Group's gross profit margin decreased to 48.1% in
1996 from 50.1% in 1995. These decreases resulted from an increase in non-
billable job-related expenses, which were slightly offset by a decrease in
direct labor costs.
Consolidated indirect costs and expenses decreased to $119.9 million, or 55.7%
of net fees, for the first nine months of 1996 compared to $136.8 million, or
56.4% of net fees, in 1995. For the third quarter of 1996, indirect costs and
expenses decreased to $37.9 million, or 54.4% of net fees, compared to $46.5
million, or 58.3% of net fees, for the same period in 1995. These decreases
($16.9 million, or 12.4%, for the first nine months of 1996 and $8.6 million, or
18.6%, for the third quarter of 1996) were attributable to the Company's 1996
cost reduction and labor utilization initiatives. In addition to the domestic
marketing and business development initiatives mentioned above, the Company has
initiated other programs, focused on the domestic business, with overall goals
to maximize efficiency and profitability and to positively effect change in the
Company's culture. These programs include an initiative to measure and improve
contribution to the Company's overall goals and objectives, on both an
individual and an organizational level. These initiatives focus on specific
financial drivers and help determine how individual and organizational efforts
can positively impact these drivers.
Another program is focused on technical delivery, quality control, and quality
assurance. The central objectives to this program are to reassess technical
delivery throughout the Company and to enable the Company to make immediate
improvements in the utilization of staff; to reassess quality assurance, quality
control rules, responsibilities, and structure in order to improve work quality;
and to define and implement standard procedures for technical execution and
7
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delivery. The Company has also focused on improving procurement activities
designed to reduce material and service costs by development and negotiation of
national contracts to take advantage of the Company's overall purchasing power.
The areas which have been impacted through the first nine months of 1996 include
office supplies, travel management, office equipment, telecommunications and
cellular services, offsite data management, forms management, and vehicle
leasing.
In addition, the Company plans a comprehensive ongoing review of its overhead
cost structure designed to analyze the functions provided by each department,
the value related to these functions, and the cost to perform and maintain these
functions. This review is intended to assist the Company in making the most
efficient use of resources required to support these areas. While the intent of
these programs is to increase profits, there can be no assurance they will be
successful.
Interest expense decreased to $3.6 million in the first nine months of 1996
compared to $4.4 million in 1995. For the third quarter of 1996, interest
expense decreased to $1.2 million compared to $1.5 million for the third quarter
of 1995. These decreases were related to lower average outstanding debt and
interest on a property tax rebate in the International Group in the first
quarter of 1996. Deferred financing costs of $1.9 million related to the
renegotiation of the Company's credit facilities were also expensed in the first
nine months of 1996 ($.3 million in the third quarter of 1996).
The effective income tax rates for the first nine months of 1996 and 1995 were
60.5% and 45.0%, respectively. The 1996 third quarter effective income tax rate
was 63.9%, as compared to the 1995 third quarter tax rate of 45.0%. The
effective tax rates were higher than the statutory federal rate of 34% due
primarily to the effect of state income taxes, certain nondeductible expenses,
and losses in certain jurisdictions for which no benefit was recognized.
Net income for the nine months ended September 30, 1996 was $1,262,000, or $.66
per share. This compares with net income of $2,909,000, or $1.45 per share, for
the first nine months of 1995. The net income for the third quarter of 1996 was
$574,000, or $.30 per share, compared with a net loss of ($196,000), or ($.10)
per share, for the third quarter of 1995.
CURRENCY TRANSLATION
The translation of the Company's foreign subsidiaries' financial statements into
U.S. dollars is done in multiple steps. First, all foreign operations are
measured into the functional currencies of the foreign subsidiaries' economic
environments by utilizing a combination of current, average, and historic
exchange rates, with translation impacts being included in income. The foreign
subsidiaries' functional currency financial statements are translated into U.S.
dollars, the Company's reporting currency, utilizing current and average
exchange rates, resulting in an adjustment to shareholders' equity. In addition,
transactions denominated in different currencies result in exchange gains or
losses which are included in income. The impact of foreign currency translation
and exchange transactions included in income was not significant in the first
nine months of 1996. The translation of the Company's foreign subsidiaries' in
the first nine months of 1996 resulted in a $.6 million change in the Foreign
Currency Translation Adjustment component of shareholders' equity. This change
was caused by a 0.7% decrease in the strength of the dollar relative to the
pound sterling from the rate at December 31, 1995 to the rate at September 30,
1996.
8
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DEBT AND SHORT-TERM BORROWINGS
The Company reported debt and short-term borrowings of $42.6 million at
September 30, 1996, compared to $52.4 million at December 31, 1995. At December
31, 1995, the Company was not in compliance with all the restrictive covenants
in the bank credit facility agreements. The Company subsequently received a
waiver and, on May 10, 1996, received a commitment from its banks to modify and
extend its credit facilities to January 15, 1997. (Please refer to the Liquidity
and Capital Resources discussion below.) The Company is currently in compliance
with all restrictive covenants. These revised credit facilities are secured by
substantially all assets of the Company and substantially all stock of its
subsidiaries. The revised credit facilities, in addition to customary
restrictions normally contained in credit facilities of this type, include
certain restrictions relating to, among other things, maintaining debt within
approved limits, maintaining a minimum specified tangible net worth, limitations
on capital expenditures and share repurchases, and achievement of certain fixed
charge and interest coverage ratios.
LIQUIDITY AND CAPITAL RESOURCES
In the second quarter, the Company engaged a financial advisor, Alex. Brown &
Sons Incorporated, to assist in developing a financial plan consistent with the
Company's strategic objectives. Within the scope of the financial advisor's role
has been the analysis and review of the Company's current capital structure and
evaluation of alternative means of raising debt or equity capital. On October
28, 1996, the Company announced that this effort has resulted in a letter of
intent to merge with PSI Holdings, Inc. (PSI). PSI, based in Lombard, Illinois,
is a nationally recognized leader in engineering, environmental, and
construction services. PSI is controlled by Bain Capital, Inc., a Boston-based
private investment firm. The Board of Directors has authorized management to
enter into negotiations for a definitive merger agreement.
While there can be no assurance that the Company will reach definitive merger
terms, the proposed merger is intended to provide an improved capital structure.
In parallel with the merger negotiations, the Company is seeking a short-term
extension of its current bank credit facilities until permanent financing is
established as a result of the merger.
Prior to 1995, certain of the Company's subsidiaries filed their federal income
tax returns on the cash basis of accounting. Effective January 1, 1995, these
subsidiaries changed their method of accounting from the cash to the accrual
method for federal income tax purposes. Accordingly, previously deferred income
of approximately $47 million at January 1, 1995 will be included in taxable
income over a four-year period beginning in 1995. The Company anticipates income
tax payments of approximately $3.4 million in 1996 related to this change in
income tax accounting.
9
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The Company believes that its cash provided by operations and borrowings
available under the bank credit facilities will be sufficient to meet its base
operating requirements and capital expenditures through December 31, 1996. The
Company's ability to fund growth, other than at minimum levels, will depend on
profitability and working capital management, primarily in the areas of accounts
receivable and work in progress. The Company believes that a moderate shortfall
in operating profits could be offset by more intense accounts receivable
collection efforts.
The bank credit facilities prohibit principal payments on existing notes of
approximately $13.1 million (as of September 30, 1996) or any future notes owed
by the Company to former shareholders. The existing notes as well as any future
notes to former shareholders state that they are subordinated to the bank credit
facilities.
The Company's 401(k) Savings Plan (the Plan) permits employees to elect to
invest their Plan contributions in Company Common Stock, and provides that the
Company's matching contributions, if any, under the Plan are made in the form of
Company Common Stock. As of May 10, 1996, the Board of Directors of the Company
determined to temporarily terminate all purchases of Company Common Stock under
the Plan whether as employee contributions or as Company matching contributions.
This termination was effected in light of conditions regarding the Company's
financial position, including (i) negotiations regarding extension of the
Company's credit facilities, (ii) the Company's failure to timely file its 1995
Annual Report on Form 10-K, and (iii) the related unavailability of a current
appraisal of the fair market value of the Common Stock. While these conditions
have been addressed by the Company, the Company has continued the suspension of
trading in Company Common Stock under the 401(k) Plan pending completion of the
merger negotiations with Bain and PSI.
FORWARD LOOKING STATEMENTS
The above statements contained herein under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things,
business conditions and growth in the economy, including the construction sector
in particular, competitive factors, including price pressures, the ability to
control internal costs that are not passed on to the Company's clients, the
ability to manage cash flow and working capital, the ability to obtain longer
term financing on acceptable terms to support the Company's operations and other
factors referenced elsewhere herein.
10
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EFFECT OF INFLATION
General economic inflation had the effect of increasing the Company's basic
costs of operations. These increased costs were generally recovered through
increases in contract prices.
CASH PROVIDED BY OPERATIONS
Cash provided by operations in the first nine months of 1996 was $15.5 million
compared to $7.1 million for the same period in 1995. This increase was
primarily attributable to better working capital management in the areas of
accounts receivable and unbilled work in progress.
CAPITAL EXPENDITURES
Capital expenditures for the first nine months of 1996 were $3.3 million. This
represents a decrease of $.5 million from the first nine months of 1995. This
decrease was in line with the Company's 1996 capital expenditures plan, as well
as within the limits imposed by the revised credit facilities. Pursuant to the
revised credit facilities, the Company is required to limit capital spending to
$6.0 million in 1996. During this period, the Company completed the installation
of its new project and financial accounting system and continued to upgrade
existing computer equipment. The Company has no other material commitments for
purchases of additional equipment.
DIVIDENDS
Dividends are prohibited by the bank credit facilities.
11
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held July 8, 1996 in Atlanta,
Georgia, for the purpose of electing thirteen (13) directors to serve until the
next Annual Meeting and until their successors are duly elected and qualified.
Directors For Withheld
-------------------- --------- --------
Bruce C. Coles 1,430,042 16,197
James I. Dangar 1,328,949 117,291
Andrew J. Young 1,365,074 81,161
Clarence D. Zimmerman 1,392,766 53,474
Geoffrey J. Brice 1,338,058 108,181
J. Richard Cottingham 1,373,937 72,302
Robert B. Fooshee 1,247,211 199,029
Fredrick J. Krishon 1,435,156 11,084
Steven Muller 1,293,729 152,511
Walter T. Kiser 1,429,039 17,201
John Williams 1,426,815 19,425
Peter D. Brettell 1,395,024 51,215
Clay E. Sams 1,441,440 4,799
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 - Computation of Earnings Per Share
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the quarter ended September 30, 1996.
12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Law Companies Group, Inc., has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LAW COMPANIES GROUP, INC.
/s/ R. B. Fooshee
- ----------------------------------
Robert B. Fooshee
Chief Financial Officer
and Treasurer
Dated: November 19, 1996
13
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EXHIBIT 11
LAW COMPANIES GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the Nine Month
For the Quarters Periods Ended
Ended September 30, September 30,
------------------- ------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income (loss) $ 574 $ (196) $1,262 $2,909
====== ====== ====== ======
Average number of shares of
capital stock outstanding 1,913 1,930 1,907 1,930
Assuming exercise of options
based on the treasury stock
method using average market
price - - - 74
------ ------ ------ ------
Average number of primary
shares of capital stock
outstanding 1,913 1,930 1,907 2,004
====== ====== ====== ======
Primary earnings (loss)
per share $ .30 $ (.10) $ .66 $ 1.45
====== ====== ====== ======
Average number of shares
of capital stock outstanding 1,913 1,930 1,907 1,930
Assuming exercise of options
based on the treasury stock
method using previous year-end
market price - - - 74
------ ------ ------ ------
Average number of shares of
capital stock outstanding
assuming full dilution 1,913 1,930 1,907 2,004
====== ====== ====== ======
Fully diluted earnings (loss)
per share $ .30 $ (.10) $ .66 $ 1.45
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,264
<SECURITIES> 0
<RECEIVABLES> 58,332
<ALLOWANCES> 3,274
<INVENTORY> 31,521
<CURRENT-ASSETS> 97,420
<PP&E> 65,696
<DEPRECIATION> 42,167
<TOTAL-ASSETS> 137,973
<CURRENT-LIABILITIES> 101,310
<BONDS> 0
0
0
<COMMON> 1,913
<OTHER-SE> 14,873
<TOTAL-LIABILITY-AND-EQUITY> 137,973
<SALES> 243,864
<TOTAL-REVENUES> 243,864
<CGS> 0
<TOTAL-COSTS> 115,560
<OTHER-EXPENSES> 119,168
<LOSS-PROVISION> 748
<INTEREST-EXPENSE> 3,560
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<INCOME-TAX> 1,830
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,262
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
