-----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, M1BjqjkGzcCgU6MlB9Kif8i7uxJcPXAFHT5Mic+YtGhci2FVQHZM2b+sqF+Nx9E2 XZNxXqRmZebXZtGSzufVNQ== 0001012287-96-000029.txt : 19961016 0001012287-96-000029.hdr.sgml : 19961016 ACCESSION NUMBER: 0001012287-96-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANTERBURY CORPORATE SERVICES INC CENTRAL INDEX KEY: 0000794927 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 232170505 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15588 FILM NUMBER: 96643636 BUSINESS ADDRESS: STREET 1: 1600 MEDFORD PLZ STREET 2: RTE 70 & HARTFORD RD CITY: MEDFORD STATE: NJ ZIP: 08055 BUSINESS PHONE: 6099530044 MAIL ADDRESS: STREET 1: 1600 MEDFORD PLZ CITY: MEDFORD STATE: NJ ZIP: 08055 FORMER COMPANY: FORMER CONFORMED NAME: CANTERBURY EDUCATIONAL SERVICES INC /PA/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CANTERBURY PRESS INC DATE OF NAME CHANGE: 19870615 10-Q 1 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: Commission File Number: August 31, 1996 0-15588 CANTERBURY CORPORATE SERVICES, INC. FORMERLY CANTERBURY EDUCATIONAL SERVICES, INC. (Exact name of registrant as specified in its charter) Pennsylvania 23-2170505 (State of Incorporation) (I.R.S. Employer Identification No.) 1600 Medford Plaza Route 70 & Hartford Road Medford, New Jersey 08055 (Address of principal executive office) Telephone Number: (609) 953-0044 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. X Yes No ----- ----- The number of shares outstanding of the registrant's common stock as of the date of the filing of this report: 14,969,009 shares. FORM 10-Q PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED BALANCE SHEET -------------------------- [CAPTION] ASSETS - ------ August 31, 1996 (Unaudited) November 30, 1995 --------------- ----------------- Current Assets: Cash $ 1,238,429 $ 1,471,702 Accounts receivable net of allowance for doubtful accounts of $2,544,000 and $2,276,000 6,943,331 5,281,731 Note receivable 138,856 531,072 Prepaid expenses and other assets 970,193 782,136 Refundable income taxes - 326,000 Deferred income tax benefit 926,155 794,676 ---------- ----------- Total Current Assets 10,216,964 9,187,317 Property and equipment at cost, net of accumulated depreciation and amortization of $7,764,000 and $7,015,000 3,920,747 3,756,242 Goodwill net of accumulated amortization of $1,297,000 and $886,000 9,029,939 9,440,645 Note receivable 3,945,967 4,028,921 Other assets 525,672 414,484 ----------- ----------- Total Assets $27,639,289 $26,827,609 =========== ===========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED BALANCE SHEET [CAPTION] LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ August 31, 1996 November 30, (Unaudited) 1995 --------------- ------------- Current Liabilities: Accounts payable - trade $ 723,574 $ 697,768 Accrued expenses 951,007 1,369,169 Income taxes payable 485,000 132,000 Unearned tuition income 1,006,033 1,186,886 Current portion, long-term debt 2,415,592 2,837,279 ------------ ------------ Total Current Liabilities 5,581,206 6,223,102 Long-term debt 5,518,500 6,572,701 Deferred income tax liability 544,000 919,000 Shareholders' Equity: Convertible preferred stock, no par value, authorized 1,600,000 shares, at aggregate liquidation preference Class A, 12.5%, 100,000 shares issued and outstanding - 93,482 Class B, 8%, 37,000 shares issued and outstanding - 35,000 Class C, 10%, 180,000, shares issued and outstanding - 130,006 Common stock, $.001 par value, 50,000,000 shares authorized; 14,969,000 and 13,060,000 issued outstanding 14,969 13,060 Additional paid in capital 14,867,150 12,915,730 Retained earnings 1,269,899 68,963 Treasury stock (156,435) (143,435) ------------ ------------ Total Shareholders' Equity 15,995,583 13,112,806 ------------ ------------ Total Liabilities and Shareholders' Equity $ 27,639,289 $ 26,827,609 ============ ============
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME The following Consolidated Statements of Income for the three-month and nine-month periods ended August 31, 1996, and August 31, 1995, are unaudited, but the Company believes that all adjustments (which consist only of normal recurring accruals) necessary for a fair presentation of the results of operations for the respective periods have been included. Quarterly results of operations are not necessarily indicative of results for the full year. Three months ended Nine months ended August 31, August 31, ------------------------------------------------- (Unaudited) (Unaudited) 1996 1995 1996 1995 ------ ------ ------ ------ Net revenues $7,793,701 $7,119,598 $21,967,010 $21,030,110 Costs and expenses 5,006,788 4,394,979 13,190,233 12,068,426 ---------- ---------- ----------- ----------- Gross profit 2,786,913 2,724,619 8,776,777 8,961,684 Selling 631,104 584,502 1,655,752 1,416,389 General and administrative 1,546,640 1,721,779 4,620,572 5,105,939 Provision for doubtful accounts 91,751 59,700 268,063 173,398 ---------- ---------- ----------- ---------- Total operating expenses 2,269,495 2,365,981 6,544,387 6,695,726 Other (income)/expenses Interest income (92,467) (23,421) (232,104) (50,640) Interest expense 141,270 194,107 509,243 661,056 Other (9,767) (38,267) (25,061) (84,059) ---------- ---------- ----------- ---------- Income before provision for income taxes and discontinue operation 478,382 226,219 1,980,312 1,739,601 Provision for income taxes 188,000 85,746 772,000 660,896 ---------- ---------- ----------- ----------- Income from continuing operations 290,382 140,473 1,208,312 1,078,705 Discontinued operation Income from discontinued operation less applicable income taxes of $1,254 and $281,104 - 2,047 - 458,643 ---------- ---------- ----------- ----------- Net income $ 290,382 $ 142,520 $ 1,208,312 $ 1,537,348 ========== ========== =========== =========== Net income per common share and common share equivalents: Primary: Income from continuing operations .02 .01 .09 .09 Discontinued operation - - - .04 ---------- ---------- ----------- ----------- Net income per share $ .02 $ .01 $ .09 $ .13 ========== ========== =========== =========== Fully diluted: Income from continuing operations .01 .08 Discontinued operation - .04 ---------- ----------- Net income per share $ .01 $ .12 ========== =========== Common and common share equivalents (weighted average): Primary 14,947,000 12,805,100 14,277,700 12,323,700 ========== ========== =========== =========== Fully diluted 13,491,600 13,010,200 ========== ===========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTHS ENDED AUGUST 31, 1996 AND 1995 August 31, August 31, 1996 1995 ---------- ---------- Cash flows from operating activities: Cash received from customers $19,856,494 $20,737,965 Cash paid to suppliers and employees (19,572,459) (18,956,227) Interest received 232,104 50,640 Interest paid (509,243) (661,056) ----------- ----------- Net cash provided by continuing operating activities $ 6,896 $ 1,171,322 Cash flows from investing activities: Capital expenditures (913,916) (461,961) Collection on notes receivable 475,170 - ----------- ----------- Net cash used in investing activities (438,746) (461,961) Cash flows from financing activities: Principal payments on long-term debt (377,783) (146,020) Proceeds from revolving credit facility 425,000 - Repayment of revolving credit facility (389,000) (500,000) Proceeds from long-term debt 422,145 352,773 Proceeds from exercise of stock options and warrants 11,150 26,250 Repayment on term loan (1,556,250) (2,075,000) Payment of dividends on preferred stock (7,376) (27,869) Purchase of treasury stock (13,000) (61,904) Proceeds from issuance of common stock, net 1,683,691 2,151,943 ----------- ----------- Net cash provided by/(used in) financing activities 198,577 (279,827) ----------- ----------- Net cash provided by discontinued operation - 106,500 Net increase/(decrease) in cash (233,273) 590,034 Cash at beginning of period 1,471,702 1,384,030 ----------- ----------- Cash at end of period $ 1,238,429 $ 1,974,064 =========== ===========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTHS ENDED AUGUST 31, 1996 AND 1995 August 31, August 31, 1996 1995 ---------- ---------- Reconciliation of income from continuing operations to net cash provided by continuing operating activities: Net income $1,208,312 $1,078,705 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 1,160,117 982,676 Provision for doubtful accounts 268,063 188,998 Deferred income tax benefit (506,479) 615,609 Change in operating assets and liabilities: Increase in accounts receivable (1,929,663) (388,442) Increase in prepaid expenses and refundable income taxes 137,943 201,368 Increase in other assets (111,188) (121,111) Increase(decrease) in accounts payable 25,806 (661,980) Decrease in accrued expenses (418,162) (687,765) Decrease in unearned tuition income (180,853) (361,861) Increase in income taxes payable 353,000 325,125 ---------- ---------- Total adjustments (1,201,416) 92,617 ---------- ---------- Net cash provided by continuing operating activities $ 6,896 $1,171,322 ========== ==========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. Summary of Significant Accounting Policies ------------------------------------------ Principles of Consolidation - --------------------------- The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All material intercompany transactions have been eliminated. Basis of Financial Statement Presentation and Material Uncertainty - ------------------------------------------------------------------ On November 30, 1993 the Company issued 1,029,000 of its common shares to the shareholders of Landscape Maintenance Services, Inc. in a business combination accounted for as a pooling of interests. During 1994, the Company instituted suit against the former Landscape Maintenance shareholders, alleging misrepresentations and the omission of material facts (e.g. undisclosed liabilities) thereby breaching the agreement to merge the Company and Landscape Maintenance (the Acquisition Agreement). The Company seeks, among other remedies, an adjustment to the number of shares issued, payment of certain previously undisclosed liabilities and unspecified damages or the rescission of the Acquisition Agreement. The accompanying consolidated financial statements include Landscape Maintenance for all periods presented under the pooling of interests method of accounting for business combinations. Because the outcome of this litigation is uncertain, the number of shares issued in the business combination or adjustment of the accounting for the business combination and its effects on the consolidated financial statements cannot be determined at this time. The rescission of the Acquisition Agreement would result in a change in reporting entity which would require restatement of the consolidated financial statements for all periods presented, to eliminate the results of operations, cash flows and financial position of Landscape Maintenance, currently included under the pooling of interests method of accounting. Landscape Maintenance represents the business maintenance services segment of the Company. See Note 3 for selected financial information regarding this segment. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at August 31, 1996, and revenues and expenses for the nine months ended August 31, 1996. The ultimate outcome and actual results could differ from the estimates and assumptions used. Revenue Recognition - ------------------- The Company's computer software training segment records revenue at the time an individual attends the training class. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The Company's management training segment records revenue based on performance of seminars to its clients. The Company's vocational training segment records tuition revenues ratably over the term of the courses which run for approximately two to eight weeks. Receivables for students' tuition are recorded as of the students' first day of class attendance. Unearned tuition income represents revenue to be recognized over the term of the courses. The Company's business maintenance services segment records revenues on a pro rata basis over the contract term (typically three to nine months). Statement of Cash Flows - ----------------------- For purposes of the Statement of Cash Flows, cash refers solely to demand deposits with banks and cash on hand. Depreciation and Amortization - ----------------------------- The Company depreciates and amortizes its property and equipment for financial statement purposes using the straight-line method over the estimated useful lives of the property and equipment (useful lives of leases or lives of leasehold improvements and leased property under capital leases, whichever is shorter). For income tax purposes, the Company uses accelerated methods of depreciation. Amortization of Intangible Assets - --------------------------------- Goodwill is being amortized over twenty-five years using the straight- line method. Deferred Income Taxes - --------------------- Deferred income taxes are determined utilizing the liability method prescribed by FAS 109. This method gives consideration to the future tax consequences associated with the differences between financial accounting and tax bases of assets and liabilities. Earnings Per Share - ------------------ Earnings per share is computed using the weighted average common shares outstanding during the year and includes the dilutive effect of common stock equivalents (options). Fully diluted earnings per share for 1995 is based on the assumed conversion of preferred stock. Accounting Changes - ------------------ In October 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") 123, "Accounting for Stock-Based Compensation." SFAS 123, which is required to be adopted by January 1, 1996, establishes financial accounting and reporting standards for stock-based employee compensation plans, and establishes accounting standards for issuance of equity instruments to acquire goods and services from non-employees. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS 121, which is required to be adopted by January 1, 1996, establishes accounting standards for the impairment of long-lived assets and certain intangible assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. The Company does not expect that adoption of SFAS 121 and 123 will have a material effect on its consolidated financial position, consolidated statement of income, or liquidity. 2. Segment Reporting ----------------- The Company is organized into four operating segments: computer software training, management training, vocational training and business maintenance services. The computer software training segment trains corporate workers and managers as an authorized training center for Microsoft, Lotus, Borland, WordPerfect, Aldus and Apple on DOS, Windows and Macintosh platforms. The management training segment conducts corporate seminars in management and team development, selling and negotiating, interpersonal communication, executive development and organizational problem solving. The Company's vocational training segment develops, markets and teaches courses that focus upon job-related skills in vocations such as word processing specialist, computer operator, tractor trailer driver, bartender, phlebotomy technician and electrocardiography technician. Its clients are individuals who wish to seek employment, corporations who need to hire these individuals, as well as other corporations that hire Canterbury on a direct basis to train its existing employees. The business maintenance services segment specializes in corporate landscape maintenance and design. Selected financial information for each segment, which includes an allocation of corporate expenses, is as follows: Income Depreciation Before Capital & Nine Months Ended 8/31/96 Revenues Taxes Assets Expenditures Amortization - --------------------------------------------------------------------------------------------------- Computer Software Training $ 8,760,213 $ 698,931 $ 3,157,608 $ 475,236 $ 326,882 Management Training 1,291,579 467,911 254,419 - 867 Vocational Training/Corporate 1,256,921 127,464 20,348,151 - 396,886 Business Maintenance Services 10,658,297 686,006 3,879,111 438,680 435,482 ----------- ---------- ----------- ---------- ----------- $21,967,010 $1,980,312 $27,639,289 $ 913,916 $ 1,160,117 =========== ========== =========== ========== ===========
FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Income Depreciation Before Capital & Nine Months Ended 8/31/95 Revenues Taxes Assets Expenditures Amortization - ------------------------------------------------------------------------------------------------ Computer Software Training $ 8,774,344 $1,196,420 $ 3,770,382 $ 277,214 $ 291,395 Management Training 1,155,976 141,522 401,333 - 674 Vocational Training/Corporate 3,171,321 219,040 16,822,741 15,617 325,166 Business Maintenance Services 7,928,469 182,619 4,155,490 169,130 365,441 ----------- ---------- ----------- ---------- ---------- $21,030,110 $1,739,601 $25,149,946 $ 461,961 $ 982,676 =========== ========== =========== ========== ==========
3. Discontinued Operation ---------------------- On November 30, 1995 the Company sold Star Label Products, Inc. and its wholly owned subsidiary, Smartwork Graphics, which comprised the specialty printing segment. Star Label was sold to its former owner. The proceeds of the sale consisted of both cash and notes receivable amounting to $4,000,000. Also the Company issued to the buyer an aggregate of 350,000 options to purchase the common stock of Canterbury Corporate Services, Inc. at an exercise price of $2.00 per share (bid price at date of grant). The said options expire on November 9, 2000. In the opinion of management, the value assigned to these options, if any, is not significant. The results of operations and the gain on the sale of this segment has been reported as a discontinued operation and the financial statements for the nine months ended August 31, 1995 have been restated to reflect the discontinuation of the specialty printing segment. The gain on sale of the discontinued operation for the year ended November 30, 1995 was $1,493,545 net of taxes of $1,309,922. The following is a summary of the results of operations of the Company's specialty printing segment: Nine Months ended August 31, 1995 ----------------- Revenue $ 2,533,123 Income from operations (net of taxes of $281,104) 458,643
Cost and expenses for this discontinued segment include approximately $310,000 representing allocated costs from corporate for the nine months ended August 31, 1995. The net assets of discontinued operation were as follows: August 31, 1995 --------------- Current assets $ 511,250 Current liabilities (237,430) Property, plant and equipment, net 834,720 Other, net 256,362 ---------- Total $1,364,902 ==========
FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. Property and equipment ---------------------- Property and equipment consists of the following: August 31, 1996 November 30, 1996 --------------- ----------------- Land $ 725,910 $ 785,910 Buildings and improvements - 680,171 Equipment 8,224,523 7,351,103 Furniture and fixtures 1,179,571 1,134,866 Leased property under capital leases and leasehold improvements 941,674 819,230 ----------- ----------- 11,071,678 10,771,280 Less: accumulated depreciation and amortization (6,930,931) (6,424,380) Reserve on disposition of assets (220,000) (590,658) ----------- ----------- Net property and equipment $ 3,920,74 $ 3,756,242 =========== =========== 5. Long-Term Debt -------------- August 31, 1996 November 30, 1995 --------------- ----------------- Long-term obligations consist of: Mortgages payable $ - $ 36,299 Term loan 4,150,000 5,706,250 Revolving credit line 3,155,620 3,119,620 Unsecured notes payable, other - 144,000 Capital lease obligations 628,472 403,811 ---------- ---------- 7,934,092 9,409,980 Less: Current maturities (2,415,592) (2,837,279) ---------- ---------- $5,518,500 $6,572,701
========== ========== In April, 1995 the Company entered into a permanent restructuring of its term-loan and revolving credit facilities with its bank. The term-loan amortization and maturities remained identical to the original agreements. A principal payment of this term loan was made in a lump sum payment of $2,075,000 in June, 1995. Twelve equal quarterly payments of $518,750 are due thereafter. Quarterly payments of $518,750 were made in December, 1995, March, 1996, June 1996 and September, 1996. The interest rate is LIBOR plus 3% or the bank's prime rate plus 1/2%. The Company has the right to choose which rate is to be utilized on a periodic basis. The interest rates can be reduced if certain financial ratios are met in the future. The 30 day LIBOR rate at August 31, 1996 was 5.4375%. At August 31, 1996 the Company borrowed $3,155,620 under the revolving credit facility; the unused portion of the line was $344,380. Based on borrowing limitations as set forth in the borrowing base calculation, the Company repaid $350,000 in December, 1995, $25,000 in January, 1996 and $14,000 in April, 1996. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The revolving credit line is secured by all accounts receivable, equipment, furniture and fixtures. Aggregate maturities on long-term debt for the next five years, exclusive of obligations under capital leases, are approximately $2,075,000, $4,905,620, $518,750, $0 and $0 respectively. 6. Capital Leases -------------- Capital lease obligations are certain equipment leases which expire in May, 1999. Future payments under capitalized leases together with the present value, calculated at the respective leases' implicit interest rate of approximately 9.5% to 10.5% at their inception, as of August 31, 1996 are as follows: Year ending November 30, 1996 $117,463 Year ending November 30, 1997 313,484 Year ending November 30, 1998 169,567 Year ending November 30, 1999 117,141 -------- Total minimum lease payments 717,655 Less amount representing interest (89,183) -------- Present value of long-term obligations under capital leases $628,472 ========
7. Subsequent Events ----------------- On July 1, 1996 the Company acquired the business of ProSoft, LLC of Charlotte, North Carolina for Canterbury Corporate Services, Inc. restricted common stock and the opportunity to earn additional restricted common shares over the next three years based on various levels of increasing profitability. ProSoft provides computer software training and consulting, both in its own classrooms and on-site to corporations in the Charlotte area. Item 2. Management's Discussion of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- Liquidity and Capital Resources - ------------------------------- Working capital at August 31, 1996 was $4,637,700. This level of working capital is expected to be maintained through Fiscal 1996; however, Landscape Maintenance causes some seasonality in consolidated cash flows. The spring season requires that Landscape Maintenance expend funds for labor and materials in advance of billings as the business gears up for the summer months. The cash shortfall will reverse itself in the late fall/early winter as the collection of receivables exceeds the cost of operations. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Two other factors will have a positive impact on consolidated liquidity. CALC/Canterbury should have a significant positive influence on overall cash flow for 1996. Strong margins coupled with the fact that receivables turn, on average, in approximately 40 days, will contribute to a strong working capital ratio. Also, as the vocational training segment becomes less of a significant portion of consolidated operations, the very slow receivable turn attributed to self-paying individuals will have less of a negative impact on overall liquidity. Management believes available working capital lines of credit, as well as the ability to raise money through equity funding will be sufficient to cover cash flow requirements for the Company for the next 12 months. Cash flow from continuing operations for the nine months ended August 31, 1996 was $7,000 a decrease of $1,171,000 over the same period last year. This was attributable to increased construction revenue resulting in an increase in business maintenance segment accounts receivable due to a longer collection cycle caused by retention and length of projects. Additionally, significant expenditures for staffing and course development were made in the second quarter for CALC/Canterbury. Gearing up to train on Windows 95 and other major new software products necessitated the need to invest for the latter part of Fiscal 1996 and beyond. From March through June 1996, the Company raised $1,683,000 net of applicable costs, through private placements of its common stock sold to foreign investors at prices ranging from $1.41 to $1.50. The equity raised was used for general working capital needs and to repay bank debt. The Company believes that the combination of cash provided by operating activities, as well as the ability to borrow from the unused portion of its credit line, will enable the Company to meet its liquidity needs in respect to its current operations for the next 12 months. There was no material commitment for capital expenditures as of August 31, 1996. Inflation was not a significant factor in the Company's financial statements. In 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and SFAS 123, "Accounting for Stock-Based Compensation." Both of these statements are required to be adopted by January 1, 1996. The Company does not expect that adoption of SFAS 121 and 123 will have a material effect on its consolidated financial position, consolidated statement of income, or liquidity. For further discussion, see Note 1 of the Notes to Consolidated Financial Statements. Results of Operations - --------------------- Revenues - -------- Revenues for the nine months ended August 31, 1996 increased by $937,000 (4%) to $21,967,000 over the same period last year. This net increase was due to the significant number of winter storms during the Winter of 1996. Hence, snow and ice removal revenues increased in the business maintenance services segment by approximately $1,624,000 over the same period last year. Also, maintenance FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) service contracts have increased by approximately $700,000 over 1995 due to increased referred business. Offsetting the increase in snow removal revenue was a decrease in vocational training revenues of approximately $1,914,000. This decrease is the result of the planned closings and downsizing of many of the Company's vocational training centers during 1995. Costs and Expenses - ------------------ Cost of sales expenses for the nine months ended August 31, 1996 increased $1,122,000 (9%) over the same period last year. The increase was due to additional staffing and course development in the computer software training segment, as well as the additional costs associated with performing the increased business segment revenue. Selling expense for the six and nine months ended August 31, 1996 increased $47,000 (8%) and $239,000 (17%), respectively, over the same period last year. This was primarily due to an increase in staffing for the computer software training and management training segments. This increased staffing was employed to sell into new markets as well as expand existing markets. General and administrative expense for the three and nine month period ended August 31, 1996 increased $175,000 (10%) and $486,000 (10%) over the same period last year. This was due primarily to reduced administrative staffing and more efficient support as well as a reduction in corporate overhead. Interest income for the three and nine months ended August 31, 1996 increased $69,000 and $182,000, respectively, over the same period last year. This was due to note receivable interest income generated by the sale of the discontinued operation. Interest expense for the six and nine months ended August 31, 1996 decreased $53,000 and $152,000, respectively, over the same period last year. This was due to a reduction in principal balances of the Company's term loan facility. This quarterly report contains forward looking statements. The actual results might differ materially from those projected in the forward looking statements. Additional information concerning factors that could cause actual results to materially differ from those in forward looking statements is contained in this and other Canterbury Corporate Services, Inc.'s SEC filings, including periodic reports under the Securities Exchange Act of 1934, as amended, copies of which are available upon the request from the Canterbury investor relations department. PART II - OTHER INFORMATION --------------------------- Item 1 Legal Proceedings - ------ None Item 2 Changes in Securities - ------ None Item 3 Defaults Upon Senior Securities - ------ None Item 4 Submission of Matters to a Vote of Security Holders - ------ None Item 5 Other Information - ------ None Item 6 Exhibits and Reports on Form 8-K - ------ (a) Exhibits: None (b) Reports on Form 8-K: None
FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. 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. CANTERBURY CORPORATE SERVICES, INC. (Registrant) By/s/ Stanton M. Pikus ---------------------- Stanton M. Pikus President (Chief Executive Officer and duly authorized signer) By/s/ Kevin J. McAndrew ------------------------ Kevin J. McAndrew, C.P.A. Chief Operating Officer, Executive Vice President, (Chief Financial Officer and duly authorized signer) October 15, 1996 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000794927 CANTERBURY CORPORATE SERVICES, INC. 1 NOV-30-1996 DEC-01-1995 AUG-31-1996 9-MOS 1,238,429 0 9,487,567 2,544,236 0 10,216,964 11,071,678 7,150,931 27,639,289 5,581,206 0 0 0 0 15,995,583 27,639,289 21,967,010 21,967,010 13,190,233 19,466,557 0 268,063 509,243 1,980,312 772,000 1,208,312 0 0 0 1,208,312 0.09 0.00
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