<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number 1-10485
TYLER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2303920
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2800 WEST MOCKINGBIRD LANE
DALLAS, TEXAS 75235
(Address of principal executive offices)
(Zip code)
(214) 902-5086
(Registrant's telephone number, including area code)
2121 SAN JACINTO STREET
SUITE 2900, DALLAS, TEXAS 75201
(Former name, former address and former fiscal year,
if changed since last report.)
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
--- ---
Number of shares of common stock of registrant outstanding at May 13, 1999:
39,301,211
Page 1 of 21
<PAGE> 2
TYLER CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I - Financial Information (Unaudited)
Item 1. Financial Statements
Condensed Consolidated Balance Sheets ................................. 3
Condensed Consolidated Statements of Income ... ....................... 5
Condensed Consolidated Statements of Cash Flows ....................... 6
Notes to Condensed Consolidated Financial Statements .................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................. 15
Part II - Other Information
Item 1. Legal Proceedings ..................................................... 21
Item 6. Exhibits and Reports on Form 8-K ...................................... 21
Signatures .............................................................................. 21
Exhibit 27 Financial Data Schedule (for SEC information only)
</TABLE>
Page 2 of 21
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TYLER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and number of shares)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- ----------------
<S> <C> <C>
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 1,821 $ 1,558
Accounts receivable (less allowance
for losses of $762 and $531
at 3/31/99 and 12/31/98, respectively) 15,536 14,500
Income tax receivable -- 1,308
Prepaid expenses and other current assets 2,763 1,374
Current notes receivable 5,788 --
Deferred income taxes 1,028 1,061
Net assets of discontinued operations -- 12,752
------------- ----------------
Total current assets 26,936 32,553
Net assets of discontinued operations -- 2,848
Property and equipment, net 14,691 14,147
Other assets
Goodwill and other intangibles, net 107,653 95,996
Non-current notes receivable 5,171 --
Other receivables 3,612 3,612
Sundry 886 938
------------- ----------------
$ 158,949 $ 150,094
============= ================
</TABLE>
See accompanying notes.
Page 3 of 21
<PAGE> 4
TYLER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands, except par value and number of shares)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- --------------
<S> <C> <C>
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,898 $ 1,190
Accrued liabilities 7,243 5,152
Current portion of long-term debt 1,957 1,876
Deferred revenue 10,073 10,148
Income tax payable 254 --
------------- --------------
Total current liabilities 21,425 18,366
Long-term debt, less current portion 36,633 37,189
Other liabilities 6,792 7,273
Deferred income taxes 10,434 10,920
Commitments and contingencies
Shareholders' equity
Preferred stock, $10.00 par value; 1,000,000
shares authorized , none issued -- --
Common stock ($.01 par value, 100,000,000
shares authorized; 36,965,946 and 35,913,313
shares issued at 3/31/99 and 12/31/98, respectively) 369 359
Capital surplus 110,185 103,985
Accumulated deficit (20,682) (21,791)
------------- --------------
89,872 82,553
Less treasury shares, at cost:
(1,423,482 shares at 3/31/99 and 12/31/98) 6,207 6,207
------------- --------------
Total shareholders' equity 83,665 76,346
------------- --------------
$ 158,949 $ 150,094
============= ==============
</TABLE>
See accompanying notes.
Page 4 of 21
<PAGE> 5
TYLER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues $ 20,433 $ 4,808
Cost of revenues 9,827 2,508
----------- -----------
Gross profit 10,606 2,300
Selling, general and administrative 5,468 1,554
Amortization of intangibles 1,096 350
----------- -----------
Operating income 4,042 396
Interest expense 826 252
Interest income (9) (124)
----------- -----------
Income from continuing operations,
before income taxes 3,225 268
Income tax expense 1,551 125
----------- -----------
Income from continuing operations 1,674 143
Income from operations of discontinued operations, after income taxes -- 12
Loss on disposal of discontinued operations (565) --
----------- -----------
Net income $ 1,109 $ 155
=========== ===========
Basic earnings (loss) per common share:
Continuing operations $ .05 $ .01
Discontinued operations (.02) --
----------- -----------
Net earnings per common share $ .03 $ .01
=========== ===========
Diluted earnings (loss) per common share:
Continuing operations $ .05 $ .01
Discontinued operations (.02) --
----------- -----------
Net earnings per common share $ .03 $ .01
=========== ===========
Weighted average outstanding common shares:
Basic 34,771 27,327
Diluted 35,962 28,823
</TABLE>
See accompanying notes.
Page 5 of 21
<PAGE> 6
TYLER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,109 $ 155
Adjustments to reconcile net income
to net cash used by operations:
Depreciation and amortization 1,812 581
Deferred income tax benefit (141) (209)
Discontinued operations-noncash charges and changes in
operating assets and liabilities (665) (2,727)
Changes in operating assets and liabilities, net of
effects of acquired companies and discontinued operations:
Accounts receivable (596) (923)
Income taxes payable 1,190 676
Other current assets (502) 46
Other receivables (1,872) 603
Accounts payable 347 (870)
Accrued liabilities (299) (1,510)
Deferred revenue (630) 1,558
Other liabilities (481) (571)
----------- -----------
Net cash used by operations (728) (3,191)
----------- -----------
Cash flows from investing activities
Additions to property, plant and equipment (850) (396)
Cost of acquisitions, net of cash acquired (5,781) (27,483)
Investment in database and other assets (1,035) --
Investing activities of discontinued operations (534) (338)
Proceeds from disposal of discontinued operations after expenses 11,291 2,628
Issuance of notes receivable (1,000) --
Other 88 (5)
----------- -----------
Net cash provided (used) by investing activities 2,179 (25,594)
----------- -----------
Cash flows from financing activities
Net (payments) borrowings on revolving credit facility (50) 22,426
Payments on notes payable (1,041) --
Sale of treasury shares to employee benefit plan -- 202
Payments of principal on capital lease obligations (97) (195)
----------- -----------
Net cash (used) provided by financing activities (1,188) 22,433
----------- -----------
Net increase (decrease) in cash and cash equivalents 263 (6,352)
Cash and cash equivalents at beginning of period 1,558 8,364
----------- -----------
Cash and cash equivalents at end of period $ 1,821 $ 2,012
=========== ============
</TABLE>
See accompanying notes.
Page 6 of 21
<PAGE> 7
Tyler Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Tables in thousands, except per share data)
(1) Basis of Presentation
The accompanying unaudited information for Tyler Corporation
("Tyler" or the "Company") includes all adjustments which are, in
the opinion of the Company's management, of a normal or recurring
nature and necessary for a fair summarized presentation of the
condensed consolidated balance sheet at March 31, 1999, and the
condensed consolidated results of operations and cash flows for the
periods presented. Such financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information. The consolidated results of
operations for interim periods may not necessarily be indicative of
the results of operations for any other interim period or for the
full year and should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
The Company discontinued the operations of Forest City Auto Parts
Company ("Forest City") in 1998. Accordingly, the prior year's
financial statements have been restated to reflect the disposition
of Forest City.
(2) Acquisitions
The Company acquired the entities described below in transactions
which were accounted for by the purchase method of accounting and
financed the cash portion of the consideration utilizing funds
available under its bank credit agreement. Results of operations of
the acquired entities are included in the Company's condensed
consolidated financial statements from their respective dates of
acquisition.
On February 19, 1998, the Company completed the purchases of
Business Resources Corporation ("Resources"), The Software Group,
Inc. ("TSG") and Interactive Computer Designs, Inc. ("INCODE").
These acquisitions represent the implementation of Tyler's
previously announced strategy to build a nationally integrated
information management services, system, database and outsourcing
company initially serving local and municipal governments.
Resources, TSG and INCODE provide information management solutions
to approximately 200 county governments and 225 cities, principally
located in the Southwestern United States. The purchase price for
each acquired company consisted of the following: (i) Resources -
10.0 million shares of Tyler common stock and approximately $28.0
million of cash and assumed debt; (ii) TSG - 2.0 million shares of
Tyler common stock and approximately $12.0 million of cash; and
(iii) INCODE - 225,000 shares of Tyler common stock and
approximately $1.3 million of cash. The purchase price has been
allocated to the assets (including identifiable intangible assets
such as title plant, workforce, customer lists and software) and
liabilities of each company based on their respective fair values.
The purchase price exceeded the fair value of each company's
respective net identifiable assets by approximately $45.9 million,
$14.1 million and $2.5 million for Resources, TSG and INCODE,
respectively and the excess has been assigned to goodwill. The
purchase price for Resources does not include certain potential
additional consideration, as the contingencies regarding such
additional consideration are not presently determinable beyond
reasonable doubt.
On June 5, 1998, the Company acquired a line of document management
software and related customer installations and service contracts
from the Business Imaging Systems division of Eastman Kodak Company
for $3.6 million in cash and $1.9 million in assumed liabilities.
Kofile, Inc. ("Kofile"), a newly formed subsidiary in the Company's
Resources unit, is based in Rochester, New York and its business
consists of the development, support and marketing of the document
management software and related
Page 7 of 21
<PAGE> 8
customer installations and service contracts. The excess purchase
price over the fair values of the net identifiable assets acquired
was approximately $5.6 million and has been recorded as goodwill.
On July 1, 1998, the Company completed the purchases of CompactData
Solutions, Inc. ("CompactData") and Ram Quest Software, Inc. ("Ram
Quest"). CompactData specializes in building and marketing
large-scale databases comprised of public record information, such
as property appraisals, motor vehicle registrations, drivers
licenses and criminal and civil court case records. Ram Quest is a
producer of advanced software for title companies, which provides
automation solutions for the closing, title plant management and
imaging needs of its customers. Ram Quest currently has installed
software systems with over 75 customers throughout Texas. Ram Quest
and CompactData operate as subsidiaries of the Company's Resources
unit. The purchase price for CompactData and Ram Quest totaled
approximately $2.3 million, comprised of approximately $1.0 million
in cash and assumed debt and 145,000 shares of Tyler common stock.
The excess purchase price over the fair values of the net
identifiable assets acquired was $2.1 million and has been recorded
as goodwill.
Effective August 1, 1998, the Company completed the purchase of
Computer Management Services, Inc. ("CMS") for approximately $1.2
million in cash and 228,000 shares of Tyler common stock. CMS
provides integrated information management systems and services to
over 500 cities and 100 counties throughout Iowa, Minnesota,
Missouri, South Dakota, Illinois, Wisconsin and other states,
primarily in the upper Midwest. The excess purchase price over the
fair value of the net assets acquired was approximately $1.1
million and has been recorded as goodwill.
Effective March 1, 1999, the Company acquired Eagle Computer
Systems, Inc. ("Eagle"), of Eagle, Colorado, for approximately 1.1
million shares of Tyler common stock and $5.0 million in cash. The
excess purchase price over the estimated fair value of net
identifiable assets acquired was approximately $10.8 million and
has been recorded as goodwill. Eagle is a leading supplier of
networked computing solutions for over 120 county governments in 14
states, primarily in the western United States. In addition, Eagle
provides hardware, data conversion, site planning, training and
ongoing support to its customers.
During 1999 and 1998, the Company also made other acquisitions
which are immaterial.
The following unaudited pro forma information presents the
consolidated results of operations as if all of the Company's
acquisitions occurred on January 1, 1998, after giving effect to
certain adjustments, including amortization of intangibles,
interest and income tax effects. The pro forma information does not
purport to represent what the Company's results of operations
actually would have been had such transactions or events occurred
on the dates specified, or to project the Company's results of
operations for any future period.
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues........................................... $ 21,045 $ 14,113
Income from continuing operations.................. 1,534 256
Net income......................................... 969 294
Net income per diluted share....................... $ .03 $ .01
</TABLE>
(3) Commitments and Contingencies
As discussed in Note 13 of the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, the Company, through certain of
its subsidiaries, is involved in various environmental claims and
claims for work-related injuries and physical conditions arising
from a formerly-owned subsidiary that was sold in December 1995.
Page 8 of 21
<PAGE> 9
Since February 1997, approximately 300 former employees of TPI of
Texas, Inc. ("TPI") have filed a series of separate personal injury
lawsuits which allege that they were exposed to silica, asbestos
and/or other industrial dusts during their employment at TPI.
Named as defendants with TPI and Swan Transportation Company
("Swan"), another wholly-owned subsidiary of the Company, are major
suppliers of asbestos, sand and industrial respirator devices.
Three co-defendants have been sued under product liability theories
of recovery and various theories to try to avoid workers
compensation bars to recovery. The plaintiffs seek to recover money
damages for the personal injuries they allegedly suffered as a
result of their occupational exposure to silica, asbestos and other
industrial dusts. While the Company plans to defend this litigation
vigorously, it is reasonably possible that the amounts recorded as
liabilities for TPI related matters could change in the near term
by amounts that would be material to the consolidated financial
statements.
As discussed in Note 13 of the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, the New Jersey Department of
Environmental Protection and Energy ("NJDEPE") has alleged that a
site where a former affiliate of Tyler Pipe Industries, Inc. (a
wholly-owned subsidiary of the Company known as TPI of Texas, Inc.
("TPI")), Jersey-Tyler Foundry Company ("Jersey-Tyler"), once
operated a foundry contains lead and possible other priority
pollutant metals and may need on-site and off-site remediation. The
site was used for foundry operations from the early part of this
century to 1969 when it was acquired by Jersey-Tyler. Jersey-Tyler
operated the foundry from 1969 to 1976, at which time the foundry
was closed. In 1976, Jersey-Tyler sold the property to other
persons who have operated a salvage yard on the site. NJDEPE agreed
for TPI to conduct a feasibility study to assess remediation
options and propose a remedy for the site and the impacted areas.
This study was completed and submitted to the NJDEPE in March 1999.
TPI has not agreed to commit to further action at this time. TPI
never held title to the site and denies liability.
Other than ordinary course, routine litigation incidental to the
business of the Company and except as described herein, and in the
Company's Annual Report on Form 10-K for the year ended December
31, 1998, there are no other material legal proceedings pending to
which the Company or its subsidiaries are parties or to which any
of its properties are subject.
(4) Revenue Recognition
The Company's information software systems and services segment
derives revenue from software licenses, postcontract customer
support ("PCS"), and services. PCS includes telephone support, bug
fixes, and rights to upgrade on a when-and-if available basis.
Services range from installation, training, and basic consulting to
software modification and customization to meet specific customer
needs. In software arrangements that include rights to multiple
software products, specified upgrades, PCS, and/or other services,
the Company allocates the total arrangement fee among each
deliverable based on the relative fair value of each of the
deliverables as determined based on vendor-specific objective
evidence.
In October 1997, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") 97-2,
Software Revenue Recognition, which supersedes SOP 91-1. The
Company was required to adopt SOP 97-2 for software transactions
entered into beginning January 1, 1998.
The Company recognizes revenue in accordance with SOP 97-2 as
follows:
Software Licenses - The Company recognizes the revenue allocable to
software licenses and specified upgrades upon delivery and
installation of the software product or upgrade to the end user,
unless the fee is not fixed or determinable or collectibility is
not probable. If the fee is not fixed or determinable, revenue is
recognized as payments become due from the customer. If
collectibility is not considered probable, revenue is recognized
when the fee is collected. Arrangements that include software
services, such as training or installation, are evaluated to
determine whether those services are essential to the functionality
of other elements of the arrangement.
Page 9 of 21
<PAGE> 10
A majority of the Company's software arrangements involve
off-the-shelf software and the other elements are not considered
essential to the functionality of the software. For those software
arrangements in which services are not considered essential, the
software license fee is recognized as revenue after delivery and
installation have occurred, training has commenced, customer
acceptance is reasonably assured, the license fee is substantially
billable and remaining services other than training are considered
nominal.
Software Services - When software services are considered
essential, revenue under the entire arrangement is recognized as
the services are performed using the percentage-of-completion
contract accounting method. When software services are not
considered essential, the fee allocable to the service element is
recognized as revenue as the services are performed.
Computer Hardware Equipment - Revenue allocable to equipment based
on vendor specific evidence of fair value is recognized when the
equipment is delivered and collection is probable.
Postcontract Customer Support - PCS agreements are generally
entered into in connection with initial license sales and
subsequent renewals. Revenue allocated to PCS is recognized on a
straight-line basis over the period the PCS is provided. All
significant costs and expenses associated with PCS are expensed as
incurred.
Contract Accounting - For arrangements that include customization
or modification of the software, or where software services are
otherwise considered essential, revenue is recognized using
contract accounting. Revenue from these software arrangements is
recognized on a percentage-of-completion method with
progress-to-completion measured based primarily upon labor hours
incurred.
Deferred revenue consists primarily of payments received in advance
of revenue being earned under software licensing, software and
hardware installation, support and maintenance contracts.
Through its information and property records services segment, the
Company provides computerized indexing and imaging of real property
records, records management and micrographic reproduction, as well
as information management outsourcing and professional services
required by county and local government units and agencies and
provides title plant update services to title companies. The
Company recognizes service revenue when services are performed and
equipment sales when the products are shipped.
Title Plants - Sales of copies of title plants are usually made
under long-term installment contracts. The contract with the
customer is generally bundled with a long-term title plant update
service arrangement. The contractual amount ascribed to the sale
aspect of the arrangement is based on vendor specific evidence of
fair value. The revenue resulting from the sale of copies of title
plants is recognized currently by discounting future payments to
reflect present values. Such amounts have been recognized currently
because legal ownership has passed, delivery has occurred, no
significant continuing obligations remain, and collection is
considered probable.
The Company also receives royalty revenue relating to the current
activities of two former subsidiaries of Resources. Royalty revenue
is recognized as earned upon receipt of royalty payments.
Page 10 of 21
<PAGE> 11
(5) Discontinued Operations
On March 26, 1999, the Company sold all of the outstanding common
stock of Forest City to HalArt, L.L.C. for approximately $24.5
million. Proceeds consisted of $12.0 million in cash, $3.8 million
in a short-term secured promissory note, $3.2 million in senior
secured subordinated notes and $5.5 million in preferred stock. The
short-term secured promissory note bears interest at 8.5%, becomes
due in July 1999, is secured by a first lien on certain real estate
and is subject to mandatory prepayment in certain conditions. In
July 1999, the unpaid balance, if any, of the short-term secured
promissory note will be converted to a senior subordinated note due
in March 2002 and will be secured by a second lien on Forest City
inventory and real estate. The senior secured subordinated notes
carry interest rates ranging between 6% to 8%, become due in March
2002, and are secured by a second lien on Forest City inventory and
real estate. The preferred stock will be mandatorily redeemable
March 2006. Both the subordinated notes and the preferred stock are
subject to partial or whole redemption upon the occurrences of
specified events.
In determining the loss on the disposal of the business, the
subordinated notes were valued using present value techniques.
Also, because the redemption of the preferred stock is highly
dependent upon future successful operations of the buyer and due to
its extended repayment terms, the Company is unable to estimate the
degree of recoverability. Accordingly, the Company will record the
value of the preferred stock as cash is received. The Company
estimated the loss on the disposal of Forest City to be $8.9
million which was recorded in the fourth quarter of 1998. The
estimated loss included anticipated operating losses from the
measurement date of December 1998 to the date of disposal and
associated transaction costs. The Company recorded an additional
loss during the three months ended March 31, 1999 of $565,000 (net
of taxes of $364,000) to reflect adjusted estimated transaction
costs and funded operating losses.
The purchase agreement provides for an adjustment to the purchase
price depending upon the ultimate balance of net assets transferred
to the buyer and for the settlement in cash for levels of cash and
cash equivalents above or below a prescribed level, as of the
closing date. In the preparation of the unaudited condensed
financial statements at March 31, 1999, the Company estimated such
amounts based upon preliminary estimates which are subject to
approval by the buyer. The ultimate amount of the settlements, if
any, may vary materially from the amounts reflected in the
accompanying condensed financial statements.
The net assets of discontinued operations at December 31, 1998
consisted principally of working capital (including accounts
receivable, inventories, accounts payable and accrued liabilities),
property and equipment of Forest City. Net sales of discontinued
operations for the three months ended March 31, 1998 were $18.6
million. Results of discontinued operations include external
interest expense on debt associated with discontinued operations of
$43,000 for the three months ended March 31, 1998.
Income tax benefit of $13,000 has been provided on discontinued
operations in the first quarter of 1998 based on the income tax
resulting from inclusion of the discontinued segment in the
Company's consolidated federal income tax return.
The Company has estimated a $4.6 million capital loss for tax
purposes on the sale of Forest City. No tax benefit has been
recorded for this capital loss since realization of the capital
loss is not assured.
(6) Sale of Copies of Title Plants
During the quarter ended March 31, 1999, the Company entered into a
series of title services agreements with certain of its customers.
Each of the contracts included the sale of copies of title plants
in a three county area combined with a ten year title plant update
service arrangement for the provision of title plant indices and
document retrieval services. Revenue recognized in connection with
the sales of copies of the title plants for the quarter ended March
31, 1999 amounted to approximately $1.7 million which has been
Page 11 of 21
<PAGE> 12
classified in the accompanying condensed consolidated balance sheet
at March 31, 1999, as non-current installment receivables at their
discounted present values.
(7) Earnings Per Share
Basic earnings per share of common stock is computed by dividing
net income by the weighted-average number of Tyler common shares
outstanding during the period. Diluted earnings per share is
calculated in the same manner as basic earnings per share, except
that the denominator is increased to include the number of
additional common shares that would have been outstanding assuming
the exercise of all employee stock options and a warrant that would
have had a dilutive effect on earnings per share. In the three
months ended March 31, 1999, options to purchase 1,530,421 shares
of common stock at exercise prices ranging from $5.44 to $10.94
were outstanding at March 31, 1999, but were not included in the
computation of diluted earnings per share because the options
exercise prices were greater than the average market price of the
common shares and, therefore, the effect would have been
antidilutive. The following table reconciles the numerators and
denominators used in the calculation of basic and diluted earnings
per share for each of the periods presented:
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
1999 1998
------- -------
<S> <C> <C>
Numerators for basic and diluted earnings per share:
Income from continuing operations ..................... $ 1,674 $ 143
======= =======
Denominator:
Denominator for basic earnings per share-
Weighted-average outstanding common shares ............ 34,771 27,327
Effect of dilutive securities:
Employee stock options ................................ 142 240
Warrant ............................................... 1,049 1,256
------- -------
Dilutive potential common shares ........................ 1,191 1,496
------- -------
Denominator for diluted earnings per share-
Adjusted weighted-average outstanding
common shares and assumed conversion ............... 35,962 28,823
======= =======
Basic earnings per share from continuing
operations ......................................... $ .05 $ .01
======= =======
Diluted earnings per share from continuing
Operations ......................................... $ .05 $ .01
======= =======
</TABLE>
(8) Comprehensive Income (Loss)
In June 1997, SFAS No. 130, Reporting Comprehensive Income, was
issued and was adopted by the Company in 1998. SFAS No. 130
establishes standards for reporting and displaying comprehensive
income and its components in an annual financial statement that is
displayed with the same prominence as other annual financial
statements. The statement also requires the accumulated balance of
other comprehensive income to be displayed separately from retained
earnings and additional paid-in capital in the equity section of
the statement of financial position. Comprehensive income and net
income for the three months ended March 31, 1999 and 1998 was $1.1
million and $155,000, respectively.
(9) Segment and Related Information
As of January 1, 1998, the Company has adopted SFAS No. 131,
Disclosures About Segments of an Enterprise and Related
Information, which requires segment information to be reported
using a
Page 12 of 21
<PAGE> 13
management approach. This management approach is based on reporting
segment information the way management organizes segments within
the enterprise for making operating decisions and assessing
performance.
The Company has two reportable segments: information and property
records services and information software systems and services. The
largest component of the information and property records services
business is the computerized indexing and imaging of real property
records maintained by county clerks and recorders, in addition to
the provision of other information management outsourcing services,
records management, micrographic reproduction and title plant
update services and sales of copies of title plants to title
companies. The information software systems and services segment
provides municipal and county governments with software systems and
related services to meet their information technology and
automation needs.
Divested activities include the historical operating results and
assets of the automotive parts and supplies segment, which was
discontinued in 1998. See Note 5 for further discussion. In
addition, corporate activities are included as "Other".
The Company evaluates performance based on several factors, of
which the primary financial measure is business segment operating
income. The Company defines segment operating income as income
before noncash amortization of intangible assets associated with
their acquisition by Tyler, interest expense, non-recurring items
and income taxes. The accounting policies of the reportable
segments are the same as those described in Note 1 of the Notes to
Consolidated Financial Statements included in the Company's Annual
Report on Form 10K for the year ended December 31, 1998.
There were no intersegment transactions, thus no eliminations are
necessary.
The Company's reportable segments are strategic business units that
offer different products and services. They are separately managed
as each business requires different marketing and distribution
strategies.
The Company derives a majority of its revenue from external
domestic customers. The information and property records services
segment conducts minor operations in Germany, which are not
significant and are not subsequently disclosed.
Summarized financial information concerning the Company's
reportable segments is set forth below based on the nature of the
products and services offered:
For the three months ended March 31, 1999
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Information
& Property Information
Records Software Continuing Divested
Services Systems Other Operations Activities Totals
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues............... $ 10,142 $ 10,291 $ -- $ 20,433 $ -- $ 20,433
Segment profit (loss).. 4,122 2,497 (1,481) 5,138 -- 5,138
</TABLE>
For the three months ended March 31, 1998
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Information
& Property Information
Records Software Continuing Divested
Services Systems Other Operations Activities Totals
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues............... $ 2,399 $ 2,409 $ -- $ 4,808 $ 18,566 $ 23,374
Segment profit (loss).. 667 741 (662) 746 40 786
</TABLE>
Page 13 of 21
<PAGE> 14
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
Reconciliation of reportable segment operating
profit to the Company's consolidated totals 1999 1998
------------------------------------------------- ------------ -----------
<S> <C> <C>
Total segment operating profit for
reportable segments........................... $ 5,138 $ 746
Interest expense................................. (826) (252)
Interest income.................................. 9 124
Goodwill and intangibles amortization............ (1,096) (350)
------------ -----------
Income from continuing operations
before income tax............................. $ 3,225 $ 268
============ ===========
</TABLE>
(10) Subsequent Events
On April 6, 1999, the Company completed its acquisition of Micro
Arizala Systems, Inc. d/b/a FundBalance, ("FundBalance") of Ann
Arbor, Michigan, a company which develops and markets fund
accounting software and other applications for state and local
governments, not-for-profit organizations and cemeteries. Tyler
acquired all of the outstanding capital stock of FundBalance by
means of a merger transaction pursuant to which all the shares of
FundBalance capital stock were converted into the right to receive
shares of Tyler common stock based upon an agreed-upon exchange
ratio.
Effective May 1, 1999, the Company acquired Process Incorporated
d/b/a Computer Center Software ("MUNIS") of Falmouth, Maine, which
designs and develops integrated financial and land management
information systems for counties, cities, schools and
not-for-profit organizations. MUNIS provides software solutions to
more than 600 customers, primarily located throughout the northeast
and southeast United States.
Effective May 1, 1999, the Company acquired Gemini Systems, Inc.
("Gemini") of Falmouth, Maine, which develops and markets software
products for municipal governments and utilities which are
installed at over 500 locations in 34 states, with over 300 of
those installations in New England.
(11) New Accounting Standards
In June 1998, SFAS No.133, Accounting for Derivative Instruments
and Hedging Activities, was issued. This statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities. The provisions of SFAS No.
133 are effective for financial statements for all fiscal quarters
of all fiscal years beginning after June 5, 1999, although early
adoption is allowed. The Company has not determined if it will
adopt the provisions of this SFAS prior to its effective date. The
adoption of SFAS No. 133 is not expected to have a material impact
on the Company's consolidated financial statements and related
disclosures.
On January 1, 1999, the Company adopted the provisions of SOP 98-5,
Reporting on the Costs of Start-up Activities. This SOP provides
guidance on the financial reporting of start-up and organization
costs and requires that these costs be expensed as incurred.
Adoption of SOP 98-5 did not have a material impact on the
Company's consolidated financial statements.
Page 14 of 21
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD - LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements other than historical or
current facts, including, without limitation, statements about the
business, financial condition, business strategy, plans and
objectives of management, and prospects of the Company are
forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, such forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ
materially from these expectations. Such risks and uncertainties
include, without limitation, changes in product demand, the
availability of products, changes in competition, economic
conditions, risks associated with Year 2000 issues, changes in tax
risks, and other risks indicated in the Company's filings with the
Securities and Exchange Commission. These risks and uncertainties
are beyond the ability of the Company to control, and in many
cases, the Company cannot predict the risks and uncertainties that
could cause its actual results to differ materially from those
indicated by the forward-looking statements. When used in this
Quarterly Report, the words "believes," "plans," "estimates,"
"expects," "anticipates," "intends," "continue," "may," "will,"
"should" or the negative of such terms and similar expressions as
they relate to the Company or its management are intended to
identify forward-looking statements.
GENERAL
Through March 26, 1999, Tyler operated two distinct businesses,
the integrated information management services, systems and
outsourcing business and the automotive parts and supplies
business. In March 1999, Tyler sold Forest City Auto Parts Company
("Forest City") to HalArt, L.L.C. As a result of the sale of Forest
City, Tyler no longer engages in the automotive parts and supplies
business, and its business is solely focused on the integrated
information management services, systems, and outsourcing
business. Therefore, historical financial information attributable
to the automotive parts and supply business has been reported as
discontinued operations and all prior year financial information
included herein has been restated to reflect this disposition.
Continuing operations are comprised of the results of operations
of its newly acquired information management businesses from their
respective dates of acquisition.
RECENT DEVELOPMENTS
On April 6, 1999, Tyler acquired Micro Arizala Systems, Inc. d/b/a
FundBalance, Inc. ("FundBalance"), a developer of fund accounting
software and other applications for state and local governments,
not-for-profit organizations and cemeteries. FundBalance products
are installed at over 1,150 locations in 42 states and Canada.
Effective May 1, 1999, the Company acquired Process Incorporated
d/b/a Computer Center Software ("MUNIS"), a developer of integrated
financial and land management information systems for counties,
cities, schools and not-for profit organizations. MUNIS provides
software solutions to more than 600 customers, primarily located
throughout the northeast and southeast United States.
Effective May 1, 1999, the Company acquired Gemini Systems, Inc.
("Gemini"), a provider of software products for municipal
governments and utilities which are installed at over 500 locations
in 34 states, with over 300 of those installations in New England.
Page 15 of 21
<PAGE> 16
ANALYSIS OF RESULTS OF OPERATIONS
REVENUES
For the three months ended March 31, 1999, Tyler had revenues of
$20.4 million compared to $4.8 million from continuing operations
in the prior year period. On a pro forma basis, revenues increased
$6.9 million, or 49%, for the three months ended March 31, 1999
from $14.1 million in the comparable prior year period. During the
three months ended March 31, 1999, the Company recognized as
revenue approximately $1.7 million in connection with the sales of
copies of title plants to a group of seven title companies. Under
the terms of contracts with these seven title companies, Tyler will
deliver database information covering three Texas counties and
provide data update and document image retrieval services over the
ten-year term of the contracts. Tyler will also provide these
customers with its fully integrated on-line data indexing and
imaging system. The total estimated value of these contracts over
the ten-year period is $24.5 million. Additionally, in 1998, The
Software Group was awarded significant contracts with the counties
of El Paso, and Gregg, both located in Texas, and Multnomah County
(Portland) in Oregon for combined expected revenues of
approximately $8.0 million. Installation of these contracts began
in the fall of 1998 and is expected to be significantly complete by
the end of 1999. Revenues in the first quarter of 1999 include
approximately $2.3 million associated with these three contracts.
Microfilm and imaging services and title company software
installations provided approximately $500,000 of the revenue
increase due to the completion of several large projects. Annual
maintenance services, document management software, recreation
services and optical imaging services provided other sources of
revenue increases.
COST OF REVENUES
For the three months ended March 31, 1999, Tyler had cost of
revenues of $9.8 million compared to $2.5 million from continuing
operations in the prior year period. On a pro forma basis, total
cost of revenues increased approximately $2.2 million or 28% for
the three months ended March 31, 1999, compared to $7.9 million
from continuing operations in the comparable prior year period. The
gross margin was significantly higher at 51.8%, compared to the
prior year period of 44% on a pro forma basis. The improvement in
margin is mainly attributable to changes in product mix, primarily
sales of copies of title plants and related services to title
companies and increased sales volume related to several large
contracts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
For the three months ended March 31, 1999, Tyler had selling,
general and administrative expenses of $5.5 million compared to
$1.6 million from continuing operations in the comparable prior
year period. On a pro forma basis, selling, general and
administrative expenses were $6.1 million compared to $3.9 million
in the first quarter of 1998. On a pro forma basis, selling,
general and administrative expense as a percent of revenues
increased to 28.9% for the three months ended March 31, 1999, from
27.6% from continuing operations in the first quarter of 1998
primarily due to increased costs associated with hiring management
personnel to accommodate present and planned future growth. This
increase was offset somewhat by higher sales volume.
AMORTIZATION OF INTANGIBLES
The Company accounted for all 1998 and first quarter 1999
acquisitions using the purchase method of accounting for business
combinations. Unallocated purchase price over the fair value of net
identifiable assets of the acquired companies ("goodwill") and
intangibles associated with acquisition are amortized using the
straight-line method of amortization over their respective useful
lives.
NET INTEREST EXPENSE
Net interest expense was higher for the first quarter of 1999
compared to the same period of 1998 as a result of the debt
incurred on February 19, 1998 to finance acquisitions and their
related transaction costs. Prior to February 19, 1998, the Company
had no debt. The average interest rate in the first quarter of 1999
was 7.1% compared to 7.3% in the comparable prior year period.
INCOME TAX PROVISION
The effective tax rate increased to 48% from 46.6% primarily due to
the non-deductibility of goodwill amortization relating to
acquisitions which occurred beginning in the first quarter of 1998.
Page 16 of 21
<PAGE> 17
DISCONTINUED OPERATIONS
Subsequent to entering into a letter of intent in December of 1998,
the Company sold all of the outstanding common stock of its
non-core automotive parts and supplies business, Forest City, on
March 26, 1999, for approximately $24.5 million. Proceeds consisted
of $12.0 million in cash, $3.8 million in a short-term secured
promissory note, $3.2 million in senior secured subordinated notes
and $5.5 million in preferred stock. The short-term secured
promissory note bears interest at 8.5%, becomes due in July 1999,
is secured by a first lien on certain real estate and is subject to
mandatory prepayment in certain conditions. In July 1999, the
unpaid balance, if any, of the short-term secured promissory note
will be converted to a senior subordinated note due in March 2002,
and will be secured by a second lien on Forest City inventory and
real estate. The senior secured subordinated notes carry interest
rates ranging between 6% to 8%, become due in March 2002, and are
secured by a second lien on Forest City inventory and real estate.
The preferred stock will be mandatorily redeemable March 2006. Both
the subordinated notes and the preferred stock are subject to
partial or whole redemption upon the occurrences of specified
events.
The Company estimated the loss on the disposal of Forest City to be
$8.9 million which was recorded in its 1998 Form 10-K. The
estimated loss included anticipated operating losses from the
measurement date of December 1998 to the date of disposal and
associated transaction costs. The Company recorded an additional
loss during the three months ended March 31, 1999 of $565,000 (net
of taxes of $364,000) to reflect adjusted estimated transaction
costs and funded operating losses.
The purchase agreement provides for an adjustment to the purchase
price depending upon the ultimate balance of net assets transferred
to the buyer and for the settlement in cash for levels of cash and
cash equivalents above or below a prescribed level, as of the
closing date. In the preparation of the unaudited condensed
financial statements at March 31, 1999, the Company estimated such
amounts based upon preliminary estimates which are subject to
approval by the buyer. The ultimate amount of the settlements, if
any, may vary materially from the amounts reflected in the
accompanying condensed financial statements.
NET INCOME AND OTHER MEASURES
Net income was $1.1 million for the three months ended March 31,
1999 compared to $155,000 in the first quarter of 1998. Income from
continuing operations was $1.7 million and $143,000 for the three
months ended March 31, 1999 and 1998, respectively. Diluted
earnings per share from continuing operations was $.05 and $.01 for
the three months ended March 31, 1999 and 1998, respectively.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") from continuing operations for the three months ended
March 31, 1999 was $5.9 million compared to $1.0 million for the
comparable prior year period. EBITDA consists of income from
continuing operations before interest, income taxes, depreciation
and amortization. Although EBITDA is not calculated in accordance
with generally accepted accounting principles, the Company believes
that EBITDA is widely used as a measure of operating performance.
Nevertheless, the measure should not be considered in isolation or
as a substitute for operating income, cash flows from operating
activities, or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance
with generally accepted accounting principles. EBITDA is not
necessarily indicative of amounts that may be available for
reinvestment in the Company's business or other discretionary uses.
In addition, since all companies do not calculate EBITDA in the
same manner, this measure may not be comparable to similarly titled
measures reported by other companies.
Page 17 of 21
<PAGE> 18
FINANCIAL CONDITION AND LIQUIDITY
In February 1998, the Company entered into a three-year bank credit
agreement in an amount not to exceed $50 million, including a $5
million sublimit for the issuance of standby and commercial letters
of credit. At March 31, 1999, the Company had outstanding
borrowings of $30.8 million under the bank credit agreement. The
effective average interest rate for the borrowings under the bank
credit agreement was approximately 7.1% for the three months ended
March 31, 1999. The Company's capitalization at March 31, 1999
consisted of $38.6 million in long-term debt and capital lease
obligation (including current portion) and $83.7 million in
stockholders' equity. The total debt-to-capital ratio was
approximately 32% at March 31, 1999.
The Company is engaged in discussions with its primary lending bank
regarding increasing its credit line. Although there can be no
assurances that the credit line can be increased on terms
acceptable to the Company, the Company expects to have an expanded
credit facility available by early third quarter 1999.
For the three months ended March 31, 1999, the Company incurred
capital expenditures of $850,000. These expenditures include costs
of computer equipment and software required for internal growth and
some modest building expansion.
The Company incurred software development costs of approximately
$800,000 in the first quarter of 1999 primarily relating to the
construction of a national data repository ("Database"). Such costs
include certain payroll related programming costs as well as the
costs to purchase data from external sources to initially populate
the Database. Upon completion, the Database will include, among
other items, a wide range of public information such as real
property tax and assessment data; chain of title property records
and images. Additionally, further expenditures will be necessary
subsequent to 1999 to update and expand the Database.
Effective March 1, 1999, the Company acquired Eagle Computer
Systems, Inc. ("Eagle") for 1.1 million shares of Tyler common
stock and $5.0 million cash in a business combination accounted for
as a purchase.
In March 1999, the Company entered into a merger agreement pursuant
to which it will acquire all of the outstanding common stock of CPS
Systems, Inc. ("CPS"). This transaction, which is expected to be
accounted for as a pooling-of-interests, is subject to the approval
of CPS shareholders and to certain other customary conditions,
including completion of due diligence by Tyler. In connection with
this proposed transaction Tyler provided CPS with bridge financing
of $1.0 million in the form of a note secured by a lien on
substantially all of the assets of CPS, including accounts
receivable, inventory, intangibles, equipment and intellectual
property. The note bears interest at 2% over the prime rate and is
due in September 1999.
Subsequent to March 31, 1999, the Company paid approximately $16.8
million in cash and issued 3.8 million shares of Tyler common stock
to acquire FundBalance, MUNIS and Gemini.
The Company from time to time engages in discussions with respect
to selected acquisitions and expects to continue to assess these
and other acquisition opportunities as they arise. The Company may
also require additional financing if it decides to make additional
acquisitions. There can be no assurance, however, that any such
opportunities will arise, any such acquisitions will be consummated
or that any needed additional financing will be available when
required on terms satisfactory to the Company. Absent any
acquisitions, the Company anticipates that cash flows from
operations, working capital and unused borrowing capacity under its
existing bank credit agreement will provide sufficient funds to
meet its needs for at least next year.
Page 18 of 21
<PAGE> 19
YEAR 2000 COMPLIANCE
Status of Progress
The Company has established a Program Office to centralize and
coordinate its efforts and to further define, evaluate and conduct
audits of the Company and its progress toward Year 2000 ("Y2K")
compliance. The Program Office is chaired by the Chief Financial
Officer and reports periodically to the Executive Committee of the
Board of Directors. The Program Office has established a Y2K Task
Force, comprised of representatives from each of the Company's
principal operating units, which is charged with evaluating and
implementing the Company's Y2K effort and reporting the results
thereof to the Program Office. The Executive Committee of the Board
of Directors is charged with evaluating the progress reported by
the Program Office and addressing any issues as they arise.
At the request of the Program Office, each of the Company's
operating units has independently developed a Y2K plan. Pursuant to
these plans, each operating unit has conducted an inventory and
assessment of its internal and external technology, all of its
computer-based systems, imbedded microchips and other processing
capabilities to identify the computer systems that could be
affected by the Y2K issue. The operating units have also
substantially completed testing of their products for Y2K
compliance, and some have completed testing of their delivery
systems. Certain customers currently have Y2K compliant versions of
the Company's products. The Company's Y2K plan calls for a majority
of customers to have compliant versions installed by July 1999 and
the remainder by December 1999. Each operating unit is at a
different stage in the implementation of their Y2K plan. Overall,
however, as of March 31, 1999, the Company was approximately 60%
complete.
The Company primarily uses third party software for its internal
computer systems. A majority of the installed systems are purported
to be Y2K compliant. The Company has purchased, and is now
installing at one of its principal operating units, an enhanced
accounting application from Platinum Technologies that is Y2K
compliant to replace the current system. Installation is expected
to be completed by the fourth quarter of 1999.
The Company cooperates with many third party vendors and suppliers
to provide products and services to its customers and to the
Company itself. The Company has circulated requests for and has
received written confirmations regarding their Y2K compliance from
a selected number of such parties and is expecting responses from
the remainder. All responses will be evaluated to determine if
additional action is required.
Costs to Address
Given the nature of ongoing system development activities
throughout the businesses, it is difficult to quantify, with
specificity, all of the costs being incurred to address this issue.
A significant portion of these costs will represent the
redeployment of existing information technology resources. The
Company's employees have conducted the majority of the work
performed thus far in executing the implementation plans.
The costs incurred to date are estimated to be approximately $2.9
million, and the estimated costs to complete will comprise an
additional $1.1 million. A significant amount of the estimated
costs to complete will be capitalized because such costs represent
hardware and software packages. Some of the prior costs were
incurred by the Company's operating units before they were acquired
by the Company. The new accounting application was purchased
primarily to accommodate expansion and anticipated future
acquisitions and secondarily to obtain Y2K compliance. However, the
total cost for the accounting application is included in the
aforementioned amount. The total cost estimate of the
implementation plan may be revised because the plan is constantly
evaluated and revised as a result of many factors. These factors
include, but are not limited to, the results of any phase of the
implementation plan, customer requirements, acquisitions, or
recommendations by business partners. The Company does not expect
that the opportunity costs of executing the implementation plan
will have a material effect on the financial condition of the
Company or its results of operations.
Page 19 of 21
<PAGE> 20
Risks
The Y2K issue creates risk for the Company from unforeseen problems
in its own computer, telephone and security systems and from third
parties upon which the Company relies. Accordingly, the Company is
requesting assurances from certain software vendors from which it
has acquired software, or from which it may acquire software, that
the software will correctly process all date information at all
times. The Company exerts no control over such third party's
efforts to become Y2K compliant. The services provided by these
parties are critical to the operations of the Company and the
Company is heavily reliant upon these parties to successfully
address the Y2K issue. Therefore, if any of these parties fail to
provide the Company with services, the Company's ability to conduct
business could be materially impacted. The result of such impact
may have a material adverse effect on the financial condition and
results of operations of the Company.
In addition, the Company is in the process of confirming with
certain of its customers and suppliers their progress in
identifying and addressing problems that their computer systems
will face in correctly processing date information as the year 2000
approaches and is reached. Failure to appropriately address the Y2K
issue by a major customer or supplier or a material percentage of
the smaller customers could have a material adverse effect on the
financial condition and results of operations of the Company.
The Company does not expect any material product development
activities to be delayed due to the Y2K compliance efforts;
however, if certain initiatives are delayed, the result could have
an adverse effect to the Company.
Contingency
The Company's Y2K compliance activities are being monitored and
evaluated by the Program Office and ultimately by the Executive
Committee. Contingency plans are being established and implemented
as the risks are identified. Additional steps are being taken to
further minimize the risks associated with the Y2K issue. For
example, all of the Company's operating units are developing plans
to allow for additional customer support after January 1, 2000 in
anticipation of questions they may receive from their customers,
even if the questions do not relate directly to their products or
services.
Summary
There can be no assurance that the Company will identify all
date-handling problems in its business systems or those of its
customers and suppliers in advance of their occurrence or that the
Company will be able to successfully remedy all Y2K compliance
issues that are discovered; however, the Company is working to
identify all issues. To the extent that the Company is unable to
resolve its Y2K issues prior to January 1, 2000, operating results
could be materially and adversely affected. In addition, the
Company could be adversely affected if other entities (i.e.,
vendors or customers) not affiliated with the Company do not
appropriately address their own Y2K compliance issues in advance of
their occurrence.
Page 20 of 21
<PAGE> 21
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of legal proceedings see Part I, Item 1.
"Financial Statements - Notes to Condensed Consolidated Financial
Statements - Commitments and Contingencies" on page 8 of this
document.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Exhibit
------- -------
27 Financial Data Schedule (for SEC information only)
(b) There were no reports filed on Form 8-K during the first
quarter of 1999.
Item 3 of Part I and Items 2, 3, 4 and 5 of Part II were not applicable and have
been omitted.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TYLER CORPORATION
By: /s/Theodore L. Bathurst
-------------------------------------------
Theodore L. Bathurst
Vice President and Chief Financial Officer
(principal financial officer and an
authorized signatory)
By: /s/Brian K. Miller
-------------------------------------------
Brian K. Miller
Vice President and Chief Accounting Officer
(principal accounting officer and an
authorized signatory)
Date: May 14, 1999
Page 21 of 21
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule (for SEC information only)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,821,000
<SECURITIES> 0
<RECEIVABLES> 16,298,000
<ALLOWANCES> 762,000
<INVENTORY> 0
<CURRENT-ASSETS> 26,936,000
<PP&E> 17,632,000
<DEPRECIATION> 2,941,000
<TOTAL-ASSETS> 158,949,000
<CURRENT-LIABILITIES> 21,425,000
<BONDS> 0
0
0
<COMMON> 369,000
<OTHER-SE> 83,296,000
<TOTAL-LIABILITY-AND-EQUITY> 158,949,000
<SALES> 20,433,000
<TOTAL-REVENUES> 0
<CGS> 9,827,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 826,000
<INCOME-PRETAX> 3,225,000
<INCOME-TAX> 1,551,000
<INCOME-CONTINUING> 1,674,000
<DISCONTINUED> (565,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,109,000
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
