UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
commission File Number 0-27290
KSW, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3191686
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Indentification Number)
37-16 23rd Street, Long Island City, New York 11101
(address of principal executive offices (Zip Code)
718-361-6500
(Registrant's telephone number, icluding area code)
Indicate by check mark whether the registrant (1) has files 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 suc 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 the number of shares outstanding of each of the issurer's classes
of common stock, as of the latest practicable date:
Outstanding
Class September 30, 1996
Common stock, $.01 par value 5,458,004
This is page 1 of 11 pages.
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KSW, INC.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
Page No.
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet 3
September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Operation 4
Nine months and three months ended
September 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows 5
Nine months ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2. Managements's Discussion and Analysis of 7
Financial Condition and Results of Operation
PART 11 OTHER INFORMATION
Item 1 Legal Proceedings 9
Item 2 Change in Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K.
SIGNATURES 10
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<TABLE>
<CAPTION>
KSW, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 1996 December 31, 1995
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,718 $ 5,124
Accounts receivable, less allowance
for doubtful accounts of $250 and $300 at
September 30, 1996 and December 31, 1995
respectively 7,645 4,783
Retainage receivable 4,998 3,355
Cost and estimated earnings in excess of - -
billings on uncompleted contracts 2,003 1,513
Prepaid expenses and other 823 455
---------- -------
Total current assets 17,187 15,230
Property and equipment, net of accumulated
depreciation of $682 and $464 at
September 30, 1996 and December 31, 1995
respectively 691 733
Other Assets:
Goodwill, net of accumulated amortization
of $674 and $559 at September 30, 1996 &
December 31, 1995, respectively 4,316 4,431
Other 14 37
------- ------
Total Assets $22,208 $20,431
========== =========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts payable 4,970 $ 3,561
Retainage payable 3,913 3,335
Accrued payroll and related benefits 750 971
Accrued expenses 136 539
Due to contractor - 1,264
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,185 632
------- -------
Total current liabilities 11,954 10,302
Capital Lease Obligations 28 0
------- ------
Total liabilities 11,982 10,302
------ ------
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares
authorized; 5,458,004 and 5,200,026 shares issued
and outstanding at September 30, 1996 and
December 31, 1995, respectively 52 52
Additional paid-in capital 9,774 9,450
Retained earnings 400 627
--------- --------
Total stockholders' equity 10,226 10,129
--------- --------
Total Liabilities and Stockholders' Equity $ 22,208 $20,431
-------- --------
-------- --------
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<TABLE>
<CAPTION>
KSW, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues
Contracts $ 29,672 $ 32,955 $ 10,834 $ 12,287
Fees from Sellers 689 2,308 167 359
Interest 83 130 18 44
--------- ---------- ----------- ------------
30,444 35,393 11,019 12,690
Direct costs 27,872 31,279 10,011 11,099
-------- --------- ----------- -----------
Gross profit 2,572 4,114 1,008 1,591
Selling, general
& administrative expenses 2,992 2,743 995 920
Interest 8 0 4 0
----------- ---------- ----------- -----------
Profit/(Loss) before provision
for income taxes (428) 1,371 9 671
Provision for income taxes (201) 620 4 291
----------- ----------- ---------- ------------
Net Profit/ (Loss) $ (227) $ 751 $ 5 $ 380
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------
Net Profit/(Loss) per
common share (.04) .10 0 .05
----------- ---------- --------- -----------
----------- ---------- --------- -----------
Weighted average common
shares outstanding 5,604,347 7,800,000 5,580,769 7,800,000
---------- ---------- --------- -----------
---------- ---------- --------- -----------
Fully diluted Profit/(Loss)
per common share (.04) .10 0 .05
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Fully diluted average
common shares 5,604,347 7,800,000 5,580,769 7,800,000
---------- ----------- --------- ---------
---------- ----------- --------- ---------
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<TABLE>
<CAPTION>
KSW, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net gain/(loss) $ (227) $ 751
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 333 283
Changes in operating assets
and liabilities:
Accounts and retainage receivable (4,505) (5,366)
Costs and estimated earnings in
excess of billings on uncompleted
contracts (490) (1,078)
Prepaid expenses and other (368) 305
Accounts and retainage payable 1,987 6,268
Accrued salaries and related benefits (221) (69)
Accrued expenses (403) (107)
Due to contractor (1,264) (475)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,553 485
-------- --------
Net cash provided by/(used in)
operating activities (3,605) 997
--------- --------
Cash flows from investing activities:
Receivables from Helionetics (256)
Purchase of property and equipment (176) (243)
Other Assets 23 45
--------- --------
Net cash used in investing activities (153) (454)
--------- ---------
Cash flows from financing activities:
Sale of stock 450
Repurchase of stock (126)
Capital lease obligations 28
---------- ----------
Net cash provided by financing activities 352 0
--------- -----------
Net increase/(decrease) in cash and cash
equivalents (3,406) 543
Cash and cash equivalents,
beginning of period 5,124 4,840
--------- ----------
Cash and cash equivalents,
end of period $ 1,718 $ 5,383
------------- -------------
------------- -------------
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KSW, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the financial
position of the Company as of September 30, 1996 and December 31, 1995 and the
results of operations and cash flows for the nine and three month periods ended
September 30, 1996 and 1995. Because of the possible fluctuations in the
marketplace in the construction industry, operating results of the Company on a
quarterly basis may not be indicative of operating results for the full year.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Total revenues for the third quarter decreased by 13% to $11,019,000,
compared to $12,690,000 for the third quarter of 1995. During the third quarter
1995 there was $7,662,000 of revenues from the New York Hospital project versus
only $2,045,000 in the third quarter of 1996. The Company has received numerous
new projects which will start in the later part of 1996 and should result in
additional revenues for that period as well as for 1997. As of September 30,
1996, the Company's backlog was $71,000,000. Revenues increased each month
during the third quarter of 1996 as follows:
MONTH REVENUE
July $ 2,733,000
August $ 3,494,000
September $ 4,792,000
-----------
Total $11,019,000
===========
COST OF SALES
Cost of sales decreased by $1,088,000 or 10% to $10,011,000 from
$11,099,000 as a result of the decrease in sales revenues noted above.
GROSS PROFIT
Gross profit decreased by 37% ($583,000) from $1,591,000 in the third
quarter of 1995 to $1,008,000 in the third quarter of 1996. This was primarily
due to the sales volume decrease noted above. In addition, the gross profit
percentage decreased from 12.5% in the third quarter of 1995 to 9.1% in the same
quarter of 1996 primarily due to the decrease in fee income associated with the
completion of contracts pursuant to the asset purchase agreement and a
settlement of a dispute on the Kennedy Airport project in September 1995 at an
amount greater than previously estimated.
SELLING GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") increased from
$920,000 for the third quarter of 1995 to $995,000 in the third quarter of 1996,
an increase of $75,000 (8%) due to additional corporate expenses associated with
being an independent reporting corporation.
PROVISION FOR TAXES
Provision for taxes for the nine months ended September 30, 1996 and
1995 and for the third quarter of 1995 was approximately 45% of net income
(loss) before taxes, the same effective rate as for the year 1995.
NET INCOME
Net income for the third quarter of 1996 was $5,000 compared to net
income of $380,000 in the third quarter of 1995 and a net loss of $234,000 in
the first quarter of 1996 and a net income of $2,000 in the second quarter of
1996. Net income should increase as work is performed on the new contracts
previously mentioned.
LIQUIDITY AND CASH FLOW
For the first nine months of 1995 cash generated by operations was
$997,000. For the same period in 1996 the cash used in operations was $3,605,000
which was offset by $352,000 generated from financing activities. The cash flow
for the first nine months of 1996 was affected by start-up costs on various
projects.
While no significant capital improvements are projected over the next
year, cash will be needed to fund the start-up costs of several new large
projects which the Company has successfully negotiated. To this end, the Company
has signed an agreement for a $2.5 million unsecured line of credit with Fleet
Bank. The Company believes this line of credit will be sufficient to fund the
Company's working capital needs. As of October 31, 1996, the Company has not
drawn down any monies against this line.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no outstanding material lawsuits to which the Company or its
subsidiary is a party. Neither the Company nor its subsidiary is a party to any
regulatory investigation or inquiry with any governmental agency. In the third
quarter of 1996, the U.S. Department of Labor, Office of Federal Contract
Compliance reviewed the Company's Equal Employment Opportunity policies and
practices and the Company was found to be in compliance with the applicable laws
and regulations.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KSW, INC.
Date: November 5, 1996
----------------
/s/Robert Brussel
Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)
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KSW, INC. AND SUBSIDIARY
SUMMARY INFORMATION
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1995
-------------- -------------- -------------- --------------
INCOME STATEMENT:
<S> <C> <C> <C> <C>
Revenues $ 30,444 $ 35,393 $ 11,019 $ 12,690
Cost of Sales 27,872 31,279 10,011 11,099
Gross Profit 2,572 4,114 1,008 1,591
Operating expenses
Selling, general, administration,
depreciation, interest and
income tax expenses 2,799 3,363 1,003 1,211
Income before income taxes
Net income/(loss) (277) 751 5 380
Net income/(loss) and fully
diluted income/(loss)
per share (.04) .10 0 .05
Number of shares used in
computation 5,604,347 7,800,000 5,580,769 7,800,000
</TABLE>
<TABLE>
AS AT AS AT
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
<CAPTION>
<S> <C> <C>
BALANCE SHEET DATA:
Total assets $ 22,208 $ 20,431
Working capital 5,233 4,928
Current liabilities 11,954 10,302
Long term liabilities 28 0
Stockholders' equity 10,226 10,129
OTHER DATA:
Current ratio 1.44:1 1.48:1
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