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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 0-20123
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WINTHROP RESOURCES CORPORATION
(Exact name of Registrant as specified in its charter)
MINNESOTA 41-1415469
(State of incorporation) (I.R.S. Employer
Identification No.)
1015 OPUS CENTER, 9900 BREN ROAD EAST
MINNETONKA, MINNESOTA 55343
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (612) 936-0226
--------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
--------------------------
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
--- ---
As of November 6, 1996, 8,600,300 shares of Common Stock of the Registrant,
$0.01 par value, were outstanding.
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1
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WINTHROP RESOURCES CORPORATION
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 .......................................... 3
Consolidated Statements of Earnings for the three months
and nine months ended September 30, 1996 and 1995 .............. 4
Consolidated Statement of Common Shareholders' Equity
for the nine months ended September 30, 1996 ................... 5
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1996 and 1995 .............................. 6
Condensed Notes to Consolidated Financial Statements ........... 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................. 10
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS .............................................. 14
Item 2. CHANGES IN SECURITIES .......................................... 14
Item 3. DEFAULTS UPON SENIOR SECURITIES ................................ 14
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............ 14
Item 5. OTHER INFORMATION .............................................. 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K ............................... 14
SIGNATURES ............................................................... 15
EXHIBIT INDEX ............................................................ 16
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WINTHROP RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- -------------
ASSETS
<S> <C> <C>
Cash and cash equivalents ..................................... $ 2,294,138 $ 10,234,159
Receivables:
Trade accounts .............................................. 3,899,165 2,215,747
Other receivables ........................................... 215,682 174,063
------------- -------------
Total receivables ....................................... 4,114,847 2,389,810
Investment in leasing operations:
Direct financing and sales-type leases ...................... 282,063,971 238,651,547
Operating leases, less accumulated depreciation ............. 3,180,428 5,542,906
Equipment installed on leases not yet commenced ............. 18,740,018 10,086,568
------------- -------------
Total investment in leasing operations .................. 303,984,417 254,281,021
Furniture and equipment, less accumulated depreciation
and amortization of $683,980 and $528,985 ................... 970,007 607,078
Goodwill and other intangible assets, less accumulated
amortization of $461,357 and $11,944 ........................ 6,580,674 188,055
Other assets .................................................. 1,271,684 244,854
------------- -------------
$ 319,215,767 $ 267,944,977
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts payable ........................................ $ 4,535,242 $ 8,001,592
Accrued liabilities ........................................... 7,656,174 3,735,546
Income taxes payable .......................................... 2,151,470 1,644,882
Customer deposits ............................................. 3,414,572 2,017,070
Rents received in advance ..................................... 3,237,774 3,934,758
Deferred income taxes ......................................... 18,278,814 15,430,414
Senior notes due 2003 ......................................... 28,750,000 ---
Discounted lease rentals ...................................... 174,133,804 178,457,019
------------- -------------
Total liabilities........................................ 242,157,850 213,221,281
Preferred stock, $.01 par value. Authorized 2,000,000
shares; no shares issued and outstanding .................... --- ---
Common shareholders' equity:
Common stock, $.01 par value. Authorized 15,000,000 shares;
issued and outstanding 8,600,300 and 7,882,900 shares...... 86,003 78,829
Additional paid-in capital................................... 23,190,695 9,465,205
Retained earnings............................................ 53,781,219 45,179,662
------------- -------------
Total common shareholders' equity.................... 77,057,917 54,723,696
------------- -------------
$ 319,215,767 $ 267,944,977
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
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WINTHROP RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Leasing................................. $15,063,272 $11,863,549 $54,887,859 $51,360,591
Sales................................... 453,298 303,726 1,610,815 1,548,130
Other................................... 130,168 27,797 309,450 81,975
----------- ----------- ----------- -----------
Total revenues........................ 15,646,738 12,195,072 56,808,124 52,990,696
----------- ----------- ----------- -----------
Costs and expenses:
Leasing................................. 3,101,475 2,863,332 20,596,984 22,834,218
Sales................................... 373,163 143,956 914,592 1,194,615
Selling, general and administrative..... 2,099,580 1,237,587 6,082,328 4,506,051
Interest................................ 3,892,707 3,469,157 11,396,709 9,931,806
Other................................... 159,312 --- 449,412 ---
----------- ----------- ----------- -----------
Total costs and expenses.............. 9,626,237 7,714,032 39,440,025 38,466,690
----------- ----------- ----------- -----------
Earnings before income tax expense........ 6,020,501 4,481,040 17,368,099 14,524,006
Provision for income tax expense.......... 2,468,400 1,792,400 7,121,000 5,809,600
----------- ----------- ----------- -----------
Net earnings.............................. $ 3,552,101 $ 2,688,640 $10,247,099 $ 8,714,406
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net earnings per common and
common equivalent share.................. $ 0.40 $ 0.34 $ 1.25 $ 1.10
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
4
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WINTHROP RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
COMMON STOCK ADDITIONAL
------------------------ PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1995..................... 7,882,900 $78,829 $9,465,205 $45,179,662 $54,723,696
Issuance of common
shares in public offering.............. 750,000 7,500 13,718,250 --- 13,725,750
Common shares issued upon
exercise of stock options.............. 10,500 105 58,991 --- 59,096
Repurchase and retirement of
common shares.......................... (43,100) (431) (51,751) (673,746) (725,928)
Dividends declared..................... --- --- --- (971,796) (971,796)
Net earnings for the period............ --- --- --- 10,247,099 10,247,099
--------- ------- ---------- ----------- -----------
BALANCE,
SEPTEMBER 30, 1996.................... 8,600,300 $86,003 $23,190,695 $53,781,219 $77,057,917
--------- ------- ---------- ----------- -----------
--------- ------- ---------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
5
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WINTHROP RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
NINE MONTHS
ENDED SEPTEMBER 30
----------------------------
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings................................................. $ 10,247,099 $ 8,714,406
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Leasing costs and interest expense
on discounted lease rentals......................... 29,645,840 33,871,657
Leasing revenue, primarily amortization of unearned
income on sales-type and direct financing leases.... (11,572,687) (13,383,392)
Deferred initial direct costs........................... (1,042,399) (484,704)
Deferred income taxes................................... 2,848,400 2,323,840
Amortization of goodwill and other intangible assets.... 449,412 ---
Depreciation on furniture and equipment................. 154,995 60,639
Changes in operating assets and liabilities:
Trade accounts and other receivables............... (1,725,037) 260,230
Other assets....................................... (1,019,262) 101,603
Accounts payable and accrued liabilities........... (1,749,146) (2,761,701)
Income taxes payable............................... 506,588 100,274
Customer deposits and rents received in advance.... 700,518 936,358
------------- ------------
Net cash provided by operating activities..... 27,444,321 29,739,210
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment for leasing....................... (125,129,030) (93,775,531)
Purchase of furniture and equipment..................... (465,770) (186,932)
Acquisition, net of cash acquired....................... (4,805,855) ---
------------- ------------
Net cash used in investing activities......... (130,400,655) (93,962,463)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from discounted lease rentals.................. 58,949,454 70,808,826
Early retirement of discounted lease rentals............ (4,877,788) (10,232,042)
Borrowings under lines of credit........................ 27,268,000 15,300,000
Repayment of borrowings under lines of credit........... (27,268,000) (15,300,000)
Proceeds from issuance of common stock.................. 13,725,750 ---
Proceeds from issuance of senior notes.................. 28,750,000 ---
Proceeds from exercise of stock options................. 59,096 ---
Repurchase of common stock.............................. (725,928) (1,069,740)
Dividends paid.......................................... (864,271) (636,109)
------------- ------------
Net cash provided by financing activities..... 95,016,313 58,870,935
------------- ------------
Net decrease in cash and cash equivalents.................... (7,940,021) (5,352,318)
Cash and cash equivalents, beginning of period............... 10,234,159 6,860,747
------------- ------------
Cash and cash equivalents, end of period..................... $ 2,294,138 $ 1,508,429
------------- ------------
------------- ------------
Cash paid during the period for:
Interest................................................ $ 746,063 $ 119,634
------------- ------------
------------- ------------
Income taxes............................................ $ 3,769,403 $ 3,385,486
------------- ------------
------------- ------------
</TABLE>
NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition (see Note 2):
The company accrued a $2,000,000 liability in conjunction with the Capital
Business Leasing, Inc. acquisition.
See accompanying notes to consolidated financial statements.
6
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WINTHROP RESOURCES CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The financial statements included in this Form 10-Q have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed, or omitted,
pursuant to such rules and regulations, although management believes the
disclosures are adequate to make the information presented not misleading.
These statements should be read in conjunction with the financial statements and
related notes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
The financial statements presented herein as of September 30, 1996 and 1995
and for the three and nine month periods then ended reflect, in the opinion of
management, all material adjustments consisting only of normal recurring
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows for the interim periods. Certain 1995 balances
have been reclassified to conform to the 1996 presentation.
(2) ACQUISITION
On January 19, 1996, the Company acquired substantially all of the assets
of Capital Business Leasing, Inc. ("Capital"), a Nevada corporation with its
headquarters in Henderson, Nevada and a sales office in Knoxville, Tennessee.
Capital was a small-ticket lease broker that served as a focal point or
consolidator for a variety of unrelated brokers and vendors, and arranged for
the financing of these lease transactions with other leasing companies. The
Company is operating this wholesale lease business as it was previously
conducted. Capital's assets, which included cash, furniture and equipment and
other intangibles including goodwill, were acquired pursuant to an asset
purchase agreement for $7,100,000. Under the terms of the agreement, the
Company paid $5,100,000 on January 19, 1996 and is required to pay up to
$2,000,000 on December 31, 1996, plus accrued interest thereon at a rate of six
percent (6%) per annum.
The acquisition has been accounted for as a purchase and the results of
operations of Capital since the date of acquisition have been included in the
Company's consolidated financial statements. The Company allocated $1,000,000
of the purchase price to other intangible assets and is amortizing such amount
on a straight-line basis over five years. The excess of the aggregate purchase
price over the fair market value of net assets acquired of approximately
$5,842,000 was recognized as goodwill and is being amortized on a straight-line
basis over 15 years.
7
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(3) PUBLIC STOCK AND DEBT OFFERING
Effective June 28, 1996, the Company completed a public offering of
1,500,000 shares of its Common Stock at $19.50 per share and $28,750,000 of
9.50% Senior Notes due 2003. Of the 1,500,000 shares offered, 750,000 shares
were sold by the Company and 750,000 shares were sold by certain shareholders of
the Company.
(4) INVESTMENT IN LEASING OPERATIONS
The components of the net investment in direct financing and sales-type
leases as of September 30, 1996 were as follows:
<TABLE>
<S> <C>
Minimum lease payments receivable, net of
reserve for credit losses................................... $300,057,882
Estimated residual values.................................... 25,352,867
Initial direct costs......................................... 5,111,052
Less unearned revenue on lease payments receivable........... (44,075,385)
Less unearned revenue on residuals........................... (4,382,445)
-------------
Net investment in direct financing and sales-type leases..... $282,063,971
-------------
-------------
</TABLE>
Unearned revenue is recorded as leasing revenue over the lease terms.
Investment in operating lease assets included the following as of
September 30, 1996:
Operating lease assets..................................... $ 8,524,664
Less accumulated depreciation and amortization............. (5,344,236)
-----------
Net investment in operating leases......................... $ 3,180,428
-----------
-----------
(5) DISCOUNTED LEASE RENTALS
Discounted lease rentals as of September 30, 1996 consisted of the
following:
Nonrecourse borrowings..................................... $173,838,288
Recourse borrowings........................................ 295,516
------------
Total discounted lease rentals............................. $174,133,804
------------
------------
8
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(6) NOTES PAYABLE TO BANKS
At September 30, 1996, the Company had lines of credit totaling $23,000,000
available from two banks. The interest rates are charged at one bank's prime
rate, or, at the Company's option, at a rate determined by a specified
alternative-rate calculation, and at 25 basis points over the other bank's prime
rate. These agreements expire in July 1997 and June 1997, respectively. All
borrowings under these agreements are secured by specific leases and the
underlying equipment. At September 30, 1996, no amounts were outstanding under
these lines of credit.
(7) SENIOR NOTES DUE 2003
At September 30, 1996, the Company had outstanding $28,750,000 in aggregate
principal amount of 9.5% Senior Notes due July 1, 2003. The 9.5% Senior Notes,
issued in the Company's June 1996 public offering of common stock and 9.5%
Senior Notes, are general unsecured senior obligations of the Company ranking
PARI PASSU with all other existing and future unsecured and unsubordinated
obligations of the Company. Interest is payable monthly. The 9.5% Senior Notes
may not be redeemed prior to July 1, 2001, after which the notes may be redeemed
in whole or in part, at the Company's option.
(8) INCOME TAXES
Income tax expense for the three months ended September 30, 1996 consisted
of current and deferred tax expense of $1,481,040 and $987,360, respectively.
For the nine month period ended September 30, 1996, current and deferred income
tax expense was $4,272,600 and $2,848,400, respectively.
(9) EARNINGS PER SHARE
Earnings per share are computed on the weighted average number of common
and common equivalent shares (stock options) outstanding of 8,845,339 and
8,197,130 for the three and nine month periods ended September 30, 1996. For
each of the comparable periods in 1995, the weighted average number of common
shares outstanding was 7,899,052 and 7,921,377, respectively. For the 1995
periods common equivalent shares were excluded from the weighted average number
of common shares as the dilutive effect was less than 3%.
9
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WINTHROP RESOURCES CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1995
Net earnings for the three months ended September 30, 1996 were $3,552,000,
or $0.40 per share, as compared to $2,689,000, or $0.34 per share, for the
corresponding period in 1995. For the nine month period ended September 30,
1996, net earnings were $10,247,000, or $1.25 per share, compared to $8,714,000,
or $1.10 per share, during the comparable 1995 period. Due to recent strong
performance of the Company's stock, the calculation of weighted average shares
outstanding for the three months ended September 30, 1996 included 245,000
common equivalent shares from the assumed exercise of outstanding stock options,
which resulted in a $.01 dilution of earnings per share. In each of the
previous reporting periods common equivalent shares resulted in less than 3%
dilution and were therefore excluded from the calculation of weighted average
common shares outstanding. In addition, current year periods also reflect the
issuance of 750,000 common shares in the Company's public offering of Common
Stock and 9.5% Senior Notes in June 1996. At September 30, 1996, the Company's
net investment in leasing operations was $303,984,000, as compared to
$285,940,000 at June 30, 1996 and $254,281,000 at December 31, 1995. This
represents increases of 6.3% and 19.5% for the three and nine month periods,
respectively.
Total revenues of $15,647,000 and $56,808,000 for the three and nine month
periods ended September 30, 1996 were up 28.3% and 7.2% over $12,195,000 and
$52,991,000 in the comparable periods in 1995. Leasing revenues accounted for
96.3% and 96.6% of total revenues for the three and nine month periods ended
September 30, 1996, respectively, and 97.3% and 96.9% for the corresponding 1995
periods. The quarter-to-quarter fluctuations in total revenues, leasing
revenues and the allocation between types of leasing revenues result primarily
from the manner and timing in which leasing revenues are recognized over the
term of each particular lease. The allocation of revenues is a function of the
lease classification as determined in accordance with generally accepted
accounting principles. Total leasing revenues for the three and nine months
ended September 30, 1996 also include approximately $1,653,000 and $5,721,000,
respectively, of commissions generated from the financing of lease transactions
which were placed by the Company's wholesale lease business acquired on January
19, 1996. For additional information relating to the acquisition, see Note 2 to
the Company's financial statements included in this Quarterly Report on Form
10-Q.
Total leasing costs as a percentage of leasing revenue were 20.6% and 37.5%
for the three and nine month periods ended September 30, 1996, respectively.
Total leasing costs for the three and nine months ended September 30, 1996
include approximately $982,000 and $3,573,000, respectively, of commissions paid
to third-party brokers for the origination of lease transactions for the
Company's wholesale lease business. During the corresponding 1995 periods,
total leasing
10
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costs were 24.1% and 44.5% of leasing revenue. The decrease in leasing costs
as a percentage of leasing revenues primarily reflects the influence of the
relative size and lease classification of transactions for the respective
periods.
Selling, general and administrative expenses increased $862,000 (69.7%) in
the third quarter of 1996 over the third quarter of 1995, and increased
$1,576,000 (35.0%) during the nine month period ended September 30, 1996 over
the corresponding 1995 period. The increases during the 1996 periods are
primarily due to increased employment costs and general operating expenses.
Employment costs increased primarily as a result of the addition of personnel
since the commencement of operations in July 1995 of WINR Business Credit and
the acquisition of the wholesale lease broker business, as well as overall
company expansion. At September 30, 1996 the Company had a total of 95 full-time
employees compared to 52 full-time employees at September 30, 1995. General
operating expenses have increased due to the growth of the Company, through the
formation of WINR Business Credit and the wholesale lease broker business
acquisition, as well as the expansion of sales offices.
Interest expense increased $424,000 (12.2%) and $1,465,000 (14.7%) during
the three and nine month periods ended September 30, 1996, respectively, over
the corresponding 1995 periods. These increases were primarily the result of
interest expense on the Company's 9.5% Senior Notes issued in the Company's
public offering of Common Stock and 9.5% Senior Notes in June 1996 and higher
average borrowings during the current periods as compared with the corresponding
1995 periods, reduced by the increased capitalization of interest expense
associated with the interim financing of equipment installed on leases not yet
commenced.
Income tax expense as a percentage of earnings before income tax was
approximately 41% for the three and nine month periods ended September 30, 1996,
and approximately 40% for both of the comparable 1995 periods. The actual
income tax paid varies depending on many factors, including the alternative
minimum tax rate, various state tax laws, timing differences due to accelerated
tax depreciation rules and a variety of other tax considerations.
As a result of the foregoing factors, net earnings increased $863,000
(32.1%) and $1,533,000 (17.6%) for the three and nine month periods ended
September 30, 1996, respectively, as compared with the corresponding 1995
periods.
FINANCIAL CONDITION AND LIQUIDITY
The funds necessary to support the Company's leasing activities have been
provided primarily from operations, discounted lease financing, the Company's
June 1996 public offering of Common Stock and 9.5% Senior Notes and, to a lesser
extent and only on an interim basis, bank borrowings under lines of credit. The
extent to which the Company employs these lines is dependent upon available
funds and the volume of its lease and sales transactions. At September 30,
1996, no amounts were outstanding under these credit lines.
11
<PAGE>
Generally, upon commencement of a lease, the Company assigns the lease
payment stream to a financial institution and the proceeds are used to reduce
the lines of credit. The Company generally funds its equity investments in
leased equipment with internally generated funds.
At September 30, 1996, the Company had discounted lease rentals outstanding
of $174,134,000, of which 99.8% were nonrecourse. At December 31, 1995, the
Company had discounted lease rentals outstanding of $178,457,000 of which 99.3%
were nonrecourse. The decrease in discounted lease rentals for the nine months
ended September 30, 1996 is due primarily to amortization of previously
discounted lease rentals exceeding the amounts received from discounting of new
leases and the availability of funds from the aforementioned offering of common
stock and 9.5% Senior Notes. The Company depends on discounted lease financing
to provide funds for its operations at rates that reflect prevailing market
interest rates and the credit standing of its customers. Based on the Company's
experience in the leasing industry, its strong financial history and its
long-standing relationships with certain financial institutions, the Company
believes that discounted lease financing will continue to be available at
competitive interest rates.
The primary use of cash for the nine-month period ended September 30, 1996
has been the purchase of equipment for leasing, which totaled approximately
$125,129,000.
On January 19, 1996, the Company made a $5,100,000 cash payment pursuant to
an asset purchase agreement (the "Agreement") for the purchase of substantially
all the assets of Capital Business Leasing, Inc. Under the terms of the
Agreement, on December 31, 1996 the Company is required to make a final payment
of up to $2,000,000, plus accrued interest thereon at a rate of six percent (6%)
per annum.
There can be fluctuations in cash flow from period to period due to the
timing of payments by customers and timing of permanent financing. The
Company's current financial resources, estimated cash flow from operations
together with the net proceeds from the Company's public offering of Common
Stock and 9.5% Senior Notes are expected to be adequate to fund the Company's
operations and its present expansion plans.
Inflation has not been a significant factor in the Company's operations.
NOTE ON FORWARD-LOOKING INFORMATION
Certain statements in this Form 10-Q and in the future filings by the
Company with the Securities and Exchange Commission and in the Company's written
and oral statements made by or with the approval of an authorized executive
officer constitute "forward-looking statements" within the meaning of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, and
the Company intends that such forward-looking statements be subject to the safe
harbors created thereby. The words "believe", "expect" and "anticipate" and
similar expressions identify forward-looking statements. These forward-looking
statements reflect the Company's
12
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current views with respect to future events and financial performance, but
are subject to many uncertainties and factors relating to the Company's
operations and business environment which may cause the actual results of the
Company to be materially different from any future results expressed or
implied by such forward-looking statements. Examples of such uncertainties
include, but are not limited to, changes in customer demand and requirements,
mix of leases written, new product announcements, interest rate fluctuations,
changes in federal income tax laws and regulations, competition, industry
specific factors and world wide economic and business conditions. The mix of
leases written in a quarter is a result of a combination of factors,
including, but not limited to, changes in customer demands and/or
requirements, new product announcements, price changes, changes in delivery
dates, changes in maintenance policies and the pricing policies of equipment
manufacturers, and price competition from other lessors. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise.
13
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PART II. OTHER INFORMATION
WINTHROP RESOURCES CORPORATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable.
(b) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
On November 6, 1996 the Company's Board of Directors declared a dividend of
four cents per share of Common Stock, payable January 2, 1997 to shareholders of
record December 16, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3.1 Restated Articles of Incorporation of the Company
Incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1 filed April 24, 1992
(File No. 33-47435).
3.2 Restated Bylaws of the Company
Incorporated by reference to Exhibit 3.2 of the Company's
Registration Statement on Form S-1 filed March 19, 1993
(File No. 33-59808).
4.1 Form of Indenture relating to the Notes, including Form of Note
Incorporated by reference to Exhibit 4.5 of the Company's
Registration Statement on Form S-2 filed May 24, 1996
(File No. 33-04539).
11 Statement Regarding Computation of Per Share Earnings.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
The Registrant was not required to file any reports on Form 8-K for the
three months ended September 30, 1996.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINTHROP RESOURCES CORPORATION
Date: November 14, 1996 By: /s/ John L. Morgan
-----------------------------------
John L. Morgan
President and Chief Executive
Officer (Principal Executive
Officer) and Director
/s/ Kirk A. MacKenzie
-----------------------------------
Kirk A. MacKenzie
Executive Vice President, Treasurer,
and Chief Financial Officer (Principal
Financial and Accounting Officer) and
Director
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
11 Statement Regarding Computation of
Per Share Earnings 17
27 Financial Data Schedule 18
16
<PAGE>
EXHIBIT 11
WINTHROP RESOURCES CORPORATION
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average common
shares outstanding. . . . . . . . . . 8,599,936 7,899,052 8,115,329 7,921,377
Effect of dilutive options . . . . . . . 245,403 * 81,801 *
---------- ---------- ----------- ----------
Total . . . . . . . . . . . . . . . 8,845,339 7,899,052 8,197,130 7,921,377
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Net earnings . . . . . . . . . . . . . . $3,552,101 $2,688,640 $10,247,099 $8,714,406
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Net earnings per common and
common equivalent share . . . . . . . . $0.40 $0.34 $1.25 $1.10
----- ----- ----- -----
----- ----- ----- -----
FULLY DILUTED EARNINGS PER SHARE:
Weighted average common
shares outstanding . . . . . . . . . 8,599,936 7,899,052 8,115,329 7,921,377
Effect of dilutive options . . . . . . . 268,796 * 89,598 *
---------- ---------- ----------- ----------
Total . . . . . . . . . . . . . . . 8,868,732 7,899,052 8,204,927 7,921,377
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Net earnings . . . . . . . . . . . . . . $3,552,101 $2,688,640 $10,247,099 $8,714,406
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Net earnings per common and
common equivalent share . . . . . . . . $0.40 $0.34 $1.25 $1.10
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
* Dilution is less than 3%; common equivalent shares are excluded.
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,294
<SECURITIES> 0
<RECEIVABLES> 4,115
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,654
<DEPRECIATION> 684
<TOTAL-ASSETS> 319,216
<CURRENT-LIABILITIES> 0
<BONDS> 28,750
0
0
<COMMON> 86
<OTHER-SE> 76,972
<TOTAL-LIABILITY-AND-EQUITY> 319,216
<SALES> 1,611
<TOTAL-REVENUES> 56,808
<CGS> 915
<TOTAL-COSTS> 27,594
<OTHER-EXPENSES> 449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,397
<INCOME-PRETAX> 17,368
<INCOME-TAX> 7,121
<INCOME-CONTINUING> 10,247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,247
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
