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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 EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
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) IDENTIFICATION NUMBER)
37-16 23RD STREET, LONG ISLAND CITY, NEW YORK 11101
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
718-361-6500
(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__
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:
OUTSTANDING
CLASS MARCH 31, 1998
COMMON STOCK, $.01 PAR VALUE 5,454,644
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THIS IS PAGE 1 OF 13 PAGES.
INDEX TO EXHIBITS IS ON PAGE 11.
KSW, INC.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
PAGE NO.
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - 3
March 31, 1998 and December 31, 1997
Condensed Consolidated Statements of Operation 4
Three months ended March 31, 1998 and 1997
Condensed Consolidated Statements of Cash Flows - 5
Three months ended March 31, 1998 and 1997
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operation
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PART II OTHER INFORMATION
Item 1 Legal Proceedings 9
Item 2 Change in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matter to a Vote of Security Holders 9
Item 5 Exhibits and Reports on Form 8-K. 9
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SIGNATURES 10
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KSW, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,842 $ 2,184
Accounts receivable, less allowance
for doubtful accounts of $170 at
March 31, 1998 and December 31, 1997,
respectively 10,419 13,186
Retainage receivable 5,484 4,984
Costs and estimated earnings in excess of
billings on uncompleted contracts 98 209
Prepaid expenses and other 1,089 946
------ ------
Total current assets 18,932 21,509
Property and equipment, net of accumulated
depreciation of $1,142 and $1,076 at
March 31, 1998 and December 31, 1997
respectively 542 569
Other Assets:
Goodwill, net of accumulated amortization
of $903 and $864 at March 31, 1998
and December 31, 1997, respectively 4,087 4,126
Other 8 65
------- -------
Total Assets $23,569 $22,269
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,378 $ 8,508
Retainage payable 2,725 4,030
Accrued payroll and related benefits 735 806
Accrued expenses 725 733
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,839 1,623
------ ------
Total current liabilities 13,402 15,700
Long-term liabilities 78 70
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Total liabilities: $13,480 15,770
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares
authorized; 5,454,644 and 5,471,311 shares issued
and outstanding at March 31, 1998
and December 31, 1997, respectively 54 54
Additional paid-in capital 9,684 9,763
Retained earnings 351 682
------ ------
Total stockholders' equity 10,089 10,499
Total liabilities and stockholders' equity $ 23,569 $26,269
======== =======
</TABLE>
KSW, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Three Months
Ended March 31, 1998 Ended March 31, 1997
Revenues
<S> <C> <C>
Contracts $ 9,723 $19,936
Fees from sellers 7 137
Interest 18 46
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$ 9,748 20,119
Direct costs 9,244 18,386
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Gross profit 504 1,733
Selling, general and administrative expenses 1,143 995
Interest 12 6
------ ------
Profit/(loss) before provision for income taxes (651) 732
Provision for income taxes (320) 232
-------- ------
Net profit/(loss) $ (331) $ 500
======== =======
Net profit/(loss) per common share - basic (.06) .09
======== =======
Weighted average common
shares outstanding - basic 5,457,422 5,542,978
========== ==========
Net profit/(loss) per common
share - diluted (.06) .09
===== ======
Weighted average common
shares - diluted 5,615,142 5,713,074
========= =========
</TABLE>
KSW, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended March 31, 1998 Ended March 31, 1997
Cash flows from operating activities:
<S> <C> <C>
Net income/(loss) $ (331) $ 500
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 105 119
Changes in operating assets and liabilities:
Accounts and retainage receivable 2,267 717
Costs and estimated earnings in
excess of billings on uncompleted
contracts 111 150
Prepaid expenses and other (143) (123)
Accounts and retainage payable (3,435) 662
Accrued salaries and related benefits ( 71) 492
Accrued expenses ( 8) ( 70)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,216 (649)
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Net cash provided by/(used in)
operating activities (289) 1,798
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Cash flows from investing activities:
Purchase of property and equipment ( 39) ( 38)
Other assets 57 -
Other liabilities 8 206
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Net cash used in investing activities 26 168
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Cash flows from financing activities:
Exercise of stock options 20
Repurchase of stock (99) --
Net cash provided by financing activities (79) 0
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Net increase/(decrease) in cash and cash equivalents (342) 1,966
Cash and cash equivalents, beginning of period 2,184 4,464
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Cash and cash equivalents, end of period $ 1,842 $6,430
======== =======
</TABLE>
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 March 31, 1998 and December 31, 1997 and the results of
operations and cash flows for the three month periods ended March 31, 1998 and
1997. Because of the nature of the construction business, operating results of
the Company on a quarterly basis may not be indicative of operating results for
the full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Total revenues for the first quarter decreased 52% to $9,748,00, compared
to $20,119,000 for the first quarter of 1997. During the first quarter of 1998
the major projects from 1997 were in the final completion stages and generated
little revenue while most of the new projects had not as yet started.
COST OF SALES
Cost of sales for the first quarter decreased by $9,142,000, or 50%, to
$9,244,000 from $18,386,000 as a result of the decrease in sales revenue noted
above.
GROSS PROFIT
Gross profit decreased by 71%, or $1,229,000, from $1,733,000 in the first
quarter of 1997 to $504,000 in the first quarter of 1998, primarily due to the
decrease in sales volume noted above. The gross profit percentage decreased from
8.6% for the first quarter of 1997 to 5.2% in the first quarter of 1998. The
decrease was due to additional costs on a project which experienced a
construction delay and subsequent acceleration of work to meet the contract
schedule. The additional costs in the first quarter of 1998 were $493,000 which
accounted for a decrease of 5.1% of gross profit. Had these costs not been
incurred, the gross profit percent for the first quarter of 1998 would have been
10.2% compared to 8.6% in the prior period. This project was 94% complete at
March 31, 1998 and is expected to be finished during the second quarter of 1998.
SELLING GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") increased from
$995,000 for the first quarter of 1997 to $1,143,000 in the first quarter of
1998, an increase of $148,000 (15%). The Company has re-negotiated its lease for
its Long Island City facility which should result in a reduction in overhead
during the second half of 1998.
PROVISION FOR TAXES
The income tax benefit for the three months ended March 31, 1998 was
$320,000 as compared to a $232,000 provision for the same period in 1997 due to
the profits/losses for the respective periods.
NET GAIN
The net loss for the first quarter of 1998 was $331,000 compared to a net
profit of $500,000 for the first quarter of 1997 due to the items mentioned
above.
LIQUIDITY AND CASH FLOW
For the first three months of 1998 cash used in operations was $289,000.
For the same period in 1997 the cash provided by operations was $1,798,000. The
cash flow for the first quarter of 1998 was a result of a comparable operating
loss for the period.
While no significant capital improvements are projected over the next year,
cash will be needed to fund the start-up costs for new projects. The Company has
a $3,000,000 credit facility with Fleet Bank, which the Company believes should
be sufficient to fund the Company's working capital needs. As of March 31, 1998,
no funds were outstanding under this facility.
FORWARD-LOOKING STATEMENTS
All statements contained herein and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that are not
historical facts, including but not limited to statements regarding the
Company's current business strategy, and plans for future development and
operations are based upon current expectations. These statements are
forward-looking in nature and involve a number of risks and uncertainties, many
of which are not within the Control of the Company. Actual results may differ
materially. 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 Litigation Reform Act of 1995 and, as such, speak only as of the date
made.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no 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.
ITEM 2. CHANGE IN SECURITIES
On August 5, 1997, the Board of Directors approved a resolution authorizing
the Company to repurchase up to 10% of the Company's common stock over the next
two years. In the first quarter, the Company repurchased and retired 30,000
shares of common stock. Through April 30, 1998, the Company has retired a total
of 129,666 shares of its common stock.
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: May 14, 1998
/s/ Robert Brussel
__________________________
Robert Brussel
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
<PAGE>
KSW, INC.
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
1 Statement Regarding Computation of Per Share Earnings 12
27 Financial Data Schedule 13
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EXHIBIT 1
KSW, INC.
STATEMENT REGARDING COMPUTATION
OF NET EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31
1998 1997
---- ----
<S> <C> <C>
Net earnings/(loss) $(331,000) $ 500,000
========= =========
EARNINGS/(LOSS) PER SHARE - PRIMARY
Weighted average shares
outstanding during the period 5,457,422 5,542,978
Earnings/(loss) per
common share - Primary (.06) .09
============= ============
EARNINGS/(LOSS) PER SHARE - DILUTED
Weighted average shares
outstanding during the period 5,457,422 5,542,978
Common & Common Stock
equivalent shares using the
treasury stock method 157,720 170,096
Total shares outstanding for
purposes of calculating
fully diluted earnings/(loss)
per share 5,615,142 5,713,074
Earnings/(loss) per
common and common
equivalent share - Diluted (.06) .09
========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,842
<SECURITIES> 0
<RECEIVABLES> 10,589
<ALLOWANCES> 170
<INVENTORY> 0
<CURRENT-ASSETS> 18,932
<PP&E> 1,684
<DEPRECIATION> 1,142
<TOTAL-ASSETS> 23,569
<CURRENT-LIABILITIES> 13,402
<BONDS> 0
0
0
<COMMON> 54
<OTHER-SE> 10,035
<TOTAL-LIABILITY-AND-EQUITY> 23,569
<SALES> 0
<TOTAL-REVENUES> 9,748
<CGS> 9,244
<TOTAL-COSTS> 10,387
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12
<INCOME-PRETAX> (651)
<INCOME-TAX> (320)
<INCOME-CONTINUING> (331)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (331)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
