UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (Mark One) (AMENDMENT #2) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended April 30, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____ to _____ Commission file number 0-3797 BURNUP & SIMS INC. ______________________________________________________ (Exact name of registrant as specified in its charter) Delaware 59-1259279 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) One North University Drive, Ft. Lauderdale, FL 33324 (Address of principal executive offices) (Zip Code) (305) 587-4512 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered 12% Convertible Subordinated Debentures due November 15, 2000 Philadelphia Stock Exchange _______________________________________ ___________________________ Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.10 per share (Title of class) 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 ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing price on July 19, 1993 was $16,413,758. The number of shares of common stock outstanding as of July 19,1993 was 8,768,339. DOCUMENTS INCORPORATED BY REFERENCE Portions of this registrant's Proxy Statement which will be filed on or before August 30, 1993 are incorporated by reference into Part III. Page 1 of 27BURNUP & SIMS BUSINESSES Burnup & Sims Inc. was founded in 1929 and together with its subsidiaries ("Burnup & Sims" or the "Company") currently provides a wide range of cable design, installation and maintenance services to telephone, CATV and utility service customers throughout the United States. These services are rendered through various subsidiary companies located principally in California, Florida, Georgia, Mississippi, North Carolina, and Texas. In addition, the Company is a manufacturer of power supplies for the CATV industry, operates a motion picture theatre chain in the Southeastern U.S. and also provides commercial printing and graphic arts services. See "Industry Segment Information" in the Notes to Consolidated Financial Statements for information related to revenues, operating profit, and identifiable assets of each of the Company's principal business segments. The Company's financial results for the last three years reflect volume declines and net losses which include the impact of prolonged economic pressures within the Telephone Services industry. (See "Management's Discussion and Analysis of Financial Condition and Results of Operations"). The Company's backlog of orders, which is substantially represented by written contracts and purchase orders and does not include work to be performed under telephone master contracts, approximated $15,609,000 at April 30, 1993, consisting of $10,594,000 related to Telephone Services and $5,015,000 related to Cable Television and Utility Services, respectively. Backlog of $18,427,000 at April 30,1992 was comprised of $11,583,000 and $6,844,000 related to Telephone Services and Cable Television and Utility Services, respectively. Substantially all of the backlog as of April 30, 1993 is expected to be completed by April 30, 1994. Backlog is not material for the General Products and Other segment. The Company obtains its raw materials and supplies from various sources and is not dependent upon any one supplier. Operations of the Company are somewhat seasonal, and this has historically resulted in reduced revenues during the third quarter (November, December and January) relative to other quarters. During winter months, inclement weather in certain areas reduces the volume and efficiency of outside service activities. Additionally, certain Telephone Services customers may reduce expenditures for plant construction and maintenance during the latter part of their budgetary year, which typically ends in December. The sale of the Company's goods and services to foreign markets generated less than one percent of revenues for fiscal year 1993. Work performed in offshore U.S. territories approximated 6% of revenues for 1993 and 1992, respectively. The Company is currently pursuing additional offshore opportunities and has entered into joint venture agreements with local partners in certain South American and East European countries to provide telecommunications services. The Company intends to finance its portion of such projects with internally-generated funds and, as necessary, through the redeployment of machinery and equipment and supervisory personnel from certain domestic areas of operation. At April 30, 1993, the Company employed 2,255 people, of which 1,505 were employed in the Telephone Services segment, 237 in the Cable Television and Utility Services segment, and 513 in the General Products and Other segment. Page 2 of 27 Telephone Services The installation and maintenance of underground cable and conduit, aerial lines, manholes, and telephone equipment for regional telephone companies, long distance carriers and private business are among the services provided by Burnup & Sims. The Company also provides fiber-optic design and installation services which require specialized skills for a number of long distance and regional telephone companies. Customers typically supply materials such as poles, cable, conduit and telephone equipment, and the Company provides expertise, personnel, tools and equipment necessary to perform installation services. Engineering and other types of personnel to supplement the day-to-day requirements of telephone companies and to meet their emergency and peak load maintenance and installation needs are also provided by the Company. Burnup & Sims provides services in approximately 35 states with a substantial portion of the work performed in California, Florida, Mississippi, North Carolina, Texas, and Tennessee. During the year ended April 30, 1993, approximately 18% and 14% of revenues were derived from the Southern Bell and South Central Bell units of Bell South Telecommunications, Inc., respectively. The Company sold a minority interest in a Telephone Services subsidiary, and is party to various agreements providing an option to the minority holder to purchase the remaining shares of common stock of the subsidiary, which is currently the subject of dispute. (See "Industry Segment Information" and "Litigation" in the Notes to Consolidated Financial Statements".) The Company provides master contract services for telephone companies. Under master contracts, Burnup & Sims has the exclusive right to perform specified work for customers for the contract duration (excluding work customers may perform themselves and projects which exceed stipulated amounts). During the years ended April 30, 1993, 1992, and 1991, revenues of approximately $62,000,000, $66,000,000, and $75,000,000, respectively, were derived from work performed under master contracts. The Company may be compensated on an hourly basis or at a fixed unit price for services rendered. Master contracts are generally for one to three-year terms and may be terminated upon 60 days notice by either party. Master contracts may be renewed through negotiations between the Company and its customers or customers may elect to award these contracts on the basis of competitive bidding. The market for telephone services is highly competitive and management believes the factors for success include quality, reliability, price and promptness of performance. Although most companies in this field tend to operate in a limited geographical area, a number of competitors may bid on a particular project without regard to location. On a national basis, neither the Company nor any of its competitors can be considered dominant in the industry, which is characterized by a large number of companies, most of which are smaller than the Company. Changes in the level of telephone company capital expenditures, influenced by prevailing interest rates and the allowance or disallowance of telephone rate increases by public regulatory agencies, may affect the volume of work available to the Company. Additionally, certain telephone companies may utilize their own personnel to perform all or some part of the types of services provided by the Company. Page 3 of 27 Cable Television and Utility Services The Company, which began installation of CATV systems in 1961, installs underground and aerial portions of new and existing CATV systems, and provides customer installation and hookup services at CATV subscriber homes. The work is generally performed under fixed unit price contracts and the Company's customers have consisted principally of operators of CATV systems. Management believes experience, dependability and mobility are the principal competitive factors that contribute to success. The CATV industry is regulated by local, state and federal laws, and such governmental regulation has a direct effect upon whether new CATV systems are built or existing systems are improved, thus directly affecting the availability of work for which the Company may compete. The industry is characterized by a large number of companies which provide CATV services. The Company is a manufacturer of power supplies for sale to CATV operators and distributors. Although the market for these products is highly competitive, management believes its position in this market is attributable to such factors as technical capability, price, reliability and service. The Company also installs underground and aerial electrical distribution systems. Customers for these services consist principally of electric utility companies and other businesses located in the Southeastern and South Central United States. The major competitive factor for Utilities Services work is price, and a substantial portion of the work performed is awarded on the basis of competitive bids. There are numerous competitors qualified to perform the same services which the Company provides. The installation of CATV and utility systems requires a substantial capital outlay by the system owners, and their ability to secure capital at acceptable financing rates directly affects the availability of work. General Products and Other The Company operates a motion picture theatre chain consisting of 94 screens at 32 locations in Florida and two locations in Georgia. Twenty-two of the theatres are indoor and 12 are drive-ins. The Company derives a substantial portion of its theatre revenues and profits from food and beverage concessions which it operates in all of the theatres. The Company's theatres exhibit first, second and third run films of major motion picture distributors. The availability of popular films has a significant effect on both admission and concession revenues. The Company's theatre operations are highly dependent on major film distributors for an adequate supply of such films. The Company competes with numerous other film exhibitors and entertainment attractions in its operating areas. The Company also offers commercial printing products and graphic arts services. The principal customers are businesses located in Florida and the Northeast United States. The printing business is extremely competitive and no one company is considered dominant. Page 4 of 27 LEGAL PROCEEDINGS Albert H. Kahn v. Nick A. Caporella, et al., Civil Action No. 11890 was filed in December 1990 by a shareholder of the Company in the Court of Chancery of the State of Delaware in and for New Castle County against the Company, the members of its Board of Directors, and against National Beverage Corp. ("NBC") as a purported class action and derivative lawsuit. The class action claims allege, among other things, that the Board of Directors of the Company, and NBC, as its largest shareholder, breached their respective fiduciary duties in approving (i) the dividend by the Company of its shares of NBC common stock (the "Distribution") and (ii) the exchange of certain shares of the Company's stock held by NBC for certain indebtedness of NBC held by the Company (the "Exchange"; the Distribution and the Exchange are hereinafter referred to as the "1991 Transaction"), in allegedly placing the interests of NBC ahead of the interests of the other shareholders of the Company. The derivative action claims allege, among other things, that the Board of Directors of the Company has breached their fiduciary duties by approving executive officer compensation arrangements, by financing NBC's operations on a current basis, and by permitting the interests of the Company to be subordinated to those of NBC. In the lawsuit, plaintiff seeks to rescind the 1991 Transaction and to recover damages. (See "Transactions with NBC" in the Notes to Consolidated Financial Statements.) In May 1993, plaintiff filed a motion to amend its class action and shareholder derivative complaint (the "Proposed New Complaint"). The Proposed New Complaint alleges that the Special Committee (the "Committee") that approved the 1991 Transaction was not independent and that, therefore, the 1991 Transaction was neither protected by the business judgement rule or in accordance with a settlement agreement (the "1990 Settlement") entered into in 1990 pertaining to certain prior litigation. The Proposed New Complaint also makes other allegations which involve (i) further violations of the 1990 Settlement by engaging in certain transactions not approved by the Committee; (ii) the sale of a subsidiary of the Company to a former officer of the Company; (iii) the timing of the 1991 Transaction and (iv) the treatment of executive stock options in the 1991 Transaction. The Company believes that the allegations in the complaint and the Proposed New Complaint are without merit, and intends to vigorously defend this action. William C. Deviney, Jr. v. Burnup & Sims, Inc. et al., Civil Action No. 152350 was filed in the Chancery Court of the First Judicial District of Hines County, Mississippi on May 3, 1993. The plaintiff in this action filed suit seeking specific performance of alleged obligations of the Company pursuant to a stock purchase agreement and related agreements entered into in 1988. Pursuant to the agreements, the Company sold to plaintiff a minority interest in a Telephone Services subsidiary and granted to plaintiff an option to purchase the remaining stock if certain conditions were satisfied. (See "Industry Segment Information" in the Notes to Consolidated Financial Statements.) Alternatively, plaintiff seeks unspecified damages for breach of contract and for alleged breaches of fiduciary duties, and seeks an award of punitive damages and attorney's fees for alleged bad faith conduct in connection with the stock purchase agreement and related matters. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this action. Additionally, the Company has filed counterclaims which, among other things, seek a declaratory judgement that the plaintiff's failure to satisfy certain material conditions terminated his rights under the stock purchase agreement. Page 5 of 27 LEGAL PROCEEDINGS (Continued) The Company and its subsidiaries are parties to various legal proceedings, including suits in which it is a defendant. In the opinion of management, the ultimate outcome of the legal proceedings will not have a material adverse effect on the financial position of the Company. FINANCIAL STATEMENTS BURNUP & SIMS INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Years Ended April 30, 1993 1993 1992 1991 ----------- ----------- ----------- Revenues $140,987,000 $153,521,000 $175,236,000 ----------- ----------- ----------- Costs of Revenues (exclusive of depreciation and amortization shown separately below) 127,316,000 133,957,000 150,085,000 General and Administrative 18,438,000 16,239,000 15,572,000 Depreciation and Amortization 6,163,000 6,918,000 8,498,000 Interest Expense 4,583,000 4,847,000 6,161,000 Interest and Dividend Income (4,016,000) (4,035,000) (6,908,000) Other Expense (Income) 1,761,000 (2,798,000) 4,520,000 ----------- ----------- ----------- Total Costs and Expenses 154,245,000 155,128,000 177,928,000 ----------- ----------- ----------- Loss Before Income Taxes and Equity in Net Income of NBC (13,258,000) (1,607,000) (2,692,000) Credit for Income Taxes (3,950,000) (560,000) (1,082,000) ----------- ----------- ----------- Loss Before Equity in Net Income of NBC (9,308,000) (1,047,000) (1,610,000) Equity in Net Income of NBC 0 0 828,000 ----------- ----------- ----------- Net Loss $ (9,308,000) $ (1,047,000) $ (782,000) =========== =========== =========== Loss Per Share $ (1.06) $ (.12) $ (.08) =========== =========== =========== See accompanying notes. Page 6 of 27 BURNUP & SIMS INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Three Years Ended April 30, 1993 Pro Rata (Dollars in Thousands) Common Capital Retained Interest Treasury Stock Surplus Earnings in NBC Stock Total ------ ------- -------- -------- -------- -------- Balance April 30, 1990 $1,601 $71,926 $55,034 $(17,347) $(51,079) $ 60,135 Net Loss (782) (782) Distribution of NBC Common Stock (5,904) 17,347 11,443 Taxes Payable on the Distribution of NBC Common Stock (5,000) (5,000) Exchange of Common Shares for Debt due from NBC (23,061) (23,061) Common Stock Issued Under Stock Option Plans 1 99 100 ------ ------- -------- -------- -------- -------- Balance April 30, 1991 1,602 72,025 43,348 0 (74,140) 42,835 Net Loss (1,047) (1,047) ------ ------- -------- -------- -------- -------- Balance April 30, 1992 1,602 72,025 42,301 0 (74,140) 41,788 Net Loss (9,308) (9,308) Adjustment of Prior Year Tax Benefits 835 349 0 0 1,184 ------ ------- -------- -------- -------- -------- Balance April 30, 1993 $1,602 $72,860 $33,342 $ 0 $(74,140) $ 33,664 ====== ======= ======= ======== ======== ======== See accompanying notes. Page 7 of 27 BURNUP & SIMS INC. CONSOLIDATED BALANCE SHEETS April 30, 1993 and 1992 ASSETS 1993 1992 ----------- ----------- Current Assets Cash and Cash Equivalents $ 9,612,000 $ 13,335,000 Accounts Receivable - Net 19,314,000 23,065,000 Unbilled Revenues 3,572,000 4,096,000 Inventories 4,246,000 4,843,000 Accrued Interest Receivable and Other - NBC 568,000 1,139,000 Refundable Income Taxes 4,310,000 462,000 Other 998,000 1,247,000 ----------- ----------- Total Current Assets 42,620,000 48,187,000 ----------- ----------- Preferred Stock and Long-Term Notes Receivable - NBC 31,184,000 31,437,000 ----------- ----------- Property - At Cost Land 3,192,000 3,261,000 Buildings and Improvements 12,221,000 12,464,000 Machinery and Equipment 59,441,000 60,683,000 ----------- ----------- Total 74,854,000 76,408,000 Less Accumulated Depreciation (56,818,000) (57,197,000) ----------- ----------- Property - Net 18,036,000 19,211,000 ----------- ----------- Other Assets Excess of Cost over Equity of Businesses Acquired 3,279,000 5,712,000 Real Estate Investments 11,663,000 10,342,000 Miscellaneous 2,135,000 3,571,000 ----------- ----------- Total Other Assets 17,077,000 19,625,000 ----------- ----------- Total $108,917,000 $118,460,000 =========== =========== Page 8 of 27 LIABILITIES AND SHAREHOLDERS' EQUITY 1993 1992 ----------- ---------- Current Liabilities Current Maturities of Debt $ 3,873,000 $ 4,279,000 Accounts Payable 9,821,000 8,591,000 Accrued Insurance 2,839,000 2,644,000 Accrued Compensation 1,970,000 1,964,000 Accrued Interest 1,499,000 3,007,000 Accrued Income Taxes 57,000 507,000 Deferred Income Taxes 0 331,000 Other 6,362,000 5,066,000 ----------- ----------- Total Current Liabilities 26,421,000 26,389,000 ----------- ----------- Other Liabilities 12,076,000 10,253,000 ----------- ----------- Long-Term Debt 12,256,000 12,905,000 ----------- ----------- Convertible Subordinated Debentures 24,500,000 27,125,000 ----------- ----------- Shareholders' Equity Common Stock, $.10 par value, authorized 25,000,000 shares; issued 16,021,714 shares; outstanding 8,768,339 shares in 1993 and 1992 1,602,000 1,602,000 Capital Surplus 72,860,000 72,025,000 Retained Earnings 33,342,000 42,301,000 Treasury Stock (74,140,000) (74,140,000) ----------- ----------- Total Shareholders' Equity 33,664,000 41,788,000 ----------- ----------- Total $108,917,000 $118,460,000 =========== =========== See accompanying notes. Page 9 of 27 BURNUP & SIMS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Years Ended April 30,1993 1993 1992 1991 ---------- ----------- ----------- Cash Flows from Operating Activities: Net Loss $(9,308,000) $ (1,047,000) $ (782,000) Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Depreciation and Amortization 6,163,000 6,918,000 8,498,000 Undistributed Earnings of NBC 0 0 (828,000) Losses Related to Subsidiary Sold - Net of Income Taxes 0 0 4,500,000 Gain on Sales of Assets (1,075,000) (1,548,000) (667,000) Gain on Repurchase of Debentures (291,000) (1,111,000) (912,000) Write-off of Excess of Cost over Equity of Business Acquired 2,017,000 0 0 Changes in Operating Assets and Liabilities - Net of Effects of Subsidiary Sold: Accounts Receivable - Net and Unbilled Revenues 4,277,000 3,146,000 6,210,000 Inventories 597,000 610,000 (563,000) Interest Receivable 64,000 1,535,000 1,349,000 Refundable Income Taxes (3,848,000) (462,000) 0 Accounts Payable and Accrued Expenses 2,242,000 1,979,000 (4,119,000) Interest and Income Taxes (1,681,000) (1,398,000) 2,835,000 Other Liabilities 2,399,000 (2,867,000) 189,000 Other, Net 1,380,000 (705,000) (1,457,000) ---------- ---------- ---------- Net Cash Provided by Operating Activities 2,936,000 5,050,000 14,253,000 ---------- --------- ---------- Cash Flows from Investing Activities: Proceeds from Sales of Assets 1,068,000 437,000 783,000 Capital Expenditures (4,338,000) (4,493,000) (4,395,000) ---------- ---------- ---------- Net Cash Used in Investing Activities (3,270,000) (4,056,000) (3,612,000) ---------- ---------- ---------- Page 10 of 27 BURNUP & SIMS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) For the Three Years Ended April 30,1993 1993 1992 1991 ---------- ----------- ----------- Cash Flows from Financing Activities: Taxes Payable on Distributions of NBC Common Stock 0 0 (5,000,000) Costs of Exchange of Common Shares for Debt due from NBC 0 0 (561,000) Borrowings Under Line of Credit Agreement 0 8,000,000 0 Repayments Under Line of Credit Agreement (5,000,000) (3,000,000) 0 Short-Term Debt Borrowings (Repayments) 0 0 (5,000,000) Long-Term Debt Borrowings 5,640,000 9,381,000 267,000 Long-Term Debt Repayments (4,029,000) (12,910,000) (7,255,000) Proceeds from Issuance of Common Stock - Net 0 0 100,000 ---------- ----------- ----------- Net Cash Provided (Used) by Financing Activities (3,389,000) 1,471,000 (17,449,000) ---------- ----------- ----------- Net Increase (Decrease) in Cash and Cash Equivalents (3,723,000) 2,465,000 (6,808,000) Cash and Cash Equivalents - Beginning of Year 13,335,000 10,870,000 17,678,000 ---------- ----------- ----------- Cash and Cash Equivalents - End of Year $ 9,612,000 $ 13,335,000 $ 10,870,000 ========== =========== =========== See accompanying notes. Page 11 of 27 NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation and Presentation The consolidated financial statements include Burnup & Sims Inc. and its subsidiaries (the "Company" or "Burnup & Sims"). All material intercompany accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current presentation. Contracts Revenues from contracts are accounted for by the percentage of completion method whereby income is recognized based on the estimated stage of completion of individual contracts. Prospective losses on such contracts are provided for when they become known. Inventories Inventories (consisting principally of material and supplies) are valued at the lower of first-in, first-out cost or market. Property Property and equipment are recorded at cost. Depreciation is provided for using the straight-line method over the estimated useful life of the assets as follows: Buildings and Improvements - 5 to 40 years, and Machinery and Equipment - 3 to 15 years. Depreciation expense was $5,517,000 for 1993, $6,240,000 for 1992, and $7,788,000 for 1991. Expenditures for maintenance and repairs are charged to income as incurred. Major expenditures for betterments and renewals are capitalized. The carrying amounts of assets sold or retired and related accumulated depreciation are eliminated in the year of disposal and the resulting gains and losses are included in income. Income Taxes Certain income and expense items are accounted for differently for financial reporting purposes and for income tax purposes. A provision for deferred taxes is made in recognition of these temporary differences using the liability method in accordance with the provisions of Statement of Financial Accounting Standards No. 96 "Accounting for Income Taxes" ("SFAS No. 96"). In February 1992, the Financial Accounting Standards Board adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which will supersede SFAS No. 96. The Company must adopt this pronouncement in its financial statements for fiscal years beginning after December 15, 1992 and anticipates the adoption of this pronouncement will be immaterial to its financial results. Page 12 of 27 NOTES TO FINANCIAL STATEMENTS (Continued) Excess of Cost Over Equity of Businesses Acquired The excess of cost over equity of businesses acquired (goodwill) is being amortized generally over forty years. The Company periodically evaluates its long-lived assets, including goodwill, and adjusts such assets accordingly when it is deemed probable that the recorded amounts are not recoverable. For the fiscal year ended April 30, 1993, the Company wrote off $2,017,000 of the remaining goodwill of a Telephone Services subsidiary which has closed several of its operating areas due to economic and competitive pressures. Goodwill is net of accumulated amortization of $4,456,000 for 1993 and $6,092,000 for 1992. Goodwill amortization was $519,000 for 1993 and 1992, and $604,000 for 1991. Accrued Insurance The Company is self-insured for certain casualty and worker's compensation exposures and, accordingly, accrues the present value of estimated losses not otherwise covered by insurance. Investments The Company's investment in preferred stock of National Beverage Corp. ("NBC") is stated at cost, which does not exceed estimated net realizable value. Until February 1991, the Company used the equity method to account for its investment in the common stock of NBC. Equity in Net Income of NBC for 1991 is reported net of costs incurred by the Company related to the distribution of all of the common stock of NBC held by the Company. (See "Transactions with NBC".) Real estate investments are carried at cost, which is less than estimated market value. Statement of Cash Flows For purposes of the statements of cash flows, the Company generally considers all highly liquid securities (consisting primarily of repurchase agreements, short-term money-market investments, certificates of deposit, and municipal obligations) with an original maturity or redemption option of three months or less, to be cash equivalents. Cash paid (refunded) for income taxes was $(205,000) in 1993, $2,670,000 in 1992, and $4,669,000 in 1991. Cash payments for interest were $4,753,000, $5,030,000, and $6,009,000 for 1993, 1992, and 1991 respectively. Non-cash transactions for the fiscal year ended April 30, 1993 include the write-off of goodwill of $2,017,000 and the write-off of certain receivables, inventory, and other assets with respect to closed and other unprofitable areas of operation (primarily Telephone Services) of $2,019,000 less the related tax benefit of $707,000. Page 13 of 27 2. ACCOUNTS RECEIVABLE - NET Accounts receivable are net of an allowance for doubtful accounts of $803,000 and $3,972,000 at April 30, 1993 and 1992, respectively. Accounts receivable include retainage which has been billed but is not due until the completion of performance and acceptance by customers, and claims for additional work performed outside original contract terms. Retainage aggregated $590,000 and $840,000 at April 30, 1993 and 1992, and claims aggregated approximately $3,100,000 at April 30, 1992. Such claims were settled during the fiscal year ended April 30, 1993 which resulted in a write-off of unreserved amounts of approximately $1,500,000. While certain amounts are subject to litigation, negotiation, and counterclaims in the ordinary course of business, which could delay settlement, substantially all accounts receivable are collectable within one year. Bad debt expense, including both provisions for doubtful accounts and direct write-offs of certain claims and receivables, approximates $3,053,000, $1,710,000, and $2,096,000 (including approximately $1,700,000 related to a provision for receivables of a subsidiary sold) for the fiscal years ended April 30, 1993, 1992, and 1991, respectively. 3. OTHER LIABILITIES Other Liabilities are summarized as follows: (Dollars in Thousands) 1993 1992 ------ ------ Deferred Income Taxes $ 3,612 $ 3,218 Accrued Interest - Prior Years' Taxes 2,187 1,985 Accrued Insurance 6,277 5,050 ------ ------ Other Liabilities $12,076 $10,253 ====== ====== 4. DEBT Debt is summarized as follows: (Dollars in Thousands) 1993 1992 ------ ------ Term Loan payable to Bank, at Prime plus 1/2% (61/2% at April 30, 1993) $12,849 $ 8,729 Revolving Loan payable to Bank, at Prime plus 1/2% 0 5,000 Capital Leases and Other, at Interest Rates from 9% to 13%, due in Installments through 1994 655 830 12% Convertible Subordinated Debentures due 2000 27,125 29,750 ------ ------ Total Debt 40,629 44,309 Less Current Maturities 3,873 4,279 ------ ------ Non-Current Debt $36,756 $40,030 ====== ====== Page 14 of 27 DEBT (Continued) The indenture under which the debentures are issued requires an annual payment to a sinking fund, which commenced November 15, 1990, calculated to retire 75% of the issue prior to maturity. The Company has the option to redeem all or part of the debentures prior to the due date by paying the principal amount at face value. Included in Other Income is a gain of approximately $291,000 in 1993, $1,111,000 in 1992 and $912,000 in 1991 from the repurchase of $2,625,000 face amount of debentures acquired to meet sinking fund requirements. The debentures are convertible into the Company's common stock (the "Common Stock") at an adjusted conversion price of $16.79 per share. At April 30, 1993, approximately 1,616,000 shares were reserved for conversion. On August 2, 1991, the Company entered into an agreement with a bank (the "Bank Agreement") to refinance an existing term loan. The facilities extended to the Company under the Bank Agreement include (1) a six-year term loan in the initial principal amount of $9,188,000 bearing interest at one-half of one percent over the prime rate and payable in equal quarterly installments computed on a fifteen-year amortization schedule (the "Term Loan"); (2) a revolving line of credit facility bearing interest at one-half of one percent over the prime rate (the "Revolving Loan"); and (3) a facility for the issuance of letters of credit. During fiscal 1993, the Company refinanced $5,000,000 which had been borrowed under the Revolving Loan from an advance under the provisions of the Term Loan. Real estate with a book value of approximately $2,500,000 at April 30, 1993 is pledged as collateral for the Term Loan. In April 1993, the Company entered into an agreement to sell certain real estate which was pledged as collateral for the Term Loan; the transaction was finalized during the first quarter of the Company's fiscal year ending April 30, 1994. Pursuant to the provisions of the Term Loan, the net proceeds from the real estate sale of approximately $2,900,000 was applied to the non-current portion of the Term Loan. Debt agreements contain, among other things, restrictions on the payments of dividends and require the maintenance of certain financial covenants. The Company's 1993 financial results resulted in non-compliance with certain financial covenants under its Term Loan. The Company has obtained waivers of such covenants for the fiscal year ended April 30, 1993 and the bank and the Company agreed to a modification for future periods for various covenants, including those with which the Company had not complied. In addition, the Company agreed that if the Series C Preferred Stock of NBC (see "Transactions with NBC") is redeemed, the proceeds will be used to retire amounts due under the Term Loan. Pursuant to its loan agreements, the Company is currently prohibited from declaring or paying dividends. At April 30, 1993, debt matures as follows: Fiscal Year Ending (Dollars in Thousands) - ------------------- ---------------------- 1994 $ 3,873 1995 3,690 1996 3,694 1997 3,695 1998 3,673 After 1998 22,004 ------ Total $40,629 ====== Page 15 of 27 5. LEASED PROPERTIES The Company leases certain theatre locations, operating equipment, offices and equipment yard facilities under cancelable and noncancelable agreements. Total rental expense approximated $5,312,000 in 1993, $4,800,000 in 1992, and $4,000,000 in 1991. Future minimum lease payments under all leases with initial or remaining noncancelable lease terms in excess of one year, at April 30, 1993, are as follows: (Dollars in Thousands) ---------------------- Capital Operating Fiscal Year Ending April 30, Leases Leases ------- --------- 1994 $280 $ 3,247 1995 130 2,473 1996 125 2,094 1997 115 1,653 1998 83 1,432 Remaining years 0 16,056 ------- --------- Total minimum lease payments $733 $26,955 ========= Less: Amount representing interest (129) ------- Present value of net minimum lease payments $604 ======= Lease agreements frequently include renewal options and require that the Company pay for utilities, taxes, insurance and maintenance expense. Options to purchase are also included in some lease agreements, particularly capital leases. The net book value of assets acquired under capital leases included in Machinery and Equipment at April 30, 1993 and 1992 approximates $731,000 and $342,000, respectively. Amortization of such assets is included in depreciation expense. Page 16 of 27 6. INDUSTRY SEGMENT INFORMATION Business segment information is summarized as follows: (Dollars in Thousands) Years Ended April 30, 1993 1992 1991 ------- ------- ------- Revenues Telephone Services $100,444 $112,260 $122,949 Cable Television and Utility Services 19,002 21,231 32,434 General Products and Other 21,541 20,030 19,853 ------- ------- ------- Total Revenues $140,987 $153,521 $175,236 ======= ======= ======= Operating Profit (Loss) Telephone Services $ (9,083) $ (20) $ 3,780 Cable Television and Utility Services 113 (849) (6,917) General Products and Other (385) (81) (120) ------- ------- ------- Total Operating Profit (Loss) (9,355) (950) (3,257) General Corporate Income (Expense), Net (3,903) (657) 565 ------- ------- ------- Loss Before Income Taxes and Equity in Net Income of NBC $(13,258) $ (1,607) $ (2,692) ======= ======= ======= Identifiable Assets Telephone Services $ 32,731 $ 39,172 $ 45,753 Cable Television and Utility Services 9,723 10,654 12,075 General Products and Other 17,248 18,233 18,773 Corporate Assets 49,215 50,401 46,072 ------- ------- ------- Total Assets $108,917 $118,460 $122,673 ======= ======= ======= Depreciation and Amortization Telephone Services $ 4,380 $ 4,565 $ 5,657 Cable Television and Utility Services 728 1,021 1,603 General Products and Other 1,055 1,332 1,238 ------- ------- ------- Total Depreciation and Amortization $ 6,163 $ 6,918 $ 8,498 ======= ======= ======= Capital Expenditures Telephone Services $ 2,610 $ 3,214 $ 3,165 Cable Television and Utility Services 721 625 838 General Products and Other 1,007 654 392 ------- ------- ------- Total Capital Expenditures $ 4,338 $ 4,493 $ 4,395 ======= ======= ======= The Company's operations are organized into three principal business segments - Telephone Services, Cable Television and Utility Services, and General Products and Other. General Products and Other includes the Company's printing, theatre and real estate operations. Operating profit consists of revenues less costs and expenses and does not include interest and dividend income, general corporate expenses, interest expense and income taxes. There are no material intersegment sales or transfers. Identifiable assets are those assets used for operations in each business segment. Corporate assets are principally cash and investments and amounts due from NBC. Page 17 of 27 INDUSTRY SEGMENT INFORMATION (Continued) One operating unit of a Telephone Services customer accounted for approximately 18% of revenues for each of the fiscal years ended April 30, 1993, 1992, and 1991, respectively. Another operating unit of the same customer comprised 14% of revenues for fiscal year 1993, 11% of revenues for fiscal year 1992 and 10% of revenues for the fiscal year ended April 30, 1991. On January 31, 1991, the Company sold a subsidiary which was included in the Cable Television & Utility Services segment to a company controlled by a former officer of the Company (the "Buyer"). Revenues of the subsidiary sold approximated $11,100,000 for the nine-month period ended January 31, 1991, and pretax losses related to the subsidiary sold of approximately $7,400,000 (which includes a provision for doubtful accounts for receivables transferred to the Company from the subsidiary as of the sale date of approximately $1,700,000) are included in the operating loss of the Cable Television and Utility Services segment for the year ended April 30, 1991. The loss (net of estimated income tax benefit) related to the subsidiary sold of $4,500,000 was recorded in the quarter ended January 31, 1991. Subsequent to April 30, 1993, the Company accepted a cash payment in settlement of amounts due from the Buyer. Effective May 1, 1988, the Company sold a minority interest in a Telephone Services subsidiary and is party to various agreements providing an option to the minority holder to purchase the remaining shares of the subsidiary effective April 30, 1993, if certain conditions were satisfied. Since the required conditions were not satisfied and certain disputed payments were not made, the Company exercised its right to terminate the buyer's option to purchase the remainder of the stock of the subsidiary. A lawsuit related to the transaction was filed on May 3, 1993. (See "Litigation" in the Notes to Condensed Consolidated Financial Statements). The subsidiary's revenues approximated $19,000,000 for each of the three years ended April 30, 1993. Operating profit of the subsidiary reflected in the table above approximated $555,000, $1,092,000, and $1,436,000 for 1993, 1992, and 1991, respectively. General Corporate Income for 1993, 1992, and 1991 includes a pretax gain of approximately $291,000, $1,111,000 and $912,000, respectively, from the repurchase each year of $2,625,000 face amount of the Company's 12% convertible subordinated debentures. Until February 1991, the Company owned a 42.1% interest in NBC. NBC produces and distributes its own branded carbonated beverage and water products as well as products for third parties. (See "Transactions with NBC".) Page 18 of 27 7. INCOME TAXES The provision (credit) for income taxes consists of the following: (Dollars in Thousands) 1993 1992 1991 ------ ---- ------ Current Federal $(4,034) $(549) $ 1,057 State (100) (165) 363 ------ ---- ------ (4,134) (714) 1,420 ------ ---- ------ Deferred Federal 163 97 (2,099) State 21 57 (403) ------ ---- ------ 181 154 (2,502) ------ ---- ------ Total $(3,950) $(560) $(1,082) ====== ==== ====== The provision (credit) for deferred income taxes consists of the following: (Dollars in Thousands) 1993 1992 1991 ------ ---- ------ Cash Basis Accounting - - $(1,913) Installment Sale $ (19) $ (88) (247) Accrued Liabilities and Expenses (50) 443 (107) Accelerated Depreciation 148 (52) 35 Retainage (116) (50) (207) Other 221 (99) (63) ------ ---- ------ Total $ 184 $ 154 $(2,502) ====== ==== ====== The difference between the effective income tax rate and the statutory federal income tax rate applied to pretax income (loss) before income taxes and equity in net income of NBC is accounted for as follows: 1993 1992 1991 ------ ------ ------ Federal Statutory Rate (34.0)% (34.0)% (34.0)% Effect of State Taxes - (4.4) (1.0) Effect of Dividend Exclusion (1.9) (15.0) (10.6) Amortization and Write-off of Intangibles 6.5 11.0 7.7 Adjustment of Prior Years' Taxes (0.3) 4.4 (0.6) Other (0.1) 3.1 (1.7) ------ ------ ------ Provision (Credit) for Income Taxes (29.8)% (34.9)% (40.2)% ====== ====== ====== In 1993, the income tax consequences of certain prior year charges to shareholders' equity were adjusted, resulting in an increase of capital surplus and retained earnings of $835,000 and $349,000, respectively. Page 19 of 27 8. STOCK OPTION PLANS The Company has two non-qualified stock option plans (the "1976 Plan" and the "1978 Plan") which provide for the granting of options to purchase Common Stock to key employees at prices equal to the fair market value on the date of grant. The 1976 Plan and the 1978 Plan expire in August 1994 and November 1993, respectively. The 1976 Plan provides that options may be exercised in four increments beginning eighteen months subsequent to the date of grant. Upon exercise of the option, the Company will reduce the optionee's purchase price by an amount equal to the increase in the fair market value on the exercise date of the shares being purchased over the fair market value of such shares on the date the option was granted. The purchase price, however, cannot exceed 85% of the fair market value of such shares on the exercise date, and in no event can the exercise price be less than $.10 per share. The holder of the option has the alternative right to cancel such option and instead to exercise a stock appreciation right entitling the holder to receive cash under certain circumstances. The aggregate amount received by participants in each fiscal year is subject to certain maximum limitations. Accordingly, the Company accrues compensation based upon the present value of its estimated future obligation. Due to the decrease in market value of the Common Stock, accrued compensation was reduced by $75,000 in 1993, $341,000 in 1992, and $1,523,000 in 1991. On February 13, 1991, NBC sold 24,650 shares of its common stock to the Company for an aggregate purchase price of approximately $376,000, which was accrued as compensation expense by the Company. The Company distributed such shares of NBC common stock to employees who held options to purchase the Company's Common Stock on January 28, 1991. The 1978 Plan provides that options may be exercised in four increments beginning one year subsequent to the date of grant. There is no subsequent adjustment of the purchase price. The following is a summary of all option transactions: Average Option Shares Price Per Share ------- --------------- Outstanding April 30, 1990 281,000 $5.75 Granted 0 - Exercised (16,000) 4.01 Cancelled (27,000) 5.22 ------- ----- Outstanding April 30, 1991 238,000 5.93 Granted 0 - Exercised 0 - Cancelled 0 - ------- ----- Outstanding April 30, 1992 238,000 5.93 Granted 0 - Exercised 0 - Cancelled 0 - ------- ----- Outstanding April 30, 1993 238,000 5.93 (Exercisable 238,000) ======= ===== Reserved for future options 561,000 ======= Page 20 of 27 9. TRANSACTIONS WITH NBC Preferred Stock and Notes Receivable - NBC is comprised of the following: (Dollars in Thousands) 1993 1992 ------ ------ Series C 7% Preferred Stock 150,000 shares, $1.00 par $12,700 $12,700 14% Subordinated Debenture, due 1994 through 2000, net of discount 17,265 17,213 Promissory Note due April 30, 1998 1,524 2,050 ------ ------ Total 31,489 31,963 Less: Current Portion* 305 526 ------ ------ Preferred Stock and Long-Term Notes Receivable - NBC $31,184 $31,437 ====== ====== *Included in Accrued Interest Receivable and Other -NBC. NBC owns approximately 36% of the Company's outstanding stock. IBS Partners Ltd., whose general partner is Nick A. Caporella, Chairman of the Board, President and Chief Executive Officer of the Company, owns 74.7% of the $.01 par value common stock of NBC (the "NBC Common Stock"). In December 1990, the Company and NBC approved a plan whereby (a) the Company distributed as a dividend to its shareholders of record on January 28, 1991, including NBC, all of the NBC Common Stock held by the Company (the "Distribution") and (b) NBC exchanged 3,846,153 shares of the Company's Common Stock held by NBC for certain indebtedness of NBC held by the Company (the "Exchange"). The Company paid the Distribution by depositing its shares of NBC Common Stock with a depositary. When NBC's registration Statement on Form S-1 was declared effective by the Securities and Exchange Commission on September 6, 1991, the depositary released the shares to NBC's transfer agent for distribution. The shares of NBC Common Stock are quoted on the NASD National Market System. The indebtedness exchanged consisted of a $20,000,000 principal amount 11 1/2% Senior Subordinated Note which was due on February 1, 1991 and the initial sinking fund payment of an aggregate of $2,500,000 which was payable on November 1, 1990 on the 14% subordinated debentures issued by NBC to the Company in the aggregate principal amount of $20,000,000 (the "Old Subordinated Debentures"). Upon completion of the Exchange, NBC retained ownership of approximately 36% of the Company's outstanding Common Stock and the Company continued to hold $17,500,000 principal amount of NBC's subordinated debt (the "Subordinated Debenture") as well as all of NBC's outstanding preferred stock which has a liquidation value of $15,000,000. Page 21 of 27 TRANSACTIONS WITH NBC (Continued) The maturity date of the Subordinated Debenture is November 1, 2000 and annual sinking fund payments of $2,500,000 commence on November 1, 1994. Pursuant to the Old Subordinated Debentures, sinking fund payments were to have commenced on November 1, 1990 with the final principal payment on the Old Subordinated Debentures due on November 1, 1997. The initial sinking fund payment was deferred pending the resolution of a previously announced reorganization plan. The Old Subordinated Debentures also contained covenants with respect to restrictions on NBC's ability to pay dividends, incur additional indebtedness, merge or sell substantially all of its assets or consummate additional acquisitions, which are not contained in the Subordinated Debenture. In fiscal 1991, expenses related to the Exchange of approximately $561,000 were charged to the cost of treasury stock and estimated income taxes of approximately $5,000,000 resulting from the excess of the fair market value of the NBC stock distributed over its tax basis was charged to retained earnings. Also, as a result of the Distribution, the Company's pro rata interest in the cost of its shares held by NBC of $17,347,000 was eliminated. The Company received an opinion from PaineWebber Incorporated that the Distribution, Exchange and the modification of the terms on the remaining debt owed by NBC to the Company, taken as a whole, are fair to the Company's shareholders from a financial point of view. In April 1992, the Company and NBC entered into a Securities Purchase Agreement pursuant to which NBC purchased all of the issued and outstanding shares of common stock of a wholly-owned subsidiary of the Company (the "Subsidiary") for an aggregate purchase price of $2,050,000. NBC paid the purchase price by delivery to Burnup & Sims of a six-year promissory note due April 30, 1998 bearing interest at 1% above the prime interest rate. The note provides for quarterly principal and interest payments beginning July 31, 1992. The obligations under the note are secured by the shares of the Subsidiary. The selling price of the Subsidiary's stock was determined based upon an independent market valuation of the two aircraft which comprised the Subsidiary's primary assets. The Company recognized a pretax gain of approximately $1,100,000 from the sale of the Subsidiary to NBC. During 1991, NBC sold 24,650 shares of NBC Common Stock to the Company for an aggregate purchase price of approximately $376,000. (See "Stock Option Plans".) The Company has billed NBC approximately $662,000, $1,312,000 and $874,000, for certain services rendered and expenses reimbursed for the years ended April 30, 1993, 1992 and 1991, respectively. Interest and dividend income includes dividends of $1,050,000 for each of the three years in the period ended April 30, 1993 and interest income of $2,632,000 for 1993, $2,502,000 for 1992, and $4,553,000 for 1991, respectively, related to the Company's investment in NBC. The Company has not recorded Equity in Net Income of NBC subsequent to January 31, 1991. Page 22 of 27 TRANSACTIONS WITH NBC (Continued) Results of operations of NBC for the fiscal year ended April 1991 as follows: (Dollars in Thousands) 1991 ------- Sales - Net $307,181 Income Before Equity in Earnings (Loss) of Burnup & Sims Inc. 3,500 Net Income 1,807 10. EARNINGS PER SHARE AND CAPITAL STOCK Primary average shares outstanding were 8,768,000 in 1993 and 1992, and 9,460,000 in 1991. Primary earnings per share is based on the weighted average number of common shares outstanding. The weighted average number of common shares outstanding for the fiscal year ended April 30, 1991 exclude approximately 2,900,000 shares through January 31, 1991, which represented 42% of the 7,000,000 restricted shares of Common Stock held by NBC. (See "Transactions with NBC".) Fully diluted earnings per share (assuming conversion of convertible subordinated debentures with corresponding adjustments for interest expense, net of tax) is not presented as the effect is anti-dilutive. At April 30, 1993 and 1992, the Company had 5,000,000 shares of authorized but unissued preferred stock and 7,253,000 shares of common stock held in treasury. 11. LITIGATION Albert H. Kahn v. Nick A. Caporella, et al., Civil Action No. 11890 was filed in December 1990 by a shareholder of the Company in the Court of Chancery of the State of Delaware in and for New Castle County against the Company, the members of its Board of Directors, and against NBC as a purported class action and derivative lawsuit. The class action claims allege, among other things, that the Board of Directors of the Company, and NBC, as its largest shareholder, breached their respective fiduciary duties in approving (i) the dividend by the Company of its shares of NBC common stock (the "Distribution") and (ii) the exchange of certain shares of the Company's stock held by NBC for certain indebtedness of NBC held by the Company (the "Exchange"; the Distribution and the Exchange are hereinafter referred to as the "1991 Transaction"), in allegedly placing the interests of NBC ahead of the interests of the other shareholders of the Company. The derivative action claims allege, among other things, that the Board of Directors of the Company has breached their fiduciary duties by approving executive officer compensation arrangements, by financing NBC's operations on a current basis, and by permitting the interests of the Company to be subordinated to those of NBC. In the lawsuit, plaintiff seeks to rescind the 1991 Transaction and to recover damages. (See "Transactions with NBC" in the Notes to Consolidated Financial Statements.) Page 23 of 27 LITIGATION (Continued) In May 1993, plaintiff filed a motion to amend its class action and shareholder derivative complaint (the "Proposed New Complaint"). The Proposed New Complaint alleges that the Special Committee (the "Committee") that approved the 1991 Transaction was not independent and that, therefore, the 1991 Transaction was neither protected by the business judgement rule or in accordance with a settlement agreement (the "1990 Settlement") entered into in 1990 pertaining to certain prior litigation. The Proposed New Complaint also makes other allegations which involve (i) further violations of the 1990 Settlement by engaging in certain transactions not approved by the Committee; (ii) the sale of a subsidiary of the Company to a former officer of the Company; (iii) the timing of the 1991 Transaction and (iv) the treatment of executive stock options in the 1991 Transaction. The Company believes that the allegations in the complaint and the Proposed New Complaint are without merit, and intends to vigorously defend this action. William C. Deviney, Jr. v. Burnup & Sims, Inc. et al., Civil Action No. 152350 was filed in the Chancery Court of the First Judicial District of Hines County, Mississippi on May 3, 1993. The plaintiff in this action filed suit seeking specific performance of alleged obligations of the Company pursuant to a stock purchase agreement and related agreements entered into in 1988. Pursuant to the agreements, the Company sold to plaintiff a minority interest in a Telephone Services subsidiary and granted to plaintiff an option to purchase the remaining stock if certain conditions were satisfied. (See "Industry Segment Information" in the Notes to Consolidate d Financial Statements.) Alternatively, plaintiff seeks unspecified damages for breach of contract and for alleged breaches of fiduciary duties, and seeks an award of punitive damages and attorney's fees for alleged bad faith conduct in connection with the stock purchase agreement and related matters. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this action. Additionally, the Company has filed counterclaims which, among other things, seek a declaratory judgement that the plaintiff's failure to satisfy certain material conditions terminated his rights under the stock purchase agreement. The Company and its subsidiaries are parties to various legal proceedings, including suits in which it is a defendant. In the opinion of management, the ultimate outcome of the legal proceedings will not have a material adverse effect on the financial position of the Company. Page 24 of 27 12. QUARTERLY FINANCIAL DATA (UNAUDITED) (Dollars In Thousands, Except Earnings Per Share) First Second Third Fourth 1993 Quarter Quarter Quarter Quarter ------- ------- ------- ------- Revenues $37,814 $36,020 $32,776 $34,377 Operating Profit (Loss) 932 1,995 (2,084) (10,198) Net Income (Loss) 237 251 (2,178) (7,618) Earnings (Loss) Per Share .03 .03 (.25) (.87) ======= ======= ======= ======= 1992 Revenues $38,430 $43,111 $34,600 $37,380 Operating Profit (Loss) 1,013 1,395 (912) (2,446) Net Income (Loss) 52 730 (527) (1,302) Earnings (Loss) Per Share .01 .08 (.06) (.15) ======= ======= ======= ======= The fourth quarter of 1993 includes a charge of $3,300,000 net of tax, or $.38 per share, relating to tangible and intangible assets which were written-off with respect to closed and other unprofitable Telephone Services areas of operation. The fourth quarter of 1992 includes a charge of approximately $1,000,000 net of tax, or $.12 per share, to provide for additional allowances for doubtful accounts. Page 25 of 27 AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT Shareholders and Board of Directors Burnup & Sims Inc.: We have audited the accompanying consolidated balance sheets of Burnup & Sims Inc. and subsidiaries (the "Company") as of April 30, 1993 and 1992 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended April 30, 1993. Our audit also included the financial statement schedules listed in Item 14 (a) 2. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 1993 and 1992 and the results of its operations and its cash flows for each of the three years in the period ended April 30, 1993 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. DELOITTE & TOUCHE Certified Public Accountants Fort Lauderdale, Florida July 29, 1993 Page 26 of 27 FORM 10-K/A AMENDMENT #2 BURNUP & SIMS INC. SIGNATURES Pursuant to the requirement 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. Burnup & Sims Inc. Registrant Date: February 8, 1994 \s\ George R. Bracken _________________ __________________________ George R. Bracken Vice President & Treasurer (Principal Financial Officer) and Authorized Officer of the Registrant Page 27 of 27