-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ir3SJqV/fjxxCrT6sjzD6UkujCwo/zcqWiqOB6BMl8bh6v4jISTDnY4g5HEML8/w mbAqogCFPeRtO5EcDMPexg== /in/edgar/work/0000950128-00-000979/0000950128-00-000979.txt : 20000717 0000950128-00-000979.hdr.sgml : 20000717 ACCESSION NUMBER: 0000950128-00-000979 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000531 FILED AS OF DATE: 20000714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER RESEARCH INC CENTRAL INDEX KEY: 0000201511 STANDARD INDUSTRIAL CLASSIFICATION: [7374 ] IRS NUMBER: 251201499 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-05954 FILM NUMBER: 672787 BUSINESS ADDRESS: STREET 1: 400 SOUTHPOINTE BLVD STREET 2: STE 300 CITY: CANONSBURG STATE: PA ZIP: 15317-8539 BUSINESS PHONE: 4122624430 MAIL ADDRESS: STREET 1: SOUTHPOINT PLZ I STREET 2: 400 SOUTHPOINTE BLVD STE 300 CITY: CANONSBURGH STATE: PA ZIP: 15317-8539 10QSB 1 e10qsb.txt COMPUTER RESEARCH, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 31, 2000 --------------- [ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT For the transition period from to ----------- ----------- Commission File No. 0-5954 ------------- COMPUTER RESEARCH, INC. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Pennsylvania 25-1201499 - ------------------------------- ---------------- (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification No. Southpointe Plaza I, Suite 300, 400 Southpointe Boulevard, Canonsburg, PA 15317 - ------------------------------------------------------------------------------- (Address of principal executive offices) (724) 745-0600 --------------------------- (Issuer's telephone number) ----------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes _____ No _____ APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,037,255 (As of May 31, 2000) ------------------------------ 2 PART I - FINANCIAL STATEMENTS ITEM I A. COMPUTER RESEARCH, INC. BALANCE SHEET May 31, 2000 (Unaudited) and August 31, 1999 (Audited)
ASSETS MAY 31, AUGUST 31, 2000 1999 ----------- ----------- CURRENT ASSETS Cash and Cash Equivalents $ 654,003 $ 449,698 Short-Term Investments 2,993,523 2,439,882 Accounts Receivable - Trade (net of allowance for doubtful accounts of $37,500) 760,325 1,058,999 Inventories at the Lower of Cost (first-in, first-out) or market 6,900 7,152 Prepaid Expenses 106,914 52,689 Deferred Tax Asset 43,750 25,000 ----------- ----------- Total Current Assets 4,565,415 4,033,420 ----------- ----------- EQUIPMENT and LEASEHOLD IMPROVEMENTS - At Cost Data Processing Equipment 975,439 1,765,116 Data Processing Equipment Under Capital Leases 388,778 446,471 Leasehold Improvements 218,724 185,008 Office Equipment 601,324 580,574 ----------- ----------- 2,184,265 2,977,169 Less Accumulated Depreciation and Amortization (1,297,663) (2,249,900) ----------- ----------- 886,602 727,269 ----------- ----------- OTHER ASSETS 18,787 43,998 ----------- ----------- $ 5,470,804 $ 4,804,687 =========== ===========
The accompanying notes are an integral part of these financial statements. 2 3 A. COMPUTER RESEARCH, INC. BALANCE SHEET - CONT'D. May 31, 2000 (Unaudited) and August 31, 1999 (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY
MAY 31, AUGUST 31, 2000 1999 ---------- ---------- LIABILITIES CURRENT LIABILITIES Current Portion of Long-Term Obligations $ 76,028 $ 81,072 Accounts Payable 90,122 125,117 Accrued Payroll and Related Costs 214,254 129,607 Accrued Income Taxes 196,670 42,000 Accrued Vacation 260,593 260,593 Customer Deposits 76,700 93,701 Other Liabilities 532 290 ---------- ---------- Total Current Liabilities 914,899 732,380 LONG-TERM OBLIGATIONS 104,342 161,266 ---------- ---------- Total Liabilities 1,019,241 893,646 ---------- ---------- STOCKHOLDERS' EQUITY Common Stock - No Par Value; $.0008 Stated Value; 10,000,000 Shares Authorized; 4,037,255 Shares Issued and Outstanding 3,230 3,230 Additional Paid-In Capital 744,342 744,342 Retained Earnings 3,703,991 3,163,469 ---------- ---------- Total Stockholders' Equity 4,451,563 3,911,041 ---------- ---------- $5,470,804 $4,804,687 ========== ==========
The accompanying notes are an integral part of these financial statements. 3 4 B. COMPUTER RESEARCH, INC. CAPITALIZATION AND STOCKHOLDERS' EQUITY May 31, 2000 (Unaudited)
DEBT AMOUNT Short-Term Line of Credit $ -0- Long-Term Debt (Including $76,028 due within one year) 180,370 ---------- Total Debt $ 180,370 ========== STOCKHOLDERS' EQUITY SHARES ISSUED AMOUNT Common Stock 4,037,255 $ 3,230 Capital in Excess of Par Value 744,342 Retained Earnings- Balance at Beginning of Current Fiscal Year 3,163,469 Net Income for Period 540,522 ---------- 3,703,991 ---------- Total Stockholders' Equity $4,451,563 ==========
The accompanying notes are an integral part of these financial statements. 4 5 C. COMPUTER RESEARCH, INC. STATEMENT OF INCOME For the Nine Months Ended May 31, 2000 and 1999 (Unaudited)
2000 1999 ---------- ---------- REVENUES Sales of Services $5,953,913 $5,650,543 Sales of Equipment, Software and Supplies 46,621 27,500 Other Income 123,108 85,874 ---------- ---------- 6,123,642 5,763,917 ---------- ---------- COSTS AND EXPENSES Operating Expenses 3,070,685 3,365,520 Selling and Administrative Expenses 1,962,444 1,841,200 Depreciation and Amortization 191,822 133,929 Cost of Equipment, Software and Supplies Sold 40,914 21,111 Interest Expense 13,902 19,759 ---------- ---------- 5,279,767 5,381,519 ---------- ---------- INCOME BEFORE INCOME TAXES 843,875 382,398 LESS: PROVISION FOR INCOME TAXES 303,353 119,132 ---------- ---------- NET INCOME $ 540,522 $ 263,266 ========== ========== Average Number of Shares Outstanding 4,037,255 4,037,255 ---------- ---------- EARNINGS PER COMMON SHARE $ .13 $ .07 ========== ========== (Basic and Diluted) DIVIDENDS PER COMMON SHARE $ -- $ -- ========== ==========
The results for the periods ended May 31, 2000 and 1999 are unaudited and are not necessarily indicative of the results to be expected for the year. All known adjustments necessary for a fair presentation of the financial information of the Company have been reflected for the nine months ended May 31, 2000 and 1999. The accompanying notes are an integral part of these financial statements. 5 6 C. COMPUTER RESEARCH, INC. STATEMENT OF INCOME For the Three Months Ended May 31, 2000 and 1999 (Unaudited)
2000 1999 ---------- ---------- REVENUES Sales of Services $1,762,998 $2,019,438 Sales of Equipment, Software and Supplies 1,621 -0- Other Income 47,289 27,136 ---------- ---------- 1,811,908 2,046,574 ---------- ---------- COSTS AND EXPENSES Operating Expenses 970,243 1,202,379 Selling and Administrative Expenses 677,809 579,233 Depreciation and Amortization 59,143 54,501 Cost of Equipment, Software and Supplies Sold 1,437 -0- Interest Expense 4,175 7,610 ---------- ---------- 1,712,807 1,843,723 ---------- ---------- INCOME BEFORE INCOME TAXES 99,101 202,851 LESS: PROVISION FOR INCOME TAXES 19,279 75,000 ---------- ---------- NET INCOME $ 79,822 $ 127,851 ========== ========== Average Number of Shares Outstanding 4,037,255 4,037,255 ---------- ---------- EARNINGS PER COMMON SHARE $ .02 $ .03 (Basic and Diluted) ========== ========== DIVIDENDS PER COMMON SHARE $ -- $ -- ========== ==========
The results for the periods ended May 31, 2000 and 1999 are unaudited and are not necessarily indicative of the results to be expected for the year. All known adjustments necessary for a fair presentation of the financial information of the Company have been reflected for the three months ended May 31, 2000 and 1999. The accompanying notes are an integral part of these financial statements. 6 7 D. COMPUTER RESEARCH, INC. STATEMENT OF CASH FLOWS For the Nine Months Ended May 31, 2000 and 1999 (Unaudited)
2000 1999 ----------- ----------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net Income $ 540,522 $ 263,266 ----------- ----------- ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and Amortization 191,822 133,929 Provision for Losses on Accounts Receivable -0- 7,500 Change in Assets and Liabilities: Accounts Receivable 298,674 (451,851) Inventories 252 2,270 Prepaid Expenses (54,225) 21,260 Accounts Payable, Accrued Expenses and Other Current Liabilities 204,564 23,542 Customer Deposits (17,001) (7,250) Deferred Tax Asset and Other Assets (7,329) -0- ----------- ----------- Total Adjustments 616,757 (270,600) ----------- ----------- Net Cash Provided by (Used by) Operating Activities 1,157,279 (7,334) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Equipment and Leasehold Improvements (335,819) (107,062) Short-Term Investment Maturities 3,750,000 2,125,000 Additions to Other Assets (1,546) (27,440) Additions to Short-Term Investments (4,303,641) (2,279,573) ----------- ----------- Net Cash Provided by (Used by)Investing Activities (891,006) (289,075) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on Capital Lease Obligations (61,968) (59,901) Proceeds from Line of Credit -0- 200,000 Payment on Line of Credit -0- (150,000) ----------- ----------- Net Cash Provided by (Used by) Financing Activities (61,968) (9,901) ----------- ----------- Net Increase (Decrease) in Cash 204,305 (306,310) Cash and Cash Equivalents at August 31, 1999 and 1998 449,698 766,823 ----------- ----------- Cash and Cash Equivalents at May 31, 2000 and 1999 $ 654,003 $ 460,513 =========== =========== CASH PAID DURING THE PERIOD Interest $ 13,902 $ 19,759 =========== =========== Income Taxes $ 246,933 $ 85,000 =========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES In December 1998, the Company entered into a long term capital lease for additional computer equipment at a cost of $190,000. The accompanying notes are an integral part of these financial statements. 7 8 COMPUTER RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED MAY 31, 2000 NOTE A - COMPANY'S ANNUAL REPORT UNDER FORM 10-KSB The accompanying financial information should be read in conjunction with the Company's 1999 Annual Report on Form 10-KSB. NOTE B - ADJUSTMENTS In the opinion of management, all adjustments that were made, which are necessary to a fair statement of the results for the interim periods, were of a normal and recurring nature. 8 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS 1. ACQUISITION OF COMPANY On July 7, 2000, Computer Research, Inc. announced that it had entered into a Purchase Agreement providing, subject to certain conditions, for CRI Acquisition, Inc., a new corporation formed by Rodger O. Riney, the founder and President of Scottrade, Inc. of St. Louis, Missouri, to make a tender offer for all outstanding shares of the Company at a price of $2.42 per share. The tender offer for all outstanding shares of common stock of the Company will be made on or before August 7, 2000. The Company had previously entered into a Letter of Intent as of June 7, 2000, to be acquired by SunGard Data Systems, Inc. at $2.00 per share. Prior to entering into the agreement with CRI Acquisition, Inc., the Letter of Intent with SunGard Data Systems, Inc. was terminated. 2. RESULTS OF OPERATIONS The Company's principal source of revenues is derived from providing computerized accounting and support services to securities firms, banks and other financial institutions. Service revenues are directly affected by stock and bond trading market volume which indirectly impacts the number of transactions processed for the clients and by the overall condition of the financial services industry. The clients serviced could become involved in mergers and/or acquisitions or may choose to convert their business from self-clearing to a fully disclosed basis which could eliminate the need for the accounting services provided by the Company. The Company could be positively or negatively impacted by a merger involving one of its clients or by a consolidation trend in the financial services industry involving services or products. Due to the volatile nature of the industry served, the results of operations, as reported for the period represented, are not necessarily indicative of results to be expected for the coming year or any specific period. 9 10 REVENUES The total revenues for the first nine months of the current fiscal year (2000) increased approximately 6% over the comparable period of the previous year to $6,123,642. This increase is primarily attributable to an increase in the number of trade transactions processed for banking clients. The total revenues for the third quarter of the 2000 fiscal year were $1,811,907 or a decrease of approximately 12% from the previous year. The revenues declined during the third quarter due to the fact that a client of the Company, that accounted for approximately 11% of the firm's revenues during the fiscal year 1999, terminated at the beginning of the third quarter of the current year. During the third quarter of the current year, the Company obtained a contract from an additional broker/dealer that will begin utilizing the Company's services at the start of the new fiscal year (2001). In addition, a banking client that currently accounts for approximately 20% of the firm's revenues has notified the Company that they are exploring the possibility of terminating its services with the firm. Should this occur, revenues will be impacted in the second or third quarter of fiscal year 2001. COSTS AND EXPENSES The total costs and expenses for the first nine months of the year 2000 decreased approximately 2% from the previous year to a figure of $5,279,767. The total costs and expenses for the fiscal third quarter of the current year decreased approximately 7% from the comparable period of the previous year. The primary contributors were a decrease in the cost of outside services as well as reduced payroll costs due to staff reductions. NET INCOME The net income for the first nine months of the current year was $540,522 or $.13 per share as compared to $263,266 or $.07 per share for the previous year. The net income for the fiscal third quarter of the current year was approximately $79,822 or $.02 per share as compared to $127,851 or $.03 per share for the comparable period of the previous year. 10 11 3. CAPITAL RESOURCES AND LIQUIDITY The Company had approximately $3.6 million in cash, cash equivalents and short- term investments at the end of the first nine months of the 2000 fiscal year. In addition, the Company maintains an approximate $750,000 line of credit, if needed. This, along with funds generated by operations, should adequately support the operating needs of the Company in the near term. 4. "SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements regarding the Company's expectations as to its future operations and financial condition and certain other information presented in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Since these statements involve risks and uncertainties and are subject to change at anytime, the Company's actual results could differ materially from expected results. The Company's forward-looking statements are based upon operating budgets and many detailed assumptions. While the Company believes that its assumptions are reasonable, it cautions that there are inherent difficulties in predicting certain important factors which could directly affect the business. Some factors, which could cause actual results to differ from expectations, include a general downturn in the economy or the stock markets and related transaction activity, gain or loss of significant clients, unforeseen new competition, changes in government policy or regulation, or costs and other effects related to unanticipated legal proceedings. 11 12 PART II - OTHER INFORMATION Not applicable. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COMPUTER RESEARCH, INC. --------------------------------------- (Registrant) Date July 14, 2000 /s/ James L. Schultz ------------------------ --------------------------------------- James L. Schultz, President & Treasurer 12 EX-27 2 ex27.txt EXHIBIT 27
5 0000201511 COMPUTER RESEARCH, INC. 1 U.S. DOLLARS 9-MOS AUG-31-2000 SEP-01-1999 MAY-31-1999 1 654,003 2,993,523 797,825 37,500 6,900 4,565,415 2,184,265 1,297,663 5,470,804 914,899 180,370 0 0 3,230 4,448,333 5,470,804 46,621 6,123,642 40,914 5,265,865 0 0 13,902 843,875 303,353 540,522 0 0 0 540,522 .13 .13
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