-----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, D7NjbSKPljox66tn2tajtm9y47e3PYxoUjsxmoYEXtn8FDNhQ3Q7VXSTFth1mIS7 utXv+U/qbgxgQKQ/2ihVfw== 0000950115-96-000619.txt : 19960708 0000950115-96-000619.hdr.sgml : 19960708 ACCESSION NUMBER: 0000950115-96-000619 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRW FINANCIAL INC /DE CENTRAL INDEX KEY: 0000943809 STANDARD INDUSTRIAL CLASSIFICATION: 7320 IRS NUMBER: 232691986 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26014 FILM NUMBER: 96562462 BUSINESS ADDRESS: STREET 1: 443 S GULPH RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6109625100 MAIL ADDRESS: STREET 1: 443 S GULPH RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------- FORM 10-Q (Mark One) _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended _____________March 31, 1996____________ ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________________ to ______________ Commission file number ________0-26015____________ CRW Financial, Inc. ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 23-2691986 - - --------------------------------------- ------------------ (State or other jurisdiction or (I.R.S. employer incorporation or organization) identification no.) 443 South Gulph Road King of Prussia, PA 19406 - - ------------------------------------------------------------------------ (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: ______610/962-5100_________ ------------------------------------------------------------------------ Former name, former address and former fiscal year, if changed since last report. Indicated by check 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 ____ APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares of the registrant's Common and Prefered Stock outstanding as of March 31, 1996 was 1,190,684 Common Shares and 430,293 Preferred Shares. CRW FINANCIAL, INC. INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1- FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1995 AND MARCH 31, 1996 3 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED APRIL 1, 1995 AND MARCH 31, 1996 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED APRIL 1, 1995 AND MARCH 31, 1996 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 12 CRW FINANCIAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS DECEMBER 31, 1995 MARCH 31, 1996 - - ------ ----------------- -------------- (unaudited) CURRENT ASSETS: CASH $ 2,074,000 $ 936,000 CASH HELD FOR CLIENTS 3,333,000 3,728,000 ACCOUNTS RECEIVABLE, NET 3,094,000 4,575,000 OTHER CURRENT ASSETS 419,000 802,000 ------------ ------------ TOTAL CURRENT ASSETS 8,920,000 10,041,000 PROPERTY AND EQUIPMENT, NET 3,320,000 3,214,000 INTANGIBLE ASSETS, NET 5,338,000 5,213,000 OTHER ASSETS 967,000 953,000 ------------ ------------ $ 18,545,000 $ 19,421,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: COLLECTIONS DUE CLIENTS $ 3,333,000 $ 3,728,000 CURRENT PORTION OF LONG-TERM DEBT 1,385,000 1,385,000 ACCOUNTS PAYABLE 2,774,000 1,927,000 ACCRUED EXPENSES 1,845,000 1,322,000 ------------ ------------ TOTAL CURRENT LIABILITIES 9,337,000 8,362,000 OTHER LONG-TERM LIABILITIES 299,000 275,000 LONG-TERM DEBT 5,723,000 5,120,000 STOCKHOLDERS' EQUITY: PREFERRED STOCK -- 2,391,000 COMMON STOCK 11,000 11,000 ADDITIONAL PAID IN CAPITAL 4,125,000 4,125,000 ACCUMULATED DEFICIT (950,000) (863,000) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 3,186,000 5,664,000 ------------ ------------ $ 18,545,000 $ 19,421,000 ============ ============ See notes to condensed consolidated financial statements -3- CRW FINANCIAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the For the thirteen weeks ended thirteen weeks ended April 1, 1995 March 31, 1996 ------------- -------------- NET REVENUES $8,009,000 $8,850,000 OPERATING EXPENSES, excluding Non-cash charges 7,259,000 8,182,000 DEPRECIATION 148,000 223,000 AMORTIZATION 242,000 125,000 ---------- ---------- Operating Income 360,000 320,000 INTEREST EXPENSE 112,000 175,000 ---------- ---------- Income from continuing operations before income taxes 248,000 145,000 INCOME TAXES 92,000 58,000 ---------- ---------- INCOME FROM CONTINUING OPERATIONS 156,000 87,000 INCOME FROM DISCONTINUED OPERATIONS OF CENTRAL CREDIT, INC., NET OF TAX 480,000 -- ---------- ---------- NET INCOME $ 636,000 $ 87,000 ========== ========== PRIMARY AND FULLY DILUTED NET INCOME PER COMMON SHARE (Note 3): (Pro Forma)(Note 3) Historical ------------------- ---------- INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS $ 0.13 $ 0.05 INCOME PER COMMON SHARE FROM DISCONTINUED OPERATION 0.39 -- ---------- ---------- NET INCOME PER COMMON SHARE $ 0.52 $ 0.05 ========== ==========
See notes to condensed consolidated financial statements - 4 - CRW FINANCIAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE THIRTEEN WEEKS ENDED ---------------------------- APRIL 1, 1995 MARCH 31, 1996 ------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 636,000 $ 87,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 390,000 348,000 Deferred tax provision 92,000 58,000 (Increase)decrease in assets Accounts receivable (387,000) (1,481,000) Other assets (99,000) (427,000) Net assets of CCI 130,000 -- Increase (decrease) in liabilities Accounts payable (250,000) (847,000) Accrued expenses (596,000) (547,000) ----------- ----------- Net cash used in operating activities (84,000) (2,809,000) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (163,000) (117,000) ----------- ----------- Net cash used in investing activities (163,000) (117,000) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of preferred stock, net -- 2,391,000 Repayments of long term debt (176,000) (603,000) ----------- ----------- Net cash provided by (used in) financing activities (176,000) 1,788,000 ----------- ----------- DECREASE IN CASH (423,000) (1,138,000) ----------- ----------- CASH, BEGINNING OF PERIOD 1,174,000 2,074,000 ----------- ----------- CASH, END OF PERIOD $ 751,000 $ 936,000 =========== ===========
See notes to condensed consolidated financial statements - 5 - CRW FINANCIAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BACKGROUND: CRW Financial, Inc. ("CRW") performs receivables management, administration and debt collection services for clients primarily in the health care, student loan, credit card and utility industries, and to commercial clients through its wholly owned subsidiary Kaplan & Kaplan, Inc. CRW's subsidiary Casino Money Centers, Inc. ("CMC"), provides financial support services to the casino industry. CRW's subsidiaries were subsidiaries of Casino & Credit Services, Inc. ("CCS") prior to May 11, 1995, and CRW's operations were a division of CCS from July 1992 to May 11, 1995 when CCS contributed all of its assets and subsidiaries other than Central Credit, Inc. ("CCI") to a newly formed subsidiary, CRW Financial, Inc. CCS then spun-off CRW in a distribution of CRW stock to CCS Shareholders on May 11, 1995. The historical financial statements of CRW have been deemed to be those of CCS, restated to present CCI as a discontinued operation. 2. BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles. The interim financial information, while unaudited, reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the interim financial statements. The results for the three months ended March 31, 1996 are not necessarily indicative of results expected for the full year. These financial statements should be read in conjuncion with the audited financial statements and the notes thereto included in the CRW Financial, Inc. Annual Report on Form 10-K for the year ended December 31, 1995. 3. NET INCOME PER COMMON SHARE Net income per common share is computed using the weighted average number of shares of CRW Common Stock and CRW common stock equivalents outstanding during the period. If the inclusion of CRW common stock equivalents has an anti-dilutive effect in the aggregate, it was excluded from the calculation. The weighted average number of shares outstanding for 1996 for purposes of computing primary and fully diluted net income per common shares was 2,230,707 and 2,435,835, respectively. Net income per common share has been presented on a pro forma basis for 1995 as if the 882,929 shares and the 339,000 shares of CRW common stock issuable pursuant to the CCS redeemable warrants were issued on January 1, 1995. For the thirteen weeks ended March 31, 1996, the Company's total outstanding common stock options and warrants exceed 20% of the total outstanding common stock. Therefore, the income per share computations are modified, as required under Accounting Principles Board Opinion No. 15, to assume all outstanding common stock options and warrants were exercised and the related proceeds were used to repurchase up to 20% of the total outstanding common stock. Any remaining proceeds are assumed to be used to reduce borrowings, thereby reducing interest expense, net of tax. - 6 - CRW FINANCIAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4. CRW ACQUISITION CORP. CRW Acquisition Corp., a wholly owned subsidiary of CRW, has agreed to acquire, conditional upon an initial public offering, five teleservices companies and one direct mail and fulfillment company in separate transactions for a combination of cash and stock. CRW expects to retain a significant interest in the new public company after completion of the initial public offering. However, there can be no assurance that any of the acquisitions or the initial public offering will be completed. - 7 - Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Continuing Operations Below is a summary of operating results (in thousands) for the Company's two business segments, CRW Financial and Casino Money Centers. Thirteen Weeks Ended March 31, 1996 ----------------------------------- CRW Casino Financial Money Centers Total --------- ------------- ----- Net Revenues $8,004 $ 846 $8,850 Operating Expenses, excluding non-cash charges 7,418 764 8,182 Depreciation 218 5 223 Amortization 119 6 125 ------ ------ ------ Operating Income $ 249 $ 71 $ 320 ====== ====== ====== Thirteen Weeks Ended April 1, 1995 ---------------------------------- CRW Casino Financial Money Centers Total --------- ------------- ----- Net Revenues $7,417 $ 592 $8,009 Operating Expenses, excluding non-cash charges 6,759 500 7,259 Depreciation 147 1 148 Amortization 237 5 242 ------ ------ ------ Operating Income $ 274 $ 86 $ 360 ====== ====== ====== - 8 - Thirteen Weeks Ended March 31, 1996 and April 1, 1995 Net Revenues. Net revenues for the thirteen weeks ended March 31, 1996 increased $841,000 (10.5%) to $8,850,000 from $8,009,000 for the thirteen weeks ended April 1, 1995. CRW Financial's revenues for the thirteen weeks ended March 31, 1996 increased $587,000 (7.9%) to $8,004,000 compared to $7,417,000 for the thirteen weeks ended April 1, 1995, primarily due to $694,000 of revenue from its new market research division, partially offset by the loss of approximately $250,000 of revenue from Bell South. Placements increased $30,490,000 (12%) to $284,199,000 for the thirteen weeks ended March 31, 1996 from $253,709,000 for the thirteen weeks primarily due to an increase in placements from the California Student Aid Commission and several other new clients. Casino Money Centers, Inc. revenues for the thirteen weeks ended March 31, 1996 increased $254,000 (43%) to $846,000 from $592,000 for the thirteen weeks ended April 1, 1995 primarily due to increased revenues from the CMC facility in the Oneida Casino in Green Bay, Wisconsin and the opening of a CMC facility at the Mohican Northstar facility in December 1995. Operating Expenses. Operating expenses increased $881,000 (11.5%) to $8,530,000 for the thirteen weeks ended March 31, 1996 from $7,649,000 for the thirteen weeks ended April 1, 1995. CRW Financial's operating expenses increased $612,000 (8.6%) to $7,755,000 for the thirteen weeks ended March 31, 1996 from $7,143,000 for the thirteen weeks ended April 1, 1995 primarily due to the opening of the Market Research Division, partially offset by lower operating expenses due to the loss of revenue from Bell South and lower data processing expenses due to the termination of the Company's outsourcing services agreement. Casino Money Centers, Inc.'s operating expenses increased $269,000 to $775,000 for the thirteen weeks ended March 31, 1996 from $506,000 for the thirteen weeks ended April 1, 1995 due to the increase in revenue in the Oneida facility and the opening of the Northstar facility. Operating Income. Operating income was $320,000 for the thirteen weeks ended March 31, 1996 compared to $360,000 for the thirteen weeks ended April 1, 1995 due to the $841,000 increase in net revenues, offset by the $881,000 increase in operating expenses. Interest Expense. Interest expense increased $63,000 to $175,000 for the thirteen weeks ended March 31, 1996 from $112,000 for the thirteen weeks ended April 1, 1995 due to an increase in long-term debt of approximately $2,000,000 during 1995. The increase in long-term debt was due to borrowings made in 1995 to increase working capital. Income Taxes. Income taxes were $58,000 for the thirteen weeks ended March 31, 1996 compared to $92,000 for the three months ended April 1, 1995. The effective income tax rate increased 3% to approximately 40% for the thirteen weeks ended March 31, 1996 from 37% for the thirteen weeks ended April 1, 1995 due to a higher provision for state income taxes. - 9 - Discontinued Operations Below is a summary of the operating results for CCI, which as discussed in Note 1 has been classified as a discontinued operation. (In thousands) Thirteen Weeks Ended April 1, 1995 ------------- Net Revenues $2,295 Operating Expenses, excluding non-cash charges 1,233 Depreciation 51 Amortization 284 --------- Operating Income 727 Income Taxes 247 --------- Net Income $ 480 ======== INFLATION Inflation has not had a significant impact on the Company's operations to date. LIQUIDITY AND CAPITAL RESOURCES During the thirteen weeks ended March 31, 1996 net cash used in operating activities was ($2,809,000) compared to ($84,000) of cash used in operating activities for the thirteen weeks ended April 1, 1995. The increase in cash used in operating activities in the 1996 period was primarily due to the $1,481,000 increase in accounts receivable, the $847,000 decrease in accounts payable and the $547,000 decrease in accrued expenses. The increase in accounts receivable was due to approximately $400,000 of receivables from the Market Research Division and temporarily increased receivables from several of CRW's larger collection clients. Net cash used in investing activities during the thirteen weeks ended March 31, 1996 decreased $46,000 to $117,000 from $163,000 for the thirteen weeks ended April 1, 1995 due to a $46,000 decrease in capital expenditures. - 10 - Net cash used in financing activities during the thirteen weeks ended April 1, 1995 was $176,000 used to repay long-term debt. Net cash provided by financing activities was $1,788,000 for the thirteen weeks ended March 31, 1996 and consisted of $2,391,000 of net proceeds from the sale of preferred stock, partially offset by $603,000 of repayments of long-term debt. The Company believes that its existing cash on hand and cash to be generated from future operations will be adequate to meet its needs for the foreseeable future. - 11 - PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K None - 12 - SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CRW FINANCIAL, INC. ------------------- (Registrant) Date: May 14, 1996 _____________________________________________ Jonathan P. Robinson, Chief Financial Officer -13- EX-27 2 FDS
5 1,000 U.S. 3-MOS DEC-31-1995 JAN-01-1996 MAR-31-1996 1 4,664 0 4,575 0 802 10,041 13,515 4,135 19,421 8,362 5,395 0 2,391 11 3,262 19,421 8,850 8,850 8,530 8,530 0 0 175 145 58 87 0 0 0 87 .05 .05
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