-----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, QUd5B6wGir+KZienzYOBPsEE/9zIleDfdd7A/jsIT+kArpZT3L/tVL1eSfxqoNwB D1RGKG20iiDRWvIjLoAYlQ== 0001012287-97-000012.txt : 19970416 0001012287-97-000012.hdr.sgml : 19970416 ACCESSION NUMBER: 0001012287-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970415 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: 97581444 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 FOR QUARTER ENDING 2/28/97 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: February 28, 1997 0-15588 CANTERBURY CORPORATE 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: 15,588,791 shares. FORM 10-Q PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED BALANCE SHEET ASSETS
February 28, 1997 November 30, (Unaudited) 1996 ----------- ------------ Current Assets: Cash $ 1,244,547 $ 440,178 Accounts receivable net of allowance for doubtful accounts of $1,763,000 and $1,685,000 3,076,330 3,142,024 Notes receivable 575,582 978,582 Prepaid expenses and other assets 786,182 641,645 Deferred income tax benefit 1,228,000 1,228,000 ----------- ---------- Total Current Assets 6,910,641 6,430,429 Property and equipment at cost, net of accumulated depreciation and amortization of $3,453,000 and $3,305,000 2,631,662 2,752,430 Goodwill net of accumulated amortization of $1,278,000 and $1,178,000 8,814,141 8,914,086 Notes receivable 9,063,573 9,092,943 Other assets 329,974 275,131 ----------- ----------- Total Assets $27,749,991 $27,465,019 =========== ===========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY February 28, 1997 November 30, (Unaudited) 1996 ----------- ------------ Current Liabilities: Accounts payable - Trade $ 236,949 $ 230,000 Accrued expenses 318,155 374,859 Income taxes payable 395,635 424,845 Unearned tuition income 1,074,186 1,198,991 Current portion, long-term debt 2,159,118 2,230,715 ----------- ----------- Total Current Liabilities 4,184,043 4,459,410 Long-term debt 4,721,906 4,718,793 Deferred income tax liability 1,928,000 2,028,000 Shareholders' Equity: Common stock, $.001 par value, 50,000,000 shares authorized; 15,589,000 and 15,054,000 issued outstanding 15,589 15,054 Additional paid in capital 15,400,141 14,840,642 Retained earnings 1,834,347 1,728,155 Treasury stock (325,035) (325,035) ------------ ------------ Total Shareholders' Equity 16,925,042 16,258,816 ------------ ------------ Total Liabilities and Shareholders' Equity $ 27,749,991 $ 27,465,019 ============ ============
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME The following Consolidated Statements of Income for the three-month periods ended February 28, 1997, and February 29, 1996, 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 February 28, and February 29 ---------------------------- (Unaudited) 1997 1996 ---- ---- Net revenues $3,174,279 $3,229,136 Costs and expenses 1,546,136 1,173,169 ---------- ---------- Gross profit 1,628,143 2,055,967 Selling 469,482 420,137 General and administrative 938,481 828,390 Provision for doubtful accounts 77,830 75,786 ---------- ---------- Total operating expenses 1,485,793 1,324,313 Other (income)/expenses Interest income (160,608) (74,044) Interest expense 121,182 196,225 Other 10,584 (12,182) ---------- ----------- Income before provision for income taxes and discontinued operation 171,192 621,655 Provision for income taxes 65,000 242,000 ---------- ---------- Income from continuing operations 106,192 379,655 Discontinued operation Income from discontinued operation net of income taxes of $207,000 - 353,455 ---------- ---------- Net income $ 106,192 $ 733,110 ========== ========== Net income per common share and common share equivalents: Primary: Income from continuing operations .01 $ .03 Discontinued operation - .03 ---------- ---------- Net income per share $ .01 $ .06 ========== ========== Common and common share equivalents (weighted average): Primary 15,131,000 13,221,200 ========== ==========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
February 28, February 29, 1997 1996 ------------ ------------ Cash flows from operating activities: Cash received from customers $ 3,310,338 $ 2,717,101 Cash paid to suppliers and employees (3,233,203) (2,243,820) Interest received 160,608 74,044 Interest paid (121,182) (196,225) -------- -------- Net cash provided by operating activities $ 116,561 $ 351,100 Cash flows from investing activities: Capital expenditures (27,112) (121,363) Collection on notes receivable 432,370 431,230 -------- -------- Net cash provided by investing activities 405,258 309,867 Cash flows from financing activities: Principal payments on long-term debt (77,484) (103,242) Repayment of revolving credit facility - (375,000) Proceeds from exercise of stock options and warrants - 3,400 Proceeds from issuance of common stock 360,034 - Repayment on term loan - (518,750) Payment of dividends on preferred stock - (7,376) Purchase of treasury stock - (13,000) --------- --------- Net cash provided by/(used in) financing activities 282,550 (1,013,968) Net cash used in discontinued operation - (382) Net increase/(decrease) in cash 804,369 (353,001) Cash at beginning of period 440,178 1,471,702 ------------ ----------- Cash at end of period $ 1,244,547 $ 1,118,319 ============ ===========
See Accompanying Notes FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
February 28, February 29, 1997 1996 ------------ ------------ Reconciliation of income from continuing operations to net cash provided by operating activities: Income from continuing operations $ 106,192 $ 379,655 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 247,825 $221,877 Provision for doubtful accounts 77,830 75,786 Change in operating assets and liabilities: Increase in accounts receivable (12,136) (441,711) Increase in prepaid expenses (144,537) (348,988) (Increase)/decrease in other assets (54,843) 170,201 Increase in accounts payable 6,949 84,887 Decrease in accrued expenses (56,704) (139,283) Decrease in unearned tuition income (124,805) (67,324) Increase/(decrease) in income taxes payable (29,210) 249,000 Increase in deferred income taxes 100,000 167,000 -------- -------- Total adjustments 10,369 (28,555) --------- ---------- Net cash provided by operating activities $ 116,561 $ 351,100 ========= ==========
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. 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 February 28, 1997, and revenues and expenses for the three months ended February 28, 1997. 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. 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. 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. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Deferred Income Taxes The Company utilizes the liability method to account for income taxes. 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). 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 is effective for fiscal years beginning after December 15, 1995. SFAS 123 provides companies with a choice to follow the provisions of SFAS 123 in determining stock based compensation expense or to continue with the provisions of APB 25, "Accounting for Stock Issued to Employees." The Company will continue APB 25 and will provide the pro forma disclosures as required by SFAS 123 in the November 30, 1997 notes to the consolidated financial statements. The Company does not expect that adoption of SFAS 123 will have a material effect on its consolidated financial statements. 2. Segment Reporting The Company is organized into three operating segments: computer software training, management training and vocational training. 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. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Selected financial information for each segment, which includes an allocation of corporate expenses, is as follows:
Income Capital Depreciation & Three Months Ended 2/28/97 Revenues Before Taxes Assets Expenditures Amortization - -------------------------- -------- -------------- -------- ------------ -------------- Computer Software Training $2,466,530 $ 127,120 $3,010,941 $ 27,112 $123,139 Management Training 355,745 18,599 182,256 - 289 Vocational Training 352,004 25,473 24,556,794 - 124,397 ---------- --------- ---------- -------- -------- $3,174,279 $ 171,192 $27,749,991 $ 27,112 $247,825 ========== ========= =========== ======== ======== Income Capital Depreciation & Three Months Ended 2/29/96 Revenues Before Taxes Assets Expenditures Amortization - -------------------------- -------- -------------- -------- ------------ -------------- Computer Software Training $2,359,404 $295,792 $ 2,858,056 $121,363 $ 98,921 Management Training 466,384 225,921 225,112 - 289 Vocational Training 403,348 99,942 20,032,383 - 122,667 ---------- ---------- ----------- -------- --------- $3,229,136 $621,655 $23,115,551 $121,363 $221,877 ========== ========== =========== ======== =========
3. Discontinued Operation On November 30, 1996 the Company sold Landscape Maintenance Services, Inc., which comprised its business maintenance services segment. The proceeds of the sale consisted of both cash and notes totalling $4,500,000. The note bears interest at 8% per annum and is secured by substantially all assets and business of the buyer. The results of operations has been reported as a discontinued operation and the financial statements for the quarter ended February 29, 1996 have been restated to reflect the discontinuation of the business maintenance services segment. The following is a summary of the results of operations of the Company's business maintenance services segment.
Three Months ended February 28, 1996 ------------------ Revenue $ 3,123,475 Income from operations (net of taxes of $207,000) 353,455
Cost and expenses for this discontinued segment include approximately $275,000 representing allocated costs from corporate for the three-months ended February 28, 1996. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The net assets of discontinued operation were as follows:
February 28, 1996 Current Assets $1,712,311 Current liabilities (1,019,418) Property, plant and equipment, net 922,144 Other, net 294,936 ---------- Total $1,909,973 ==========
4. Property and Equipment Property and equipment consists of the following:
February 28, November 30, 1997 1996 ------------ ------------ Land, buildings and improvements $ 725,910 $ 725,910 Equipment 3,288,231 3,262,009 Furniture and fixtures 1,185,631 1,184,741 Leased property under capital leases and leasehold improvements 884,756 884,756 ----------- ---------- 6,084,528 6,057,416 Less: accumulated depreciation and amortization (3,452,866) (3,304,986) ----------- ---------- Net property and equipment $ 2,631,662 $2,752,430 =========== ========== 5. Long-Term Debt February 28, November 30, 1997 1996 ------------- ------------ Long-term obligations consist of: Term loan 3,631,250 3,631,250 Revolving credit line 2,774,620 2,774,620 Capital lease obligations 466,154 543,638 ----------- ---------- 6,872,024 6,949,508 Less: Current maturities (2,159,118) (2,230,715) ----------- ---------- $ 4,712,906 $4,718,793 =========== ==========
During 1996 the Company and its primary lender, Chase Manhattan Bank, instituted litigation, each claiming that the other party violated the terms of the credit agreement. As a result, the debt was declared in default. In February, 1997, the litigation was settled and all outstandings with Chase were restructured and become due on December 31, 1997. The Company and Chase agreed that all alleged defaults under the previous agreements were permanently waived and the Company would use its best efforts to replace Chase during 1997. The Company is in the process of replacing Chase as its primary FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) lender and is confident that this refinancing should be completed before December, 1997. Based on this assumption, the Company is continuing to classify a significant portion of the bank debt as long term. The projected maturities of the debt beyond December, 1997 cannot be readily determined at this time. The Company agreed to make principal payments against the term loan throughout 1997. The first payment of $919,000 will be made in April, 1997; $518,750 is to be paid in June and $518,750 is to be paid during September, 1997. The revolving credit facility will remain at $2,774,600 until December 31, 1997, with no additional borrowings or repayments scheduled during Fiscal 1997. The capital leases will be paid as usual on a monthly basis, with any remaining balance due on December 31, 1997. Interest rates on all outstanding debt will remain at the same rate as before the restructuring. The term loan interest rate is LIBOR plus 3% or the Bank's prime rate plus 1/2%. The revolving credit facility carries an interest rate of LIBOR plus 2 1/2% or the Bank's prime rate of interest. The Company has the right to choose which rate is to be utilized on a periodic basis. The 30 day LIBOR rate at February 28, 1997 was 5.44%. As of February 28, 1997, the Company was in compliance with or has received a waiver on all of the debt covenants relating to both the term loan and the revolving credit facility. The long-term debt is secured by substantially all of the assets of the Company. Aggregate maturities on long-term debt for the next five years, exclusive of obligations under capital leases, are approximately $6,405,870, $0, $0, $0 and $0 respectively. The carrying value of the long-term debt approximates its fair value. 6. Capital Leases Capital lease obligations are certain equipment leases which expire in October, 1998. Future payments under capitalized leases together with the present value, calculated at the respective leases' implicit interest rate of approximately 10.5% to 11% at their inception, as of May 1, 1995 and October 1, 1996 are as follows: Year ending November 30, 1997 $186,753 Year ending November 30, 1998 178,929 Year ending November 30, 1999 119,384 Year ending November 30, 2000 13,183 -------- Total minimum lease payments 498,249 Less amount representing interest (32,095) -------- Present value of long-term obligations under capital leases $466,154 ======== FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Item 2. Management's Discussion of Financial Condition and Results of Operations Liquidity and Capital Resources Working capital at February 28, 1997 was $2,726,000 During 1996 the Company and its primary lender, Chase Manhattan Bank, instituted litigation, each claiming that the other party violated the terms of the credit agreement. As a result, the debt was declared in default. In February, 1997, the litigation was settled and all outstandings with Chase were restructured and become due on December 31, 1997. The Company and Chase agreed that all alleged defaults under the previous agreements were permanently waived and the Company would use its best efforts to replace Chase during 1997. The Company is in the process of replacing Chase as its primary lender and is confident that this refinancing should be completed before December, 1997. Management believes that positive cash flow contributions from the Company's operating segments will be sufficient to cover cash flow requirements for Fiscal 1997. There was no material commitment for capital expenditures as of February 28, 1997. Inflation was not a significant factor in the Company's financial statements. Cash flow from continuing operations for the three months ended February 28, 1997 was $117,000, a decrease of $234,000 over the previous year. This reduction was attributed to lower net income in 1997. In February, 1997, the Company raised $434,782, net of applicable costs, through a Regulation D Private Placement of its common stock to one accredited investor at a price of $1.00 per share. This equity was used for general working capital purposes. Results of Operations Revenues Revenues for the three months ended February 28, 1997 decreased by $55,000 (2%) to $3,174,000 from the same period last year. This decrease was attributable to reductions in both the management training and vocation training segments. Costs and Expenses Costs and expenses for the three months ended February 28, 1997 increased $49,000 (12%) over the comparable three-month period in Fiscal 1996. The increase was due to higher costs associated with increased revenue from the computer software training segment. General and administrative costs increased by $110,000 (13%) in Fiscal 1997 versus Fiscal 1996. The increase was due to increased personnel costs, as well as non-recurring professional fees expended in the process of settling various legal actions. The Company anticipates significant further legal fees to be expended pursuant to various non-recurring legal matters. Interest income increased by $86,000 (116%) in Fiscal 1997 versus Fiscal 1996 due to note receivable interest income generated by the sale of the discontinued operation (business maintenance services). Interest expense deceased by $75,000 in Fiscal 1997 over the same period in Fiscal 1996 due to a reduction in principal balances of the Company's term loan and revolving credit facility. FORM 10-Q CANTERBURY CORPORATE SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) PART II - OTHER INFORMATION Item 1 Legal Proceedings See Footnote 5 to the Financial Statements. 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 Reports on Form 8-K: Notification of filing an Order to Show Cause, Verified Complaint and Affidavit of Stanton M. Pikus, President of Canterbury Corporate Services, Inc. against The Chase Manhattan Bank for breach of the Term Loan and Revolving Loan Agreements, dated January 6, 1997. 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) April 15, 1997 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000794927 CANTERBURY CORPORATE SERVICES, INC. 1 NOV-30-1997 DEC-01-1996 FEB-28-1997 3-MOS 1,244,547 0 4,839,330 1,763,000 0 6,910,641 6,084,528 3,452,866 27,749,991 4,184,043 0 0 0 15,589 16,909,453 27,749,991 3,174,279 3,174,279 1,546,136 1,407,963 (150,024) 77,830 121,182 171,192 65,000 106,192 0 0 0 106,192 0.01 0.01
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