-----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, ANNcvKGMBVp6503D52jOLX4m+u2D0IXf05gv7F0JcM3TP4JiTIJsZnwEGLACRpzF YCbsK8sprtEcJdxJwp77Pw== 0000891554-96-000012.txt : 19960117 0000891554-96-000012.hdr.sgml : 19960117 ACCESSION NUMBER: 0000891554-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960116 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOINFO INC CENTRAL INDEX KEY: 0000351017 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 132867481 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11497 FILM NUMBER: 96503712 BUSINESS ADDRESS: STREET 1: 1600 ROUTE 208 CITY: FAIR LAWN STATE: NJ ZIP: 07410 BUSINESS PHONE: 2017030500 MAIL ADDRESS: STREET 1: 1600 ROUTE 208 CITY: FAIR LAWN STATE: NJ ZIP: 07410 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Quarter Ended: November 30, 1995 Commission File Number: 0-14786 AUTOINFO, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-2867481 (State or other (I.R.S. Employer jurisdiction of incorporation Identification number) or organization) 1600 Route 208, Fair Lawn, New Jersey 07410 (Address of principal executive offices) (201) 703-0500 (Registrant's telephone number, including area code) N/A (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 outstanding of the registrant's common stock as of January 10, 1996: 7,777,752 shares of common stock, $.01 par value. AUTOINFO, INC. INDEX Page Part I. Financial Information: Item 1. Financial Statements: Condensed Balance Sheet - November 30, 1995 and May 31, 1995 ..................... 3 Condensed Statements of Operations - Three and Six months ended November 30, 1995 and November 30, 1994 ................ 4 Condensed Statement of Changes in Financial Position - Six months ended November 30, 1995 and November 30, 1994 ................ 5 Notes to Unaudited Condensed Financial Statements ................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .......... 7 Part II. Other Information 12 Signatures ............................................................... 13 Exhibit 11 ............................................................... 14 2 AUTOINFO, INC. CONDENSED BALANCE SHEETS (Unaudited) November 30, May 31, 1995 1995 ------------ ------------ ASSETS Current assets: Cash $ 185,913 $ 521,868 Short-Term Investments 33,413,474 38,314,489 Accounts receivables 54,744 146,908 Net Book Value of Assets of discontinued operations -- 3,195,103 Other current assets 261,345 120,024 ------------ ------------ Total current assets 33,915,476 42,298,392 Property, equipment and furniture (at cost), net of accumulated depreciation (November 30, 1995 - $106,131; May 31, 1995 - $98,631) 39,893 29,251 Investment, at cost -- -- Other assets -- 29,456 ------------ ------------ $ 33,955,369 $ 42,357,099 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 54,159 $ 160,869 Accounts payable and accrued liabilities 507,670 943,901 Income taxes payable 565,271 7,131,543 ------------ ------------ Total current liabilities 1,127,100 8,236,313 ------------ ------------ Long-term debt 2,000,000 4,000,000 ------------ ------------ Stockholders' Equity: Common stock - authorized 20,000,000 shares $.01 par value; issued and outstanding - 7,777,752 at November 30, 1995 7,756,252 at May 31, 1995 77,778 77,563 Additional paid-in capital 17,782,677 17,725,267 Officer note receivable (466,797) (466,797) Retained earnings 13,840,216 13,199,439 ------------ ------------ Total stockholders' equity 30,828,269 30,120,786 ------------ ------------ $ 33,955,369 $ 42,357,099 ============ ============ See notes to condensed unaudited financial statements 3 AUTOINFO, INC. CONDENSED STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended November 30, November 30, ---------------------------- ---------------------------- 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Revenues $ 183,067 $ 277,014 $ 382,843 $ 547,834 ----------- ----------- ----------- ----------- Operating Expenses: Salaries & Employee Benefits 201,705 181,744 376,594 378,402 Selling, General & Administrative 177,112 186,056 648,812 456,638 Depreciation & Amortization 3,750 6,181 7,499 12,366 ----------- ----------- ----------- ----------- Total Operating Expenses 382,567 373,981 1,032,905 847,406 ----------- ----------- ----------- ----------- Loss from Operations (199,500) (96,967) (650,062) (299,572) Other (Income) Expenses: Interest Income (349,698) (76,542) (773,202) (152,667) Dividend Income (52,628) (28,815) (134,467) (57,629) Interest Expense 41,756 80,324 118,964 159,334 ----------- ----------- ----------- ----------- Total other (Income) and Expenses (365,570) (25,033) (788,705) (50,962) ----------- ----------- ----------- ----------- Income (loss) from continuing operations before income taxes 166,070 (71,934) 138,643 (248,610) Income Tax Benefit (74,977) (32,744) (233,485) (108,945) ----------- ----------- ----------- ----------- Net income (loss) from continuing operations 241,047 (39,160) 372,128 (139,665) ----------- ----------- ----------- ----------- Income (loss) from discontinued operations -- 600,251 (42,712) 1,456,673 Provision for income taxes (Benefit) -- 215,004 (14,522) 532,486 Net income (loss) from discontinued operations -- 385,247 (28,190) 924,187 ----------- ----------- ----------- ----------- Gain on sale of discontinued operations 60,173 -- 449,756 -- Provision for income taxes 20,459 -- 152,917 -- ----------- ----------- ----------- ----------- Net gain on sale of discontinued operations 39,714 -- 296,939 -- ----------- ----------- ----------- ----------- Net Income $ 280,761 $ 346,087 $ 640,777 $ 784,522 =========== =========== =========== =========== Net Income (loss) Per Share: Continuing operations $ .03 $ -- $ .05 ($ .02) Discontinued operations -- .05 -- .13 Sale of discontinued operations .01 -- .03 -- ----------- ----------- ----------- ----------- Net income per share $ .04 $ .05 $ .08 $ .11 =========== =========== =========== =========== Weighted average number of common and common equivalent shares 7,773,861 7,346,952 7,768,953 7,359,730
See notes to condensed unaudited financial statements 4 AUTOINFO, INC. CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended November 30, ------------------------------ 1995 1994 ------------ ------------ Cash Flows from Operating Activities: Net Income $ 640,777 $ 784,522 Adjustments to reconcile net income to net cash provided by (used in) operations activities: Depreciation expenses 7,500 12,366 Amortization of deferred compensation 9,081 9,080 Gain on sale of discontinued operations (449,756) -- Changes in Assets and Liabilities: Accounts receivables 92,164 (38,420) Other current assets (141,321) (27,962) Other assets 29,456 (43,431) Income taxes payable (6,566,272) -- Accounts payable and accrued liabilities (436,231) (162,743) ------------ ------------ Net cash provided by (used in) continuing operations (6,814,602) 533,412 ------------ ------------ Net cash provided by discontinued operations and non-cash charges (105,141) (102,192) ------------ ------------ Cash flows from Investing Activities: Proceeds from the sale of discontinued operations 3,750,000 -- Capital expenditures (18,142) (13,381) Proceeds from redemptions short term investments 87,475,054 8,429,748 Purchases of short term investments (82,574,039) 8,921,508 ------------ ------------ Net cash provided by (used in) investing activities 8,632,873 (505,141) ------------ ------------ Cash flows from Financing Activities: Reduction of burrowing (2,106,710) (276,547) Exercise of stock options 57,625 3,500 Net cash used for financing Activities (2,049,085) (273,047) Net decrease in cash (335,955) (346,968) Cash at beginning of period 521,868 445,484 ------------ ------------ Cash at end of period $ 185,913 $ 98,516 ------------ ------------
See notes to condensed unaudited financial statements 5 AUTOINFO, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1 - General The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three and six months ended November 30, 1995 and November 30, 1994 are not necessarily indicative of the results that may be expected for a full fiscal year. For further information, refer to the financial statement and footnotes thereto included in the Company's annual report on Form 10-K for the year ended May 31, 1995. Note 2 - Marketable Securities Effective June 1, 1994, the Company, as required, adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities". This pronouncement establishes the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. This statement supersedes Statement No. 12 "Accounting for Certain Marketable Securities". In connection with the adoption of SFAS No. 115, debt and equity securities used as part of the Company's investment management that may be sold in response to cash needs, changes in interest rates, and other factors have been classified as securities available for sale. Such securities are reported at cost which approximates fair value and have maturities of less than one year and included common stock and bond funds ($3,520,041 as of May 31, 1995 and $3,582,220 as of November 30, 1995), money market instruments ($3,159,808 as of May 31, 1995 and $6,328,739 as of November 30, 1995) and municipal bonds ($31,634,640 as of May 31, 1995 and $23,502,515 as of November 30, 1995). As of November 30, 1995 and May 31, 1995 unrealized gains and losses were not material. Unrealized gains and losses, if material, would be excluded from earnings and reported as a separate component of stockholders' equity. During the three and six month period ended November 30, 1995, there were no material gains or losses arising from the disposition of marketable securities. Gains and losses on disposition of securities are recognized on the specific identification method in the period in which they occur. 6 Note 3 - Acquisition of Minority Interest In September 1994, the Company acquired the minority interest in its insurance inspection services business pursuant to a formularized valuation which resulted in no additional consideration being due. Accordingly, there is no provision for minority interest in net loss of partnership for any period subsequent to August 31, 1994. Note 4 - Sale of Assets On July 20, 1995, the Company consummated the sale of certain assets net of certain liabilities constituting the operating assets of its insurance inspection division for $3,750,000 in cash. All such assets and liabilities have been classified as "Net Book Value of Assets of Discontinued Operations" in the restated Balance Sheet as of May 31, 1995. The accompanying Statement of Operations for the three and six month periods ending November 30, 1995, reflects the results of operations, classifying the results related to the businesses sold as well as the gain on sale, as discontinued operations. The Statement of Operations for the corresponding periods of the prior year have been restated. Note 5 - Income Tax Benefit The income tax benefit from continuing operations for the three and six month periods ending November 30, 1995 of $74,977 and $233,485 are the results of approximately $385,000 and $825,000 of non-taxable interest and dividend income. Note 6 - Long Term Debt On September 10, 1995, the Company prepaid $2,000,000 of long-term notes due in January 1998, 1999, and 2000. In connection with this prepayment, warrants to purchase 196,296 shares at $4.00 per share were canceled. Note 7 - Subsequent Event - Acquisition of Assets On December 6, 1995 the Company acquired substantially all of the assets of Falk Finance Company, Inc., a consumer finance company primarily engaged in the business of purchasing retail installment sales contracts which are secured by late model automobiles. The aggregate consideration paid for the assets acquired included a payment of $5,125,000 plus the assumption of approximately $33 million of debt, including $22 million of senior debt. 7 AUTOINFO, INC. Management's Discussion and Analysis of Financial Condition And Results of Operations Liquidity and Capital Resources The Company's working capital was $32.8 million and liquid assets amounted to $33.6 million as of November 30, 1995. The Company has sufficient liquid assets to meet its short and long term capital requirements. The total amount of debt outstanding as of November 30, 1995 was $2,054,000 of which $54,000 is due in less than one year. This debt primarily relates to the 7.55% subordinated notes issued by the Company in January 1994 and to acquisitions. The Company has adequate resources to meet these obligations. Inflation and changing prices had no material impact on revenues or the results of operations for the three and six month periods ended November 30, 1995. There are no trends or commitments which may have an impact on the Company's liquidity. Income taxes payable decreased by $6,566,000 due to the payment of taxes for the year ended May 31, 1995 resulting primarily from the gain on sale of assets of discontinued operations. Results of Operations On April 1, 1995, the Company consummated the sale of certain assets, net of certain liabilities, constituting the operating assets of the Orion Network, Compass Network, Checkmate Computer Systems, and Insurance Parts Locator businesses. On July 20, 1995, the Company consummated the sale of the operating assets of its insurance inspection services business. The Results of Operations of these businesses have been classified as discontinued operations. The Company's continuing operations consist of its long distance services business. Except as otherwise noted, the following discussion of the results of operations is with respect to the Company's continuing operations. Three Months Ended November 30, 1995 and 1994 Revenues Revenues for the three months ended November 30, 1995 were $183,067, a decrease of $93,947 over total revenue of $277,014 for the corresponding prior year period. This decline in revenue in the Company's telephone reseller division is due primarily to reduced network usage levels. 8 Operating Expenses Salaries and employee benefit expenses for the three months ended November 30, 1995, increased $19,961 to $201,705 from $181,744 for the prior year period. Selling and administrative expenses for the three months ended November 30, 1995 decreased $8,944 to $177,112 from $186,056 for the prior year period. Depreciation and amortization expense for the three months ended November 30, 1995 decreased to $3,750 from $6,181 for the prior year period. Other (Income) Expenses Interest income was $349,698, an increase of $273,156 over $76,542 for the prior year period. This was directly attributable to the investment of the proceeds from the sale of the Company's automotive salvage industry businesses in April 1995 ($30,350,000) and the sale of the insurance inspection business in July 1995 ($3,750,000). Dividend income increased by $28,813 to $57,628 due to the payments received on Preferred Stock dividends in arrears currently recorded as income when received. Interest expense decreased $38,568 to $41,756 from $80,324 for the prior year period. This is a result of the pre-payment of $2,000,000 of the Company's long-term debt in September, 1995. Income (Loss) from Continuing Operations Income from continuing operations for the three months ended November 30, 1995 was $166,070 compared to a loss of $71,934 in the prior year period, an increase of $238,004. This is attributable to the increase in interest and dividend income offset by reduced revenues in the Company's telephone reseller division and the increase in administrative expenses. The tax benefit of $74,977 is the result of non-taxable interest and dividend income of $385,000. Income (Loss) from Discontinued Operations Discontinued operations for the prior year period includes the results of operations from the Company's automotive salvage industry businesses ($671,125) and the Company's insurance inspection services business (a loss of $70,874). Gain on Sale of Discontinued Operations The gain on sale of discontinued operations is the result of the sale of the operating assets of the Company's insurance inspection business in July 1995 for $3,750,000 in cash. 9 Six Months Ended November 30, 1995 and 1994 Revenues Revenues for the six months ended November 30, 1995 were $382,843, a decrease of $164,991 over total revenues of $547,834 for the corresponding prior year period. This decline in revenue in the Company's telephone reseller division is due primarily to reduced network usage levels. Operating Expenses Salaries and employee benefit expenses for the six months ended November 30, 1995 decreased by $1,808 to $376,594 from $378,402 for the prior year period. Selling and administrative expenses for the six months ended November 30, 1995 increased by $292,174 to $648,812 from $456,638 for the prior year period. This increase is primarily related to litigation and settlement costs associated with a shareholder consent solicitation action. Depreciation and amortization expense for the six months ended November 30, 1995 decreased to $7,499 from $12,366 for the prior year period. Other (Income) Expenses Interest income was $773,202, an increase of $620,535 over $152,667 for the prior year period. This was directly attributable to the investment of the proceeds from the sale of the Company's automotive salvage industry businesses in April 1995 ($30,350,000) and the sale of the insurance inspection business in July 1995 ($3,750,000). Dividend income increased by $76,838 to $134,467 due to payments received on Preferred Stock Dividends in arrears currently recorded as income when received. Interest expense decreased $40,370 to $118,964 from $159,334 for the prior year period. This is a result of the pre-payment of $2,000,000 of the Company's long-term debt in September 1995. Income (loss) from Continuing Operations Income from continuing operations for the six months ended November 30, 1995 was $138,643 compared to a loss of $198,610 in the prior year period, an increase of $337,253. This is attributable to the increase in interest and dividend income offset by reduced revenues in the Company's telephone reseller division and the increase in administrative expenses. The tax benefit of $233,485 is the result of non-taxable interest and dividend income of $825,000. 10 Income (Loss) from Discontinued Operations Income (loss) from discontinued operations for the six months ended November 30, 1995 was a loss of $42,712 compared to income of $1,456,673 in the prior year, an increase of $1,449,385. Discontinued operations for the prior year period includes the results of operations from the Company's automotive salvage industry businesses (income of $1,468,680) and the Company's insurance inspection services business (a loss of $12,007). Gain on Sale of Discontinued Operations The gain on sale of discontinued operations is the result of the sale of the operating assets of the Company's insurance inspection business in July 1995 for $3,750,000 in cash. 11 AUTOINFO, INC. Part II - OTHER INFORMATION Item 1 - 3: Inapplicable Item 4: Submission of Matters to a Vote of Security Holders Pursuant to a Notice of Annual Meeting of Stockholders and Proxy Statement dated December 18, 1995, the 1995 Annual Meeting of Stockholders of the Company was held on January 12, 1996. At the Annual Meeting, the following individuals were elected by an affirmative vote of approximately 82% of the common shares eligible to vote in person or by Proxy as directors of the Company: Mr. Jason Bacher, Mr. Robert Fagenson, Mr. Andrew Gaspar, Mr. Howard Nusbaum, Mr. Jerome Stengel, and Mr. Scott Zecher. Item 5: Inapplicable Item 6 (a): The following exhibits are filed with this report. Exhibit 11 - Calculation of Earnings Per Share. Item 6 (b): No reports on Form 8-K were filed by the Registrant during the quarter for which this report is filed. A Form 8-K was filed on December 21, 1995 to report the acquisition of operating assets of FALK Finance Corp., a Consumer Finance Company engaged in the business of purchasing retail installment sales contracts which are secured by late model automobiles. 12 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized. AUTOINFO, INC. (Registrant) /s/ Scott Zecher ----------------------------------- Scott Zecher President & Chief Operating Officer Date: January 12, 1996 /s/ William I. Wunderlich ----------------------------------- William I. Wunderlich Treasurer, Secretary And Principal Financial Officer 13 EX-11 2 CALCULATION OF EARNINGS PER SHARE Exhibit 11 AUTOINFO, INC. Calculation of Earnings Per Share
Three Months Ended Six Months Ended November 30, November 30, --------------------------- ---------------------------- 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Primarily and Fully Diluted Earnings (Loss): Earnings (Loss) from Operations Applicable to Common Stock: From Continuing Operations $ 241,047 ($ 7,437) $ 372,128 ($ 107,942) From Discontinued Operations -- 353,524 (28,190) 892,464 From Sale of Discontinued Operations 39,714 -- 296,839 -- ----------- ----------- ----------- ----------- Net Income $ 280,761 $ 346,087 $ 640,777 $ 784,532 Shares: Weighed Average Number of Common Shares Outstanding 7,768,622 7,255,286 7,768,953 7,255,145 Add Shares Issuable from Assumed Exercise of Options and Warrants 5,239 91,666 5,774 104,585 ----------- ----------- ----------- ----------- Weighted Average Number of Common Shares as Adjusted 7,773,861 7,346,952 7 ,768,953 7,359,730 Primary and Fully Diluted Earnings Per Common Share: From Continuing Operations $ .03 $ -- $ .05 ($ .01) From Discontinued Operations -- .05 -- .12 From Sale of Discontinued Operations .01 -- .03 -- ----------- ----------- ----------- ----------- Net Income $ .04 $ .05 $ .08 $ .11 ----------- ----------- ----------- -----------
EX-27 3 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1 U.S. DOLLARS 6-MOS MAY-31-1996 JUN-01-1995 NOV-30-1995 1 185,913 33,413,474 106,497 (51,753) 0 33,915,476 146,024 (106,131) 33,955,369 1,127,100 2,000,000 0 0 77,578 30,750,491 33,955,369 382,843 382,843 0 1,032,905 0 0 118,964 138,643 (233,485) 372,128 268,749 0 0 640,777 0.080 0.080
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