-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, PB5llxjFXaRJRXeMBx9uvo4150ICFKvzMrdId5g4WEKTYCHY2ptcNiaUbqkNK5pF 6KWVt/apue+3ht01fXthOQ== 0000804188-94-000018.txt : 19941007 0000804188-94-000018.hdr.sgml : 19941007 ACCESSION NUMBER: 0000804188-94-000018 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940831 FILED AS OF DATE: 19941006 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL ASSOCIATES INC CENTRAL INDEX KEY: 0000804188 STANDARD INDUSTRIAL CLASSIFICATION: 7377 IRS NUMBER: 841055327 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15525 FILM NUMBER: 94551846 BUSINESS ADDRESS: STREET 1: 7175 W JEFFERSON AVE STE 3000 CITY: LAKEWOOD STATE: CO ZIP: 80235 BUSINESS PHONE: 3039801000 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (x) Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1994 ( ) Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. Commission file number 0-15525 CAPITAL ASSOCIATES, INC. (Exact name of registrant as specified in its charter) DELAWARE 84-1055327 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 7175 WEST JEFFERSON AVENUE, LAKEWOOD, COLORADO 80235 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 980-1000 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 The number of shares outstanding of the Registrant's $.008 par value common stock at September 30, 1994, was 10,029,747. CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES INDEX PAGE PART I. FINANCIAL INFORMATION NUMBER Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - August 31, 1994 and May 31, 1994 3 Consolidated Statements of Operations - Three Months Ended August 31, 1994 and 1993 4 Consolidated Statements of Cash Flows - Three Months Ended August 31, 1994 and 1993 5 Notes to Consolidated Financial Statements 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Exhibit Index 16 Signature 18 CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS) ASSETS AUGUST 31, MAY 31, 1994 1994 ---------- ------- Cash, including restricted funds of $971 and $1,567, respectively $ 1,583 $ 2,072 Accounts receivable, net of allowance for doubtful accounts of $264 and $343, respectively 942 1,375 Income tax refunds receivable 428 250 Equipment held for sale or re-lease 5,249 5,242 Residual values and other receivables arising from equipment under lease sold to private investors 5,477 5,098 Net investment in direct finance leases 15,992 18,106 Leased equipment, net 15,622 15,615 Investments in affiliated limited partnerships 11,489 12,178 Other 5,164 5,779 Notes receivable arising from sale-leaseback transactions 29,665 32,417 Discounted lease rentals assigned to lenders arising from equipment sale transactions 92,264 111,593 -------- -------- $183,875 $209,725 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Revolving Credit Facility $ 101 $ 49 Accounts payable and other liabilities 8,412 8,187 Term Loan 16,365 18,718 Deferred income taxes 753 830 Obligations under capital leases arising from sale-leaseback transactions 29,604 32,337 Discounted lease rentals 107,166 128,505 -------- -------- 162,401 188,626 -------- -------- Stockholders' equity: Common stock 62 60 Additional paid-in capital 16,899 16,689 Retained earnings 4,564 4,401 Treasury stock, at cost (51) (51) -------- -------- Total stockholders' equity 21,474 21,099 -------- -------- $183,875 $209,725 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE) THREE MONTHS ENDED AUGUST 31, AUGUST 31, 1994 1993 ---------- ---------- Revenue: Equipment sales to affiliated limited partnerships $ 8,706 $ 27,643 Other equipment sales 3,218 15,643 Leasing 2,098 4,229 Interest 3,364 3,511 Other 1,383 1,316 --------- ---------- Total revenue 18,769 52,342 --------- ---------- Costs and expenses: Equipment sales 10,502 40,847 Leasing 927 1,731 Operating and other expenses 2,865 3,082 Provision for losses 200 915 Interest: Non-recourse debt 3,716 4,743 Recourse debt 288 555 ---------- ---------- Total costs and expenses 18,498 51,873 ---------- ---------- Net income before income taxes 271 469 Income tax expense 108 188 ---------- ---------- Net income $ 163 $ 281 ========== ========== Earnings per common and common equivalent share $ .02 $ .03 ========== ========== Weighted average number of common and dilutive common equivalent shares outstanding used in computing earnings per share 10,820,000 11,053,000 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS) THREE MONTHS ENDED AUGUST 31, AUGUST 31, 1994 1993 ---------- ---------- (Note 3) Net cash provided by operating activities $ 2,971 $ 11,595 --------- --------- Cash flows from investing activities: Equipment purchased for leasing (1,462) (985) Net receipts from affiliated public income funds ("PIFs") 625 695 Sale of a portion of the investment in Corporate Express, Inc. 263 - --------- --------- Net cash used for investing activities (574) (290) --------- --------- Cash flows from financing activities: Proceeds from discounting of lease rentals 1,093 2,478 Principal payments on discounted lease rentals (1,890) (5,982) Proceeds from sales of common stock 212 - Net payments on recourse debt (2,301) (8,085) --------- --------- Net cash used for financing activities (2,886) (11,589) --------- --------- Net decrease in cash (489) (284) Cash at beginning of period 2,072 3,210 --------- --------- Cash at end of period $ 1,583 $ 2,926 ========= ========= Supplemental schedule of cash flow information: Recourse interest paid $ 296 $ 584 Non-recourse interest paid 334 1,139 Income taxes paid 200 - Income tax refunds received 15 1,614 Supplemental schedule of non-cash investing and financing activities: Discounted lease rentals associated with equipment sold to third-party investors 713 18,734 Assumption of discounted lease rentals in lease acquisitions 18 6,661 Increase in other receivables relating to equipment sale transactions 1,434 1,460 Defeasance of discounted lease rentals related to bankrupt lessee 518 - The accompanying notes are an integral part of these consolidated financial statements. 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. For further information, please refer to the financial statements of Capital Associates, Inc. (the "Company"), and the related notes, included within the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1994 (the "1994 Form 10-K"), previously filed with the Securities and Exchange Commission. The balance sheet at May 31, 1994 has been derived from the audited financial statements included in the Company's 1994 Form 10-K. Certain reclassifications have been made in the 1994 financial statements to conform to the 1995 presentation. 2. Debt Facility The Company's recourse operating credit facility ("Debt Facility") consists of two facilities, a revolving credit facility (the "Revolving Credit Facility") and a term facility (the "Term Loan"). The availability under the Revolving Credit Facility is equal to (1) the lesser of $10.75 million or (2) the Borrowing Base amount, reduced by the outstanding indebtedness under the Revolving Credit Facility. As of August 31, 1994, the Borrowing Base amount was approximately $3.9 million, and the outstanding indebtedness under the Revolving Credit Facility was $.1 million, leaving approximately $3.8 million of availability under the Revolving Credit Facility to fund the Company's working capital needs. The outstanding principal balance of the Term Loan as of August 31, 1994 was $16,365,000. Principal reductions under the Term Loan are scheduled to occur as follows (in thousands): Nine months ending May 31, 1995 $ 12,430 Balance remaining at May 31, 1995 (the scheduled termination date of the Debt Facility) 3,935 -------- $ 16,365 ======== As of the time these financial statements were prepared, there were no defaults existing under the Debt Facility. The Revolving Credit Facility bears interest at the Mellon Bank, N.A. Prime Rate plus 1%, payable monthly, in arrears. On August 31, 1994, Mellon's Prime Rate was 7.75%. The Term Loan bears interest at a fixed rate of 6.0%, payable monthly, in arrears. 3. Consolidated Statements of Cash Flow In the Consolidated Statements of Cash Flows for the three months ended August 31, 1994 and 1993, the principal portion of receipts of direct financing leases and proceeds from sales of equipment have been classified as "Cash flows from operating activities". Previously, such amounts were reported as "Cash flows from investing activities". The effect of the reclassifications on previously issued financial statements is as follows: Three months ended August 31, 1993 Previously Restated Reported Amounts ---------- -------- Net cash provided by operating activities $ 3,964 $ 11,595 Net cash provided by (used for) investing activities 7,341 (290) Net cash used for financing activities (11,589) (11,589) -------- -------- Net decrease in cash and cash equivalents $ (284) $ (284) ======== ======== I. Results of Operations Presented below are schedules (prepared solely to facilitate the discussion of results of operations that follows) showing condensed income statement categories and analyses of changes in those condensed categories derived from the Consolidated Statements of Operations. Condensed Consolidated Statements of Operations The effect on for the Three Months net income of Ended August 31, changes between 1994 1993 periods -------- -------- --------------- (in thousands) Equipment sales margin $ 1,422 $ 2,439 $ (1,017) Leasing margin (net of interest expense on discounted lease rentals) 819 1,266 (447) Other income 1,383 1,316 67 Operating and other expenses (2,865) (3,082) 217 Provision for losses (200) (915) 715 Interest expense on recourse debt (288) (555) 267 Income taxes (108) (188) 80 -------- -------- -------- Net income $ 163 $ 281 $ (118) ======== ======== ======== Equipment Sales Equipment sales revenue (and related equipment sales margin) consists of the following (in thousands):
Three Months Ended August 31, 1994 1993 Increase (Decrease) Revenue Margin Revenue Margin Revenue Margin ------- ------ ------- ------ ------- ------ Transactions during initial lease term: Equipment under lease sold to PIFs $ 8,706 $ 221 $ 27,643 $ 733 Equipment under lease sold to private investors 1,797 187 13,079 419 ------- ------- -------- ------ 10,503 408 40,722 1,152 $(30,219) $ (744) ------- ------- -------- ------ -------- ------- Transactions subsequent to initial lease termination: Sales of off-lease equipment 406 259 1,413 501 Sales-type leases 478 218 744 379 Excess collections (cash collections in excess of the associated residual value from equipment under lease sold to private investors) 537 537 407 407 ------- ------- -------- ------ 1,421 1,014 2,564 1,287 (1,143) (273) Provision for losses (200) (915) 715 ------- ------- -------- ------ -------- ------- Remarketing sales results in excess of provision for losses 1,421 814 2,564 372 (1,143) 442 ------- ------- -------- ------ -------- ------- Total equipment sales $11,924 $ 1,222 $43,286 $1,524 $(31,362) $ (302) ======= ======= ======= ====== ======== =======
Provision for losses result from the realization of less than the carrying value of equipment (which is typically not known until remarketing subsequent to the initial lease termination has occurred). The remarketing of equipment for an amount greater than its book value is reported as equipment sales margin or as leasing margin. As shown above, the realizations from sales exceeded the provision for losses for the first fiscal quarter 1995, even without considering realizations from remarketing activities recorded as leasing margin, as discussed below. During the first fiscal quarter of fiscal 1995, the Company sold significantly less transactions during their initial lease term to the Company sponsored PIFs or to private investors. As shown in the table above, the result was a comparative decrease in sales margin of $744,000. However, as shown in the table above, during the same fiscal quarter, the Company realized $442,000 more on remarketing of the lease portfolio. The changes in the Company's lease portfolio during the three months ended August 31, 1994 consisted of the following:
Discounted lease Direct finance rentals, net of leases, operating discounted lease leases, net and rentals assigned Net investment equipment held to lenders arising in leased for sale or re-lease from equipment sales equipment -------------------- -------------------- -------------- As of May 31, 1994 $ 38,963 $ (16,912) $ 22,051 Leases added to the Company's lease portfolio (and sold in September 1994) 2,159 (380) 1,779 Provision for losses (200) - (200 Change as a result of portfolio run-off (4,059) 2,390 (1,669) --------- --------- --------- As of August 31, 1994 $ 36,863 $ (14,902) $ 21,961 ========= ========= =========
A significant portion of the Company's net assets consists of aircraft. To reduce the concentration of aircraft in its portfolio, the Company intends to sell one or more aircraft. The following table summarizes the Company's investment in aircraft as of August 31, 1994 and May 31, 1994 (in thousands): August 31, May 31, 1994 1994 ---------- ------- Leased equipment, net of accumulated depreciation $ 7,912 $ 8,017 Associated non-recourse debt (3,070) (3,077) -------- -------- Investment in aircraft on-lease 4,842 4,940 Equipment held for sale or re-lease 5,000 5,000 -------- -------- 9,842 9,940 Residual values and other receivables arising from equipment under lease sold to private investors 449 518 -------- -------- Net investment in aircraft $ 10,291 $ 10,458 ======== ======== Approximately $2.7 million (net of non-recourse debt of $2.3 million) of the Company's current $4.8 million of net investment in aircraft on-lease is represented by one jet aircraft. The lease on this aircraft expires December 31, 1996. On September 30, 1994, the Company sold the aircraft for $5 million, which was approximately equal to it's carrying value. Another jet aircraft having a net book value of $5 million is included in Equipment Held for Sale or Re-Lease. The Company is attempting to remarket the aircraft through re-lease or sale. Equipment Sales to PIFs Equipment sales to PIFs significantly decreased during the three months ended August 31, 1994, as compared to the similar period in fiscal 1994, principally because fewer leases were identified and closed that satisfied the PIF's underwriting standards. During the first quarter fiscal 1995, the Company appointed a National Sales Manager to enhance its lease origination efforts. Under applicable regulatory guidelines, the Company is entitled to receive various fees and distributions in connection with its activities related to its sponsored PIFs. One such fee, an acquisition fee payable upon sale of equipment under lease to a PIF, is, in general, subject to a regulatory maximum amount over the term of a PIF. Acquisition fees payable to the Company reached the regulatory maximum for one PIF during fiscal year 1992 and, for a second PIF in the first fiscal quarter 1994. These circumstances will have an impact on reported equipment sales margins in future periods, but are not expected to impact total PIF-related income (after costs of equipment sales) in future periods because other allowable fees and distributions are expected to increase during such periods. Equipment Sales to Private Investors Equipment sales to private investors for the first fiscal quarter 1994 included sales of approximately $12.7 million of "seasoned" leases (i.e., previously originated leases held in the Company's portfolio). As the Company's lease portfolio has declined in size (sometimes referred to herein as "portfolio run-off"), fewer seasoned leases have been available for sale. During the first fiscal quarter 1995, equipment sales to private investors consisted primarily of new leases originated for sale to private investors, and the Company sold no material amount of seasoned leases to private investors. Remarketing Sales Margins from remarketing sales (i.e., sales occurring after the initial lease term) are affected by the amount of equipment leases that matures in a particular quarter. In general, as the size of the Company's lease portfolio has declined in size, fewer leases have matured and less equipment has been available for remarketing each quarter. As a result, remarketing revenue declined during the first fiscal quarter 1995 compared to the comparable period in fiscal 1994. However, as shown above, the margin from remarketing sales increased during first fiscal quarter 1995. The Company's ability to remarket additional amounts of equipment and realize a greater amount of remarketing revenue in future periods is dependent on adding additional leases to its portfolio. Accordingly, the Company is pursuing financing opportunities to obtain funds to add to its own lease portfolio. See the discussion of financing possibilities under "Business Plan" below. Provision for Losses Residual values are established equal to the estimated value to be received from the equipment following termination of the lease. In estimating such values, the Company considers all relevant facts regarding the equipment and the lessee, including, for example, the likelihood that the lessee will re-lease the equipment. The Company performs ongoing quarterly assessments of its assets to identify other than temporary losses in value. During the first fiscal quarter 1995, a lessee returned an IBM mainframe computer to the Company. The Company had previously expected to realize the carrying value of this equipment through additional month-to-month rents and proceeds from the sale of the equipment. However, the lessee stopped paying rent after the date of the filing of the 1994 Form 10-K and, as a result, the month-to-month rents actually collected and the value of the equipment now expected to be recovered from sale, are less than initially anticipated. The first fiscal quarter 1995's provision for loss principally relates to this item of equipment. During the first fiscal quarter 1994, a greater than expected amount of equipment under lease that the Company expected to be released was, instead, terminated and returned to the Company. The amounts recovered (and expected to be recovered) from the sale of such equipment were less than the previously estimated residual value, and accordingly, an appropriate provision for loss was recorded during first fiscal quarter 1994. The Company also recorded a provision for loss of $180,000 for the possible sale of one of its aircraft during the first fiscal quarter 1994. LEASING MARGIN Leasing margin consists of the following (in thousands): Three Months Ended August 31, 1994 1993 ---- ---- Leasing revenue $ 2,098 $ 4,229 Leasing costs and expenses (927) (1,731) Net interest expense on related discounted lease rentals (352) (1,232) ------- ------- Leasing margin $ 819 $ 1,266 ======= ======= Leasing margin ratio 39% 30% == == Leasing margin has declined and is expected to decline further as a result of portfolio run-off. See the discussion under "Business Plan" below. The leasing margin ratio has increased as a result of remarketing activities, which include the rental proceeds from renewing, extending or re-leasing equipment before and after the end of the initial lease term. OTHER INCOME Other Income consists of the following (in thousands): Three Months Ended August 31, 1994 1993 ---- ---- Fees and distributions from the Company-sponsored PIFs $ 777 $ 790 Sale of a portion of the investment in Corporate Express, Inc. stock 260 - Interest on income tax refunds 178 431 Other, principally recovery of sales and property tax amounts previously expensed 168 95 ------ ------ $1,383 $1,316 ====== ====== In August 1994, the Internal Revenue Service ("IRS") notified the Company that it had completed its audit of the Company's fiscal year 1992 federal income tax return and had approved an income tax refund, previously recorded as "Income tax refunds receivable". The Company recorded the interest on the refund, in the amount of $178,000, as a receivable at August 31, 1994. OPERATING AND OTHER EXPENSES Operating and other expenses decreased $.2 million (7%) for the first fiscal quarter 1995 as compared to the comparable period in fiscal year 1994. The decrease principally reflects a reduction in salaries and wages, accomplished, in part, through a reduction-in-force of 29 full-time employees during June 1994. As of August 31, 1994, the Company had 86 full-time employees compared to 118 full-time employees at August 31, 1993. As the portfolio has run-off, the Company has decreased the size of its back office staff and increased the number of revenue producing lease origination and private equity syndication personnel. INTEREST INCOME AND EXPENSE Interest revenue arises when equipment financed with non-recourse debt is sold to investors. The Consolidated Statements of Operations reflect an equal amount of interest expense. The decline in interest expense on non- recourse debt (net of the associated interest revenue) is due to portfolio run-off. The decrease in interest expense on recourse debt reflects the decline in the outstanding balance of the Debt Facility. II. Liquidity and Capital Resources The Company's activities are principally funded by the Revolving Credit Facility, rents, proceeds from sales of on-lease equipment, non-recourse debt, fees and distributions from its PIFs and sales or re-leases of equipment during and after the expiration of the initial lease terms and other cash receipts. Currently, only one PIF, Capital Preferred Yield Fund-III, ("CPYF-III") is selling units to the public. Through August 31, 1994 CPYF III sold $7.1 million of units ($6.2 million during the first fiscal quarter 1995). Four of the Company's PIFs including CPYF-III are using a portion of their available cash to purchase additional equipment from the Company. Two of the Company's PIFs are in the liquidation stage and are no longer purchasing equipment. The cash held by the PIFs available for purchase of equipment from the Company is: August 31, 1994 August 31, 1993 Available cash $ 8,962 $ 13,538 Cash committed for equipment purchases (3,132) (9,312) -------- -------- Uncommitted cash $ 5,830 $ 4,226 ======== ======== Management believes the Company's ability to generate cash from operations is sufficient to fund operations, particularly when operations are viewed as including investing and financing activities. In this context, it should be noted that through August 31, 1994, the Company reduced its aggregate outstanding indebtedness under its Debt Facility by $2.3 million since May 31, 1994 and has improved its recourse debt-to-equity ratio as follows: August 31, 1994 May 31, 1994 Recourse debt outstanding under the Debt Facility $ 16,466 $ 18,767 Stockholders' equity $ 21,474 $ 21,099 Recourse debt/stockholders' equity .77 to 1 .89 to 1 III. Business Plan As discussed in the 1994 Form 10-K, during fiscal year 1991, the Company agreed with its Lenders to begin repaying its Debt Facility. Since that time, the Company has used substantially all of its cash flow after payment of operating expenses to repay its Debt Facility. As a result of making these repayments, the Company has not had the funds necessary to significantly add to its leasing portfolio. Because of portfolio run-off, the Company's leasing portfolio and related revenue have declined since 1991. The Debt Facility provides a limited amount of funds to the Company to invest in new leases. However, this level of funds is not sufficient to maintain the current portfolio and, accordingly, the current level of profitability may not be achievable in the future. In order to maintain the current level of profitability the Company must, among other things, (1) increase lease originations with a resultant increase in equipment sales margins from such new lease originations (2) reduce operating costs and (3) develop new sources of revenue related to the Company's core business. The Company's current business plan is designed to maintain profitable operations. The amount of longer-term future profits, if any, will largely depend on the amount of new capital available to the Company. Such capital may be in a variety of forms including new recourse debt, additional equity (which could include a sale of the Company, possibly coupled with an infusion of new funds into the Company from the purchaser), securitized financing vehicles or equity provided from private purchases of equipment originated by the Company or strategic alliances/combinations with other leasing companies. The Company is involved in discussions with several commercial lenders to provide a new recourse credit facility with the objective of replacing the present Debt Facility and obtaining additional recourse debt financing for operating purposes and to increase the size of the lease portfolio under management. No assurance can be given, however, that the Company will be successful in operating profitably, developing new sources of revenue or in obtaining access to new financing. CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 1. Legal Proceedings CAII and CIS filed a Settlement Agreement with the bankruptcy court on or about August 31, 1994. Pursuant to the Agreement, CAII has agreed to pay CIS $220,000 in exchange for (i) dismissal of all claims pending between the parties in the bankruptcy court and (ii) execution of mutual general releases. The bankruptcy court approved the agreement in September 1994. There have been no material developments (other than that discussed above regarding the CIS litigation) during first fiscal quarter 1995 with respect to the legal proceedings described in the Company's fiscal 1994 Form 10-K. Item 6. Exhibits and Reports on Form 8-K a. Included as exhibits are the items listed in the Exhibit Index. The Company will furnish to its shareholders a copy of any of the exhibits listed therein upon payment of $.25 per page to cover the costs to the Company of furnishing the exhibits. b. There were no reports on Form 8-K filed during the three months ended August 31, 1994. Item No. Exhibit Index 11A Computation of Primary Earnings Per Share. A computation of fully diluted earnings per share is not presented as it is the same as the computation of primary earnings per share. Exhibit 11A CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES COMPUTATION OF PRIMARY EARNINGS PER SHARE THREE MONTHS ENDED August 31, August 31, 1994 1993 ---------- ---------- Shares outstanding at beginning of period 9,759,000 9,654,000 Shares issued during the period (weighted average) 298,000 - Shares earned, but not issued under the CEO Bonus Plan - 50,000 Dilutive shares contingently issuable upon exercise of options (weighted average) 2,045,000 2,310,000 Less shares assumed to have been purchased for treasury with assumed proceeds from exercise of stock options (weighted average) (1,282,000) (961,000) ---------- ---------- Total shares, primary 10,820,000 11,053,000 ========== ========== Net income $ 163,000 $ 281,000 ========== ========== Income per common and common equivalent share, primary $ 0.02 $ 0.03 ========== ========== CAPITAL ASSOCIATES INC. AND SUBSIDIARIES SIGNATURE 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. CAPITAL ASSOCIATES, INC. Registrant Date: October 6, 1994 By: /s/Anthony M. DiPaolo ----------------------------- Anthony M. DiPaolo, Senior Vice-President and Controller (Principal Accounting Officer) EX-27 2
5 The schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of operations and is qualified in its entirety by reference to such financial statements. QTR-1 MAY-31-1995 AUG-31-1995 1,583 0 1,370 264 5,249 0 15,622 0 183,875 0 0 62 0 0 21,037 183,875 11,924 18,769 10,502 11,429 2,865 200 4,004 271 108 163 0 0 0 163 .02 .02
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