SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
------------------
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 0-26015
-----------
CRW Financial, Inc.
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2691986
- --------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
443 South Gulph Road King of Prussia, PA 19406
- -------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 610/878-7429
---------------
------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of the registrant's common stock outstanding as of
May 12, 1997 was 5,884,984.
<PAGE>
CRW FINANCIAL, INC. AND SUBSIDIARY
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31, 1996 AND MARCH 31, 1997 3
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND 1997 4
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND 1997 5
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 11
<PAGE>
In addition to historical information, this Quarterly Report contains
forward-looking statements relating to such matters as anticipated financial
performance, business prospects and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the Company
notes that a variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. The risks
and uncertainties that may affect the operation, performance, development and
results of the Company's business include, but are not limited to, those matters
discussed herein in the section entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operations." The words "believe,"
"expect," "anticipate," "project" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof.
<PAGE>
CRW FINANCIAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, 1996 MARCH 31, 1997
------ ----------------- --------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS: (In Thousands, Except Share Amounts)
Cash $ 1,448 $ 1,831
Net assets of discontinued operation 8,235 --
Other current assets 319 630
Investment in NCO Group, Inc. -- 8,231
-------- --------
Total current assets 10,002 10,692
PROPERTY AND EQUIPMENT, net 143 191
INTANGIBLE ASSETS, net 475 500
INVESTMENT IN TELESPECTRUM WORLDWIDE INC 54,655 55,460
DEFERRED INCOME TAX ASSET 2,586 1,519
OTHER ASSETS 84 104
-------- --------
$ 67,945 $ 68,466
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Revolving line of credit $ 8,500 $ 6,500
Current portion of long-term debt 353 350
Accounts payable 340 450
Accrued expenses 1,489 2,976
-------- --------
Total current liabilities 10,682 10,276
-------- --------
LONG-TERM DEBT 332 223
-------- --------
OTHER LONG-TERM LIABILITIES 160 160
-------- --------
DEFFERED INCOME TAXES 21,898 21,898
-------- --------
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, 500,000 shares
authorized, no shares issued and outstanding -- --
Common Stock $.01 par value, 20,000,000 shares
authorized, 5,366,442 and 5,884,984 shares
issued and outstanding, respectively 54 59
Additional paid-in capital 39,686 39,939
Unrealized loss on investment in NCO Group, Inc. -- (819)
Accumulated deficit (4,867) (3,270)
-------- --------
Total stockholders' equity 34,873 35,909
-------- --------
$ 67,945 $ 68,466
======== ========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
CRW FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1997
---- ----
(In Thousands, except share amounts)
<S> <C> <C>
NET REVENUES $ 846 $ 1,266
OPERATING EXPENSES, excluding
Non-cash charges 1,081 1,544
DEPRECIATION AND AMORTIZATION 14 39
------- -------
Operating Loss (249) (317)
INTEREST EXPENSE (175) (206)
EQUITY IN EARNINGS OF TELESPECTRUM WORLDWIDE INC. -- 805
------- -------
Income (loss) from continuing operations
before income taxes (424) 282
INCOME TAXES (BENEFIT) (158) 107
------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS (266) 175
INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
NET (Note 6) 353 (59)
GAIN ON SALE OF DISCONTINUED OPERATIONS, NET (Note 4) -- 1,481
------- -------
NET INCOME $ 87 $ 1,597
======= =======
NET INCOME (LOSS) PER COMMON SHARE:
Continuing Operations $ (0.04) $ 0.02
Discontinued Operations 0.05 0.19
------- -------
$ 0.01 $ 0.21
======= =======
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
CRW FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
1996 1997
---- ----
In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 87 $ 1,597
Adjustments to reconcile net income to net
cash used in operating activities:
Equity in earnings of TeleSpectrum -- (805)
Gain on sale of collection business -- (1,481)
Discontinued operations - non-cash charges
and working capital charges (858) 359
Depreciation and amortization 14 39
Deferred tax provision (benefit) (158) 107
(Increase)decrease in assets
Other assets (33) (331)
Increase (decrease) in liabilities
Accounts payable (75) 110
Accrued expenses (566) (923)
------- -------
Net cash used in operating activities (1,589) (1,328)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition -- (25)
Investing activities of discontinued operations (113) (100)
Proceeds from sale of collection business -- 3,750
Purchases of property and equipment (4) (58)
------- -------
Net cash provided by (used in) investing activities (117) 3,567
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Financing activities of discontinued operations (103) --
Proceeds from exercise of stock options -- 258
Proceeds from sale of preferred stock, net 2,391 --
Repayments of long term debt (500) (2,114)
------- -------
Net cash provided by (used in) financing activities 1,788 (1,856)
------- -------
INCREASE IN CASH 82 383
------- -------
CASH, BEGINNING OF PERIOD 764 1,448
------- -------
CASH, END OF PERIOD $ 846 $ 1,831
======= =======
See notes to condensed consolidated financial statements.
<PAGE>
CRW FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Background:
CRW Financial, Inc. ("CRW" or the "Company") founded TeleSpectrum Worldwide
Inc. ("TLSP") in April 1996. TLSP is a premier provider of integrated
teleservices and is listed on the NASDAQ National Market System under the symbol
"TLSP." CRW owns approximately 6.2 million shares of common stock of TLSP,
representing approximately 25% of the outstanding common stock of TLSP. CRW also
owns 345,178 shares of NCO Group, Inc. ("NCOG") common stock. NCOG is a leading
provider of accounts receivable services listed on the NASDAQ National Market
System under the symbol NCOG. CRW's investment in NCOG was made on February 2,
1997 when it sold the assets of its accounts receivable management and debt
collection division (the "Collection Business") to NCOG. In addition, CRW's
wholly-owned subsidiary Casino Money Centers, Inc. ("CMC") provides check
cashing and other financial services to the casino industry.
2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles. The
interim financial information, while unaudited, reflects all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the interim financial statements. The results for the three
months ended March 31, 1997 are not necessarily indicative of results expected
for the full year. These financial statements should be read in conjunction with
the audited financial statements and the notes thereto included in the CRW
Financial, Inc. Annual Report on Form 10-K for the year ended December 31, 1996.
3. Net Income per Common Share
Net income per common share is computed using the weighted average number
of shares of CRW common stock and CRW common stock equivalents outstanding
during the period. If the inclusion of CRW common stock equivalents has an
anti-dilutive effect in the aggregate, it was excluded from the calculation. For
the three months ended March 31, 1996, the Company's total outstanding common
stock options and warrants exceeded 20% of the total outstanding common stock.
Therefore, the income per share computations were modified, as required under
Accounting Principles Board Opinion No. 15, to assume all outstanding common
stock options and warrants were exercised and the related proceeds were used to
repurchase up to 20% of the total outstanding common stock. Any remaining
proceeds were assumed to be used to reduce borrowings, thereby reducing interest
expense, net of tax. The weighted average number of shares outstanding for
purposes of computing net income per common share was 7,621,183 and 7,307,505,
for the three months ended March 31, 1997 and 1996, respectively.
<PAGE>
CRW FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 requires a dual presentation of "basic" and "diluted" earnings
per share on the face of the income statement. As required by SFAS 128, the
Company will be adopting the provisions of this accounting standard effective
with the preparation of the financial statements for the year ended December 31,
1997. Earlier application is not permitted. However, the Company is permitted by
this statement to disclose the following pro forma earnings per share
(unaudited):
Pro Forma Net Income (Loss) Per Common Share
For the Three Months Ended
March 31, 1997
-----------------------------------------------
Continuing Discontinued
Operations Operations
---------- ----------
EPS as Reported $0.02 $0.19 $0.21
Effect of SFAS 128 0.01 0.06 0.07
----- ----- -----
Pro Forma Basic EPS $0.03 $0.25 $0.28
===== ===== =====
EPS as Reported $0.02 $0.19 $0.21
Effect of SFAS 128 -- --
----- ----- -----
Pro Forma Diluted EPS $0.02 $0.19 $0.21
===== ===== =====
Pro Forma Net Income (Loss) Per Common Share
For the Three Months Ended
March 31, 1996
-----------------------------------------------
Continuing Discontinued
Operations Operations
---------- ----------
EPS as Reported $(0.04) $0.05 $0.01
Effect of SFAS 128 (0.03) 0.04 0.01
------ ----- -----
Pro Forma Basic EPS $(0.07) $0.09 $0.02
====== ===== =====
EPS as Reported $(0.04) $0.05 $0.01
Effect of SFAS 128 -- -- --
------ ----- -----
Pro Forma Diluted EPS $(0.04) $0.05 $0.01
====== ===== =====
<PAGE>
CRW FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. Sale of Collection Business
On February 2, 1997, CRW sold the assets of its Collection Business to NCOG
for consideration appraised at $12,800,000, consisting of $3,750,000 in cash,
345,178 shares of NCOG common stock, and a warrant to purchase 250,000 shares of
NCOG stock at $27.625 per share. CRW recorded an after-tax gain of $1,481,000 on
the sale of the Collection Business. The gain will not result in the payment of
any Federal income taxes as the Company has sufficient net operating loss
carryforwards to offset taxes due on the gain. The gain on the sale of the
Collection Business was recorded as follows (in thousands):
Fair Market Value of Consideration Paid by NCOG $12,800
Net Assets Sold (7,942)
Retention, Severance Pay and Non-compete Payments (1,339)
Estimated Purchase Price Adjustment (260)
Professional Fees and Accrued Expenses (782)
-------
Gain before income taxes 2,477
Utilization of Net Operating Loss Carryforward (996)
-------
Gain on Sale of Collection Business $1,481
=======
The appraisal of the consideration paid by NCOG indicated that the fair
value of the 345,178 shares of NCOG common stock received by CRW on February 2,
1997 was $8,300,000, or $24.05 per share, and that the fair value of the warrant
to purchase 250,000 shares of NCOG common stock at $27.625 per share was
$750,000.
The Company accounts for its investment in NCOG in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"). At March 31, 1997, the
investment in NCOG is classified as available-for-sale and reported at market
value; therefore, any unrealized holding gain or loss is presented as a separate
component of stockholders' equity. As of March 31, 1997, the Company recorded an
$819,000 unrealized loss on its investment in NCOG based on NCOG's March 31,
1997 common stock price of $21.87 per share.
<PAGE>
CRW FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Investment in TeleSpectrum Worldwide Inc.
The Company's common stock investment in TLSP is accounted for on
the equity method. The net investment balance at March 31, 1997 is
$55,460,000. The condensed results of operations of TLSP for the three
months ended March 31, 1997 are as follows (in thousands):
Condensed Statement of Operations Information:
Revenue $49,154
Operating Income 4,153
Net Income 2,698
Condensed Balance Sheet Information:
Current Assets $44,523
Non-current Assets 243,204
Current Liabilities 23,155
Non-current Liabilities 21,417
Stockholders' Equity 243,155
The Company's share of TLSP's undistributed net income was $805,000
for the three months ended March 31, 1997. In addition, in February 1997,
certain subordinated lenders of the Company exercised warrants to purchase
580,207 shares of TLSP common stock from the Company pursuant to the
cashless exercise provisions of the warrants, whereby the warrants were
cancelled in exchange for the Company's transfer to such lenders of 526,498
shares of TLSP common stock. After these exercises, CRW owned 7,198,642
shares of TLSP common stock. If all the remaining warrants to purchase TLSP
stock are exercised, CRW will receive approximately $1,474,000 of
consideration and would then own 6,215,839 shares of TLSP common stock.
6. Discontinued Operations
Below is a summary of the operating results for the Collection Business,
which as discussed in Note 1 was sold on February 2, 1997 and has been
classified as a discontinued operation. (In thousands)
Three Months Ended
March 31, 1996 March 31, 1997
-------------- --------------
Net Revenues $8,004 $2,006
Operating Expenses 7,434 2,101
----- ------
Operating Income (loss) 570 (95)
Income Taxes 217 36
----- ------
Income (loss) from discontinued operations $353 $(59)
===== ======
<PAGE>
CRW FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. Common Stock Equivalents
As of March 31, 1997, the Company had outstanding the following common
stock equivalents:
Number of Aggregate
Common Stock Exercise
Equivalents Proceeds
----------- --------
Incentive and non-qualified options
to purchase common stock 1,387,525 $3,372,480
Convertible subordinated note 592,654 962,075
Warrants to purchase common stock 635,554 1,252,042
--------- ----------
2,615,733 $5,586,597
========= ==========
All of the common stock equivalents listed above are exercisable.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CRW's operating results have been restated to reflect the classification of the
Collection Business as a discontinued operation.
Continuing Operations
Below is a summary of operating results (in thousands) for CRW and its CMC
subsidiary:
Three Months Ended March 31, 1997
---------------------------------
CRW Casino
Financial Money Centers Total
--------- ------------- -----
Net Revenues $ -- $1,266 $1,266
Operating Expenses,
excluding non-cash charges 379 1,165 1,544
Depreciation and amortization 25 14 39
----- ------ ------
Operating Income (loss) $(404) $87 $ (317)
===== ====== ======
Three Months Ended March 31, 1996
---------------------------------
CRW Casino
Financial Money Centers Total
--------- ------------- -----
Net Revenues $ -- $846 $ 846
Operating Expenses,
excluding non-cash charges 317 764 1,081
Depreciation and Amortization 3 11 14
----- ---- ------
Operating Income (loss) $(320) $ 71 $ (249)
====== ==== ======
Three Months Ended March 31, 1997 and March 31, 1996
Net Revenues. Net revenues for the three months ended March 31, 1997
increased $420,000 (49.6%) to $1,266,000 from $846,000 for the three months
ended March 31, 1996, primarily due to the commencement of CMC's check cashing
and cash advance services at the Grand Coushatta Casino in January 1997.
<PAGE>
Operating Expenses. Operating expenses increased $488,000 (44.6%) to
$1,583,000 for the three months ended March 31, 1997 from $1,095,000 for the
three months ended March 31, 1996, primarily due to the commencement of CMC's
check cashing and cash advance services at the Grand Coushatta Casino in January
1997.
Operating Loss. The Company's operating loss was $317,000 for the three
months ended March 31, 1997 compared to $249,000 for the three months ended
March 31, 1996 due to the $420,000 increase in net revenues, offset by the
$488,000 increase in operating expenses.
Interest Expense. Interest expense increased $31,000 to $206,000 for the
three months ended March 31, 1997 from $175,000 for the three months ended March
31, 1996 due to higher average borrowings outstanding under long-term debt in
the 1997 first quarter as compared to the 1996 first quarter. The increase in
long-term debt was due to borrowings made in 1996 to finance CRW's $2.1 million
investment in TLSP.
Income Taxes. Income taxes were $107,000 for the three months ended March
31, 1997 compared to a benefit of $158,000 for the three months ended March 31,
1996. The effective income tax rate was approximately 38% for both periods.
Discontinued Operations
The results of operations for the Collection Business for the three months
ended March 31, 1997 include the results from January 1, 1997 to February 2,
1997, the date on which the Collection Business was sold to NCOG. The decrease
in revenues and operating income in the 1997 period as compared to the 1996
quarter was primarily due to the impact of higher seasonal revenues in February
and March and the impact of a lower commission rate in 1997 for the division's
largest customer, the California Student Aid Commission.
<PAGE>
INFLATION
Inflation has not had a significant impact on the Company's operations to
date.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1997 net cash used in operating
activities was $1,328,000 compared to $1,589,000 of cash used in operating
activities for the three months ended March 31, 1996. The decrease in cash used
in operating activities in the 1997 period was primarily due to the cash
provided by non-cash charges and working capital changes from discontinued
operations.
Net cash provided by investing activities during the three months ended
March 31, 1997 was $3,567,000 compared to $117,000 of cash used in investing
activities for the three months ended March 31, 1996 primarily due to proceeds
from the sale of the Collection Business.
Net cash used in financing activities during the three months ended March
31, 1997 was $1,856,000 compared to $1,788,000 of cash provided by financing
activities for the three months ended March 31, 1996 primarily due to $2,114,000
of repayments of long-term debt.
CRW has a $7.5 million revolving line of credit from a bank which is due on
August 31, 1997. The amount of total outstanding borrowings under the revolving
line of credit as of March 31, 1997 was $6.5 million. The Company plans to repay
the revolving line of credit with proceeds from sale of its NCOG common stock.
If the Company is unable to sell its NCOG common stock, or the proceeds from the
sale of such stock are not sufficient to repay the revolving line of credit, CRW
plans to extend the expiration date of its revolving line of credit or refinance
it with proceeds from a new loan. CRW believes that its cash on hand, cash to be
generated from the sale of NCOG common stock and available borrowings under the
revolving line of credit or from proceeds of debt collateralized by its NCOG
and/or TLSP common stock are adequate to meet its needs through December 31,
1997.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Number Document
------ --------
3.1 Restated Certificate of Incorporation of the Company (1)
3.2 Amendment to Restated Certificate of Incorporation
of the Company (2)
3.3 Amended Bylaws of the Company (3)
4.1 Loan and Security Agreement dated May 11, 1995 between
Mellon Bank, N.A. ("Mellon") and the Company (3)
4.2 Amendment to Loan Security Agreement dated September 12,
1995 between Mellon and the Company (2)
4.3 Second Amendment to Loan and Security Agreement dated
September 19, 1996 between Mellon and the Company (2)
4.4 Third Amendment to Loan and Security Agreement dated
December 30, 1996 between Mellon and the Company (2)
4.5 Fourth Amendment to Loan and Security Agreement dated
February 4, 1997 between Mellon and the Company (2)
4.6 Fifth Amendment to Loan and Security Agreement dated
March 29, 1997 between Mellon and the Company (2)
4.7 Term Loan Note and Addendum dated November 1, 1995 in
favor of J. Brian O'Neill and Miriam P. O'Neill (2)
10.1 Agreement of Lease dated as of July 1994 between CRW
Building Limited Partnership and Casino and Credit
Services, Inc. ("CCS") (1)
10.2 Sublease Agreement dated May 10, 1995 between CCS and
the Company (3)
<PAGE>
10.3 Sublease Agreement between TLSP and the Company (2)
10.4 Lease Agreement dated July 1, 1996 between the Company
and Lee Park Investors, L.P. (2)
10.5 Lease Agreement dated December 5, 1996 between the
Company and 210 Mall Boulevard Associates (2)
10.6 Employment Agreement dated May 11, 1995 between J.
Brian O'Neill and the Company (3)
10.7 Employment Agreement dated May 11, 1995 between
Jonathan P. Robinson and the Company (3)
10.8 Amended and Restated 1995 Stock Option Plan of the
Company (5)
10.9 Securities Purchase Agreement dated February 29, 1996
between the Company and certain purchasers defined
therein (4)
10.10 Asset Acquisition Agreement dated February 2, 1997
among the Company, Kaplan & Kaplan, Inc., NCO Group,
Inc., CRWF Acquisition, Inc. and K & K Acquisition,
Inc. (6)
11 Computation of Per Share Earnings
27 Financial Data Schedule
- ------------------
(1) Filed as an Exhibit to the Company's Form 10-K for the fiscal year ended
December 31, 1995 and incorporated herein by reference.
(2) Filed as an Exhibit to the Company's Form 10-K for the fiscal year ended
December 31, 1996 and incorporated herein by reference.
(3) Filed as an Exhibit to the Company's Registration Statement on Form S-1
(File No. 33-62700) and incorporated herein by reference.
(4) Filed as an Exhibit tot he Company's Form 8-K dated February 29, 1996 and
incorporated herein by reference.
(5) Filed as an Exhibit to the Company's definitive Proxy Statement for its
1996 Annual Meeting of Stockholders and incorporated herein by reference.
(6) Filed as an Exhibit to the Company's Form 8-K dated February 2, 1997 and
incorporated herein by reference.
<PAGE>
(b) The Company filed a Form 8-K on February 18, 1997 pertaining to Item 2
of such form and containing Pro Forma Condensed Consolidated Statements of
Operations for the year ended December 31, 1995 and nine months ended September
30, 1996 as well as a Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996 following the sale of its Collection Business during February
1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRW FINANCIAL, INC.
----------------------------
(Registrant)
Date: May 15, 1997 /s/ Jonathan P. Robinson
--------------------------
Jonathan P. Robinson,
Chief Financial Officer
Exhibit 11
CRW Financial, Inc.
Net Income Per Share Reconciliation
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1996 1997
---- ----
<S> <C> <C>
Calculation of Net Income Per Common Share:
Weighted average number of shares outstanding 3,572,052 5,703,765
Assumed exercise of options and warrants 4,449,864 2,615,733
Less assumed repurchase (714,411) (698,315)
---------- ----------
Shares used in computation of net income
per common share 7,307,505 7,621,183
========== ==========
Net income for the three months ended $ 87,000 $1,597,000
Adjustment to net income for the
assumed reduction in interest
expense, net of tax 22,000 --
---------- ----------
Adjusted net income for computation of net income
per common share $ 109,000 $1,597,000
========== ==========
Net Income Per Common Share $ 0.01 $ 0.21
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,831
<SECURITIES> 63,691
<RECEIVABLES> 630
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,692
<PP&E> 191
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,466
<CURRENT-LIABILITIES> 10,276
<BONDS> 0
0
0
<COMMON> 59
<OTHER-SE> 35,850
<TOTAL-LIABILITY-AND-EQUITY> 68,466
<SALES> 1,266
<TOTAL-REVENUES> 1,266
<CGS> 1,583
<TOTAL-COSTS> 1,789
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 206
<INCOME-PRETAX> 282
<INCOME-TAX> 107
<INCOME-CONTINUING> 175
<DISCONTINUED> (59)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,597
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
