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, 1998 or
[ ] Transition report pursuant to section 13 of 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to ________
Commission file number: 0-25104
CONTINENTAL INFORMATION SYSTEMS CORPORATION
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(Exact name of registrant as specified in its charter)
New York 16-0956508
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
45 Broadway Atrium, Suite 1105, New York, New York 10006
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(Address of principal executive offices) (Zip Code)
(212) 771-1000
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(Registrant's telephone number, including area code)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of September 30,
1998, the registrant has 6,939,060 shares of common stock, par value $.01 per
share, outstanding.
CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets -
August 31, 1998 and May 31, 1998
Consolidated Statements of Operations -
for the three months ended August 31, 1998 and 1997
Consolidated Statements of Cash Flows -
for the three months ended August 31, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except Number of Shares)
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CONSOLIDATED BALANCE SHEETS
(Unaudited)
August 31, May 31,
1998 1998
-------- --------
Assets:
Cash and cash equivalents $ 1,663 $ 3,211
Accounts receivable, net 928 636
Notes receivable 8,795 6,870
Investment in mortgage participation notes 772 1,522
Inventory 1,973 3,755
Net investment in direct financing leases 4,516 4,658
Rental equipment, net 16,819 18,118
Furniture, fixtures and equipment, net 389 398
Other assets 624 620
Deferred tax assets 5,414 5,414
-------- --------
Total assets $ 41,893 $ 45,202
======== ========
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and other liabilities $ 2,180 $ 2,377
Discounted lease rental borrowings 2,350 2,594
Note payable to institution - secured 2,494 4,429
Net liabilities of discontinued operations (Note 2) 586 866
Deferred lease revenue 5,213 5,976
-------- --------
Total liabilities 12,823 16,242
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Shareholders' Equity:
Common stock, $.01 par value; authorized 20,000,000 shares,
issued 7,101,668 shares 71 71
Additional paid-in capital 35,129 35,129
Accumulated deficit (5,724) (5,834)
-------- --------
29,476 29,366
Treasury stock, at cost; 162,608 shares (406) (406)
-------- --------
Total shareholders' equity 29,070 28,960
-------- --------
Total liabilities and shareholders' equity $ 41,893 $ 45,202
======== ========
The accompanying notes are an integral part of these financial statements.
Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except per Share Data)
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CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
August 31,
-------------------
1998 1997
------- -------
Revenues:
Equipment sales $ 3,098 $ 3,436
Equipment rentals 1,871 969
Income from direct financing leases 206 187
Gain from sale of equipment subject to lease -- 78
Interest, fees and other income 503 516
------- -------
5,678 5,186
------- -------
Costs and Expenses:
Cost of sales 2,696 2,712
Depreciation of rental equipment 1,421 480
Interest expense 164 177
Other operating expenses 300 304
Selling, general and administrative expense 920 1,149
------- -------
5,501 4,822
------- -------
Income from continuing operations before income taxes 177 364
Provision for income tax 67 138
------- -------
Income from continuing operations 110 226
Loss from discontinued operations, net of tax benefit (Note 2) -- (127)
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Net Income $ 110 $ 99
======= =======
Basic and diluted net income (loss) per share (Note 1):
Income from continuing operations $ .02 $ .03
Income (loss) from discontinued operations -- (.02)
------- -------
Net Income $ .02 $ .01
======= =======
Weighted average number of shares of common
stock outstanding 6,939 7,016
======= =======
The accompanying notes are an integral part of these financial statements.
Continental Information Systems Corporation
and its Subsidiaries
(In Thousands)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
August 31,
--------------------
1998 1997
------- -------
Cash flows from operating activities:
Net income $ 110 $ 99
Less: Net loss from discontinued operations -- (127)
------- -------
Income from continuing operations 110 226
------- -------
Adjustments to reconcile net income from continuing operations
to net cash provided by operating activities:
Proceeds from sale of equipment subject to lease -- 850
Gain from sale of equipment subject to lease -- (78)
Proceeds from sale of other leased equipment 12 39
Amortization of unearned income (206) (187)
Collections of rentals on direct financing leases 551 546
Depreciation and amortization expense 1,444 575
Effect on cash flows of changes in:
Accounts receivable (292) (817)
Notes receivable (1,925) 1,428
Inventory 1,782 2,002
Other assets (4) (396)
Accounts payable and other liabilities (197) 631
Deferred lease revenue (763) 14
Deferred tax assets -- 61
Other (100) 77
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302 4,745
------- -------
Net cash provided by continuing operations 412 4,971
Net cash used in discontinued operations (280) (688)
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Net cash provided by operations 132 4,283
------- -------
Cash flows from investing activities:
Purchase of rental equipment (337) (8,699)
Purchase of property and equipment (14) (5)
Proceeds from investment in mortgage participation notes 850 --
------- -------
Net cash provided by (used in) investing activities 499 (8,704)
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Continental Information Systems Corporation
and its Subsidiaries
(In Thousands)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (continued)
For the Three Months Ended
August 31,
--------------------
1998 1997
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Cash flows from financing activities:
Proceeds from lease, bank and institution financings 1,900 969
Payments on lease, bank and institution financings (4,079) (805)
Purchase of treasury stock -- (236)
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Net cash used in financing activities (2,179) (72)
------- -------
Net decrease in cash and cash equivalents (1,548) (4,493)
Cash and cash equivalents at beginning of period 3,211 8,968
------- -------
Cash and cash equivalents at end of period $ 1,663 $ 4,475
======= =======
The accompanying notes are an integral part of these financial statements
Continental Information Systems Corporation
and its Subsidiaries
Notes to the Consolidated Financial Statements
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1. Basis of Presentation
The accompanying unaudited financial statements of Continental Information
Systems Corporation and its subsidiaries (the "Company") contain all
adjustments which are, in the opinion of management, necessary for a fair
statement of results for the interim periods presented. While certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, the Company believes that the
disclosures herein are adequate to make the information not misleading.
The results of operations for the three months ended August 31, 1998, are
not necessarily indicative of the results for the full year. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included, for the fiscal year ended May 31,
1998, appearing in the Company's Form 10-K.
2. Discontinued Operations
On May 29, 1998, the Company announced its decision to discontinue and
liquidate its LaserAccess laser printing business. The Company recorded a
provision of $4,955,000 in the quarter ended May 31, 1998, relative to the
disposal of LaserAccess' assets, including the write-off of goodwill, in
the amount of $3,258,000, and other charges related to the discontinuance
of the business unit.
The Company is currently engaged in litigation with the former owners and
executives of its discontinued LaserAccess business. In March 1998, the
Company prepaid remaining amounts due to the former owners and exercised a
right to set-off approximately $1.1 million against amounts due on
promissory notes in connection with the purchase of LaserAccess. The
Company has also terminated these individuals under their employment
agreements. On April 7, 1998, the former owners filed suit in Superior
Court of California, County of San Diego, seeking to recover damages
allegedly arising from the Company's set-off of amounts due. Additionally,
the former owners are seeking to recover approximately $733,000 in damages
arising from the Company's termination of their employment contracts. The
complaint, as amended, seeks damages for various other claims, including
defamation. The Company has asserted crossclaims and intends to vigorously
contest these actions.
The Consolidated Statements of Operations for all periods presented have
been reclassified to report the results of discontinued operations
separately from continuing operations. A summary of the results of
discontinued operations follows (in thousands):
Continental Information Systems Corporation
and its Subsidiaries
Notes to the Consolidated Financial Statements
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For the Three Months Ended
August 31,
---------------------
1998 1997
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Revenues $ -- $ 1,236
Costs and expenses -- 1,440
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Loss from discontinued operations -- (204)
Income tax benefit -- (77)
------- -------
Net loss from discontinued operations $ -- $ (127)
======= =======
The Consolidated Balance Sheets as of August 31, 1998 and May 31, 1998
have been reclassified to report the net assets of discontinued operations
separately from the assets and liabilities of continuing operations. A
summary of the assets and liabilities of discontinued operations follows
(in thousands):
August 31, 1998 May 31, 1998
--------------- ------------
Assets:
Cash and cash equivalents $ 61 $ 19
Accounts receivable, net 310 198
Inventory 256 779
Furniture, fixtures and equipment, net -- 12
Other assets -- 58
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Total assets 627 1,066
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Liabilities:
Accounts payable and accruals 1,213 1,504
Note payable -- 428
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Total liabilities 1,213 1,932
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Net Assets (Liabilities) of
Discontinued Operations $ (586) $ (866)
======= =======
Continental Information Systems Corporation
and its Subsidiaries
Notes to the Consolidated Financial Statements
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3. Net Income Per Share
In fiscal 1998, the Company adopted Financial Accounting Standard No. 128
(SFAS 128), Earnings Per Share. SFAS 128 specified new standards for
computing and disclosing net income per share. Basic and diluted net
income per share for the three months ended August 31, 1998 and 1997, was
computed based on the weighted average number of shares of common stock
outstanding during the periods. As of August 31, 1998, the Company had
outstanding options to purchase 369,674 shares of common stock (See Note
5). The potential dilution of these options is immaterial in the
computation of diluted net income per share.
4. Reclassifications
Certain prior period balances in the financial statements have been
reclassified to conform to the current period financial statement
presentation.
5. Stock Option Plan
In 1995, the Board of Directors adopted and the stockholders approved the
Continental Information Systems Corporation 1995 Stock Compensation Plan
(the "1995 Plan"). The 1995 Plan provides for the issuance of options
covering up to 1,000,000 shares of common stock and stock grants of up to
500,000 shares of common stock to non-employee directors of the Company
and, in the discretion of the Board of Directors, employees of and
independent contractors and consultants to the Company.
Continental Information Systems Corporation
and its Subsidiaries
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
A summary of the status of the 1995 Plan as of August 31, 1998 and changes
since inception is presented below:
Weighted Average
Number of Exercise Price
Options Per Option
------- ----------
Outstanding at
May 31, 1995 (none exercisable) 15,000 $ 3.50
Granted 9,000 $ 2.50
Exercised -- $ --
Forfeited/expired (9,000) $ 3.50
-------
Outstanding at
May 31, 1996 (6,000 exercisable) 15,000 $ 2.90
Granted 319,000 $ 1.97
Exercised (16,667) $ 1.97
Forfeited/expired (33,333) $ 1.97
--------
Outstanding at
May 31, 1997 (188,337 exercisable) 284,000 $ 2.02
Granted 190,674 $ 2.38
Exercised (70,001) $ 1.97
Forfeited/expired (38,331) $ 1.97
--------
Outstanding at
May 31, 1998 (234,002 exercisable) 366,342 $ 2.22
Granted 10,000 $ 1.95
Forfeited/expired (6,668) $ 1.97
--------
Outstanding at
August 31, 1998 (227,334 exercisable) 369,674 $ 2.22
========
Continental Information Systems Corporation
and its Subsidiaries
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Introduction
The following discussion and analysis of the financial condition and results of
operations of the Company should be read in conjunction with the consolidated
financial statements and the notes thereto for the fiscal year ended May 31,
1998, appearing in the Company's Form 10-K.
All statements contained herein that are not historical facts, including but not
limited to, statements regarding anticipated future capital requirements and the
Company's future business plans, are based on current expectations. These
statements are forward looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are those set forth below and
the other risk factors described from time to time in the Company's reports
filed with the SEC. The Company wishes to caution readers not to place undue
reliance on any such forward looking statements, which statements are made
pursuant to the Private Securities Litigation Reform Act of 1995 and, as such,
speak only as of the date made.
Results of Operations
Comparison of the Three Months Ended August 31, 1998 and 1997
Continuing Operations
Revenues
Total revenues increased 9.5% to $5.7 million for the three months ended August
31, 1998 from $5.2 million for the comparable fiscal quarter in 1997. Within
this revenue category, equipment sales decreased 9.8% to $3.1 million for the
three months ended August 31, 1998 from $3.4 million for the comparable fiscal
quarter in 1997. This decrease is principally due to the results of operations
of the Telecommunications Business Unit included in the financial results for
the first quarter of the prior fiscal year, and subsequently sold on August 31,
1997.
Equipment rentals and income from direct financing leases increased 79.7% to
$2.1 million for the quarter ended August 31, 1998 from $1.2 million for the
comparable fiscal quarter in 1997. This increase is the cumulative effect of
lease streams coming on-line, as a result of the Company acquiring approximately
$24 million in additional rental equipment in the prior fiscal year.
Interest, fees and other income decreased slightly to $503,000 for the three
months ended August 31, 1998 from $516,000 for the comparable fiscal quarter in
1997. This decrease principally reflects a decline in management fees received
from income funds.
Continental Information Systems Corporation
and its Subsidiaries
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Costs and Expenses
Costs and expenses increased 14.1% to $5.5 million for the three months ended
August 31, 1998 from $4.8 million for the comparable fiscal quarter in 1997.
Within this category, cost of sales, as a percentage of equipment sales, for the
three months ended August 31, 1998 and 1997, was 87.0% and 78.9%, respectively.
This variance is directly related to the results of operations of the Air Group
Business Unit and reflect the competitive conditions in the used
aircraft/engines marketplace. Revenues and earnings from the aircraft business
are likely to continue to vary quarter-to-quarter, based on a number of factors,
including the volume of transactions.
Depreciation of rental equipment increased to $1.4 million for the quarter ended
August 31, 1998 from $.5 million for the comparable fiscal quarter in 1997. This
increase is directly related to the aforementioned acquisition of approximately
$24 million in additional rental equipment in the prior fiscal year.
Interest expense decreased 7.3% to $164,000 for the quarter ended August 31,
1998 from $177,000 for the comparable fiscal quarter in 1997. Additionally,
other operating expenses decreased slightly to $300,000 for the three months
ended August 31, 1998 from $304,000 for the comparable fiscal period in 1997.
Selling, general and administrative expenses decreased 19.9% to $.9 million for
the three months ended August 31, 1998 from $1.1 million for the comparable
fiscal period in 1997. This decrease is principally due to cost containment
efforts and staff reductions between the periods.
Income Taxes
For the quarter ended August 31, 1998, a provision for deferred income tax
expense on income from continuing operations was recorded, at an effective tax
rate of 38%, in the amount of $67,000. For the quarter ended August 31, 1997, a
provision for deferred income tax expense on income from continuing operations
was recorded, at an effective rate of 38%, in the amount of $138,000.
Additionally, in this prior year fiscal quarter, a provision for deferred income
tax benefit on loss from discontinued operations was recorded, at an effective
tax rate of 38%, in the amount of $77,000.
Discontinued Operations
On May 29, 1998, the Company announced its decision to discontinue and liquidate
its LaserAccess laser printing business. The Company recorded a provision of
$4,955,000 in the quarter ended May 31, 1998, relative to the disposal of
LaserAccess' assets, including the write-off of goodwill, in the amount of
$3,258,000, and other charges related to the discontinuance of the business
unit. See "PART II, Item 1. Legal Proceedings" for a discussion of litigation
related to Laser Access.
Continental Information Systems Corporation
and its Subsidiaries
- --------------------------------------------------------------------------------
A summary of the results of discontinued operations follows (in thousands):
For the Three Months Ended
August 31,
--------------------------
1998 1997
------- -------
Revenues $ -- $ 1,236
Costs and expenses -- 1,440
------- -------
Loss from discontinued operations -- (204)
Income tax benefit -- (77)
------- -------
Net loss from discontinued operations $ -- $ (127)
======= =======
Liquidity and Capital Resources
Net cash from operations for the three months ended August 31, 1998 was $132,000
as compared to $4.3 million for the comparable period in 1997. This decrease was
primarily due to a $1.9 million increase in notes receivable in the current
quarter compared to a $1.4 million decrease in notes receivable for the
comparable period in 1997. Most of the net increase in notes receivable during
the current quarter represents a $2.2 million investment in a joint venture
between the Company's wholly-owned subsidiary, CIS Air Corporation ("CIS Air")
and JetAir Capital, Inc., a privately-owned aviation leasing and parts sales
company located in San Francisco, California. The joint venture has acquired the
McDonnell Douglas DC-10 spare parts inventory of Phillipine Airlines.
The Company purchased $337,000 of additional rental equipment for lease
transactions during the three months ended August 31, 1998 as compared to $8.7
million for the comparable period in 1997. The Company's investment in rental
equipment varies from quarter to quarter, based on a number of factors,
including current market conditions and the availability of adequate credit
facilities, and the decline in equipment purchases during the current quarter
resulted from these factors. The Company received proceeds of $850,000 from its
investment in mortgage participation notes during the three months ended August
31, 1998.
Proceeds from lease, bank and institution financings for the three months ended
August 31, 1998 and 1997 were $1.9 million and $.9 million, respectively, while
payments on these financings were $4.1 million and $.8 million for the
respective 1998 and 1997 periods. The significant increase in payments in the
current quarter resulted from a $1.9 million pay-down of CIS Air's secured
revolving loan facility (the "CIS Air Loan Facility"). Amounts available under
the CIS Air Loan Facility vary depending on the value of equipment and inventory
securing the loans, and CIS Air was required to pay down the CIS Air Loan due to
significant inventory sales during the current quarter.
Continental Information Systems Corporation
and its Subsidiaries
- --------------------------------------------------------------------------------
As of August 31, 1998, the Company had $1.7 million in cash and cash
equivalents, as compared to $4.5 million at August 31, 1997. In September 1998,
the Company received cash proceeds from the payoff of a $3.6 million note
receivable owed to CIS Air.
The Company expects that operations will generate sufficient cash to meets its
operating expenses and current obligations for the foreseeable future. The
Company finances certain equipment leases by assigning the rentals to various
lending institutions at a fixed rate on a recourse and non-recourse basis, and
the Company has, in the past, also utilized various credit facilities, including
bank lines of credit to fund its operating activities. The Company is currently
in negotiations with a commercial bank to establish a $3 million "warehouse"
line of credit. The loan agreement for the line of credit is expected to contain
various covenants, including limitations on incurring additional liens and
encumbrances and prohibiting certain transactions with affiliates or
subsidiaries. Additionaly, the Company has established the CIS Air Loan Facility
with a financing institution to provide lease and inventory financing for
aircraft engines for its operating subsidiary CIS Air, in the amount of
$10,000,000. The facility has a three-year term and permits borrowing equal to a
percentage of the appraised value of the aircraft engines financed.
Substantially all of the assets of CIS Air are pledged as collateral for the
loan. At August 31, 1998, $2,494,000 of this facility was being utilized. The
CIS Air Loan Facility bears interest at prime plus 1/4% and expires in December
2000. To expand its operations, the Company may in the future issue debt or
equity securities.
Year 2000
As the year 2000 approaches, a critical issue has emerged for all companies,
including the Company, with respect to whether application software programs and
operating systems utilized by a company and the companies with which it does
business can accommodate this date value. In brief, many existing application
software products in the marketplace were designed only to accommodate a
two-digit date position which represents the year (e.g., "95" is stored on the
system and represents the year 1995). As a result, the year 1999 (i.e., "99")
could be the maximum date value these systems will be able to process
accurately.
The Company has, for several months, been engaged in a review of the software
and information systems it uses in an effort to determine whether it or its
operations may be materially adversely affected by this so-called "Year 2000"
conversion. As a result of that review, the Company upgraded and replaced its
hardware systems with systems that are Year 2000 compliant. In addition, the
Company has engaged a vendor to provide new lease billing software and has
identified another vendor to replace its accounting software. The Company
expects that this software will be installed by the middle of 1999. The Company
has inquired of, and generally obtained the assurances of, the providers of such
software with respect to its being Year 2000 compliant. Based on its review the
Company does not presently believe that Year 2000 compliance issues with respect
to its software and systems will cause any material disruptions, malfunctions or
failures of its business. However, no assurances can be given that such review
uncovered every potential adverse effect of the Year 2000 conversion in
connection with any of such software or systems.
Continental Information Systems Corporation
and its Subsidiaries
- --------------------------------------------------------------------------------
With respect to assets other than its computer hardware and software systems,
the Company is aware that some of the equipment it leases may have embedded
technology that is not Year 2000 compliant. Under the terms of the leases,
however, the Company is not responsible for the maintenance and repair of this
equipment, and the leases are non-cancelable. Failure to achieve Year 2000
compliance may materially adversely affect the residual value of such equipment.
No assurance can be given that such decrease in residual value would not have a
material adverse effect on the Company's business or results of operations.
The Company has only recently begun a review of whether the software and systems
of the vendors, financing sources, customers, equipment manufacturers or
distributors or other parties with which it deals may, as a result of the Year
2000 conversion, have a materially adverse effect on the Company or its
operations. Accordingly, it is too early for the Company to be able to predict
whether such software and systems of such parties may have such effect. As part
of this review, the Company will attempt to obtain assurances from each of such
parties, whose dealings with the Company are material to the Company or its
operations, that such party does not and will not utilize software or systems
that may interfere with the Company, or are or will be important to the
operations of such party, that may cause problems to such party or the Company
as a result of the Year 2000 conversion. However, no assurances can be given
that the Company will be able to obtain the information from such parties
necessary for the Company to determine whether it may be materially adversely
affected by the software or systems of such parties.
The Company currently believes that its systems will be Year 2000 compliant
during 1999 and therefore has not developed a contingency plan. Nevertheless,
the Company will maintain an ongoing effort to recognize and evaluate potential
exposure relating to the Year 2000 conversion arising from its use of software
supplied by other parties or its dealings with other parties. The total cost to
the Company of these Year 2000 compliance activities has not been, and is not
anticipated to be, material to its financial position or results of operations
in any given year.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is currently engaged in litigation with the former
owners and executives of its discontinued LaserAccess business. In
March 1998, the Company prepaid remaining amounts due to the former
owners and exercised a right to set-off approximately $1.1 million
against amounts due on promissory notes in connection with the
purchase of LaserAccess. The Company has also terminated these
individuals under their employment agreements. On April 7, 1998,
the former owners filed suit in Superior Court of California,
County of San Diego, seeking to recover damages allegedly arising
from the Company's set-off of amounts due. Additionally, the former
owners are seeking to recover approximately $733,000 in damages
arising from the Company's termination of their employment
contracts. The complaint, as amended, seeks damages for various
other claims, including defamation. The Company has asserted
crossclaims and intends to vigorously contest these actions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the
Company during the quarter ended August 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONTINENTAL INFORMATION SYSTEMS
CORPORATION
Date: October 9, 1998 By: /s/ Michael L. Rosen
--------------------
Michael L. Rosen
President, Chief Executive Officer
and Director
Date: October 9, 1998 By: /s/ Jonah M. Meer
-----------------
Jonah M. Meer
Senior Vice President,
Chief Operating Officer
and Chief Financial Officer