<PAGE>
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 SEPTEMBER 30, 2000.
OR
--
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-22-309
ASI SOLUTIONS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 13-3903237
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
780 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 319-8400
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 ____
---
The number of shares of the registrant's Common Stock, par value $0.01 per
share, outstanding on November 8, 2000 was 6,963,034.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASI Solutions Incorporated
Consolidated Balance Sheets
September 30, 2000 and March 31, 2000
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
(Unaudited)
-------------- ------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 9,571,451 $12,155,795
Accounts receivable, net 9,837,341 14,479,377
Prepaid expenses and other current assets 758,387 765,721
Deferred income taxes 75,918 75,918
----------- -----------
Total current assets 20,243,097 27,476,811
Property and equipment, net 5,143,199 5,042,982
Intangible assets, net 22,068,603 22,401,403
Deferred financing costs 304,818 375,160
Other assets 398,790 453,875
----------- -----------
Total assets $48,158,507 $55,750,231
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion, notes payable to bank $ 3,972,383 $ 3,462,363
Current portion, subordinated notes payable 1,666,667
Other debt 17,110 87,785
Accounts payable and accrued expenses 9,040,085 17,558,809
Income taxes payable 368,062 278,287
----------- -----------
Total current liabilities 13,397,640 23,053,911
Deferred income taxes 690,765 690,765
Notes payable to bank, less current portion 5,648,783 7,762,537
Other liabilities 323,308 313,528
----------- -----------
Total liabilities 20,060,496 31,820,741
Stockholders' Equity:
Common stock 69,113 67,078
Additional paid in capital 12,694,188 11,477,820
Accumulated other comprehensive (loss) (327,647) (3,789)
Retained earnings 15,662,357 12,388,381
----------- -----------
Total stockholders' equity 28,098,011 23,929,490
----------- -----------
Total liabilities & stockholders' equity $48,158,507 $55,750,231
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
ASI Solutions Incorporated
Unaudited Consolidated Statements of Income
For the Three and Six Months Ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
-------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Revenue $17,901,439 $15,239,394 $40,988,053 $31,138,636
Cost of services 9,737,633 8,376,543 21,639,228 16,688,876
------------------------------ ------------------------------
Gross profit 8,163,806 6,862,851 19,348,825 14,449,760
Operating expenses:
General and administrative 4,105,451 4,143,654 8,700,038 7,783,631
Sales and marketing 1,369,328 1,474,545 3,277,556 2,795,910
Research and development 556,650 558,953 1,158,584 1,060,905
------------------------------ ------------------------------
Income from operations 2,132,377 685,699 6,212,647 2,809,314
Interest expense, net 180,353 382,193 470,653 781,268
------------------------------ ------------------------------
Income before provision for income taxes 1,952,024 303,506 5,741,994 2,028,046
Provision for income taxes 860,287 128,520 2,468,018 845,262
------------------------------ ------------------------------
Net income $ 1,091,737 $ 174,986 $ 3,273,976 $ 1,182,784
============================== ==============================
Basic earnings per share $ 0.16 $ 0.03 $ 0.48 $ 0.18
============================== ==============================
Diluted earnings per share $ 0.15 $ 0.03 $ 0.46 $ 0.18
============================== ==============================
Weighted average common shares outstanding:
Basic shares 6,772,498 6,538,813 6,755,402 6,538,813
Diluted effect of stock options and
warrants 591,943 205,521 319,273 194,611
------------------------------ ------------------------------
Diluted shares 7,364,441 6,744,334 7,074,675 6,733,424
============================== ==============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ASI Solutions Incorporated
Unaudited Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net income: $ 3,273,976 $ 1,182,784
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,430,275 1,281,819
Provision for doubtful accounts 50,814
Other 70,342 49,152
Changes in assets and liabilities:
Accounts receivable 4,477,531 1,781,751
Prepaid expenses and other current assets 17,544 6,561
Other assets 31,744 (14,649)
Accounts payable and accrued expenses (9,253,420) (1,949,456)
Income taxes 1,096,397 (1,082,128)
Other liabilities 17,415 41,093
----------- -----------
Net cash provided by operating activities 1,212,618 1,296,927
----------- -----------
Cash flow from investing activities:
Fixed asset additions (1,098,787) (840,051)
Other (138,231) (19,882)
----------- -----------
Net cash used in investing activities (1,237,018) (859,933)
----------- -----------
Cash flow from financing activities:
Repayment of debt (3,341,076) (7,514,280)
Payment of financing costs (15,000)
Proceeds from issuance of common stock, net 1,218,405 227,531
----------- -----------
Net cash used in financing activities (2,122,671) (7,301,749)
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents (437,273) 69,285
Net decrease in cash and cash equivalents (2,584,344) (6,795,470)
Cash and cash equivalents at beginning of period 12,155,795 7,595,366
----------- -----------
Cash and cash equivalents at end of period $ 9,571,451 $ 799,896
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ASI Solutions Incorporated
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Basis of Presentation:
--------------------------------------
On March 26, 1996, ASI Solutions Incorporated (the "Company") was incorporated
in the State of Delaware. Effective March 31, 1996, the Company issued
4,625,158 shares of Common Stock in exchange for substantially all of the issued
and outstanding shares of common stock of Proudfoot Reports Incorporated ("PRI")
and 95% of the common stock of Assessment Solutions Incorporated ("Assessment
Solutions"). During fiscal 1997, the remaining 5% of the outstanding common
stock of Assessment Solutions were redeemed. The initial stockholders of the
Company were also the principal stockholders of PRI and Assessment Solutions,
the two previously separate but commonly controlled companies. After the
reorganization, Assessment Solutions and PRI are wholly owned subsidiaries of
the Company. On August 29, 1997, the Company acquired the assets of Effective
Learning Systems. On November 13, 1997, the Company's newly created subsidiary
McLagan Partners Inc. ("McLagan Partners") acquired substantially all of the
assets and business operations of McLagan Partners Incorporated and
subsidiaries. The Company, Assessment Solutions, PRI and McLagan Partners are
hereinafter referred to collectively as the "Company."
The exchange described above has been accounted for as a reorganization since
all entities involved were under common control. The consolidated financial
statements reflect the interests attributable to the one controlling shareholder
of both combined entities at their historical basis of accounting. The
remaining interests have been accounted for as a purchase of minority interests
and the excess of the purchase price over the related historical cost of
$1,063,000 has been allocated to intangible assets. All inter-company accounts
and transactions have been eliminated in consolidation.
Effective April 16, 1997, the Company sold 1.8 million shares of common stock to
the public at a price of $6 per share in an initial public offering and pursuant
to an over-allotment option, the underwriter purchased 270,000 shares of common
stock at a price of $6 per share (the "Offering"). Proceeds from the Offering,
net of underwriters' discount and offering costs, were approximately $9,034,000.
Effective on the Offering date, the Company's Certificate of Incorporation (the
"Certificate") was restated to increase the number of authorized shares of
Common Stock to 18 million shares.
The accompanying unaudited interim financial statements of ASI Solutions
Incorporated have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Certain information and note
disclosures normally included in annual financial statements have been condensed
or omitted pursuant to those rules and regulations. In the opinion of
management, all adjustments, consisting of normal, recurring adjustments
considered necessary for a fair presentation, have been included. Although
management believes that the disclosures made are adequate to ensure that the
information presented is not misleading, it is suggested that these financial
statements be read in
<PAGE>
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2000.
The results of the six months ended September 30, 2000 and 1999 are not
necessarily indicative of the results of operations for the entire year.
The financial statements of foreign subsidiaries, where the local currency is
the functional currency, are translated into U.S. dollars using exchange rates
in effect at period end for assets and liabilities and average exchange rates
during each reporting period for results of operations. Adjustments resulting
from translation of financial statements are reflected as a separate component
of stockholders' equity.
2. Operations:
----------
The Company
ASI Solutions Incorporated (the "Company") is a leading national provider of
human resources outsourcing services for large organizations seeking to hire,
train and develop a higher quality, more effective workforce. The Company's
services are organized into three core areas: performance improvement services,
employment process outsourcing and compensation services and market share
studies. The Company believes these services position the Company as a single-
source solution for many organizations that outsource all or a portion of their
human resources functions. The Company markets its services principally to
Fortune 500 companies for which customer service, sales and call center
functions are critical components of their businesses. Industries served by the
Company include telecommunications, financial services, information technology,
consumer products and healthcare.
Impact of Recently Issued Accounting Pronouncements
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of Statement
133," which postponed the adoption of SFAS No. 133. The Company does not
anticipate the statement to have a significant effect on its current financial
reporting and disclosure requirements.
In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities -- an Amendment of FASB Statement
No. 133" which addresses a limited number of issues causing implementation
difficulties for numerous entities that apply SFAS No. 133. The Company does
not anticipate the statement to have a significant effect on its current
financial reporting and disclosure requirements.
<PAGE>
3. Stockholders' Equity:
---------------------
A summary of the changes in Stockholders' Equity for the six months ended
September 30, 2000 is as follows:
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-In Comprehensive Retained
Shares Stock Capital Income Earnings Total
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 2000 6,662,183 $67,078 $11,477,820 $ (3,789) $12,388,381 $23,929,490
Issuance of Common Stock for
Employee Stock Purchase Plan 75,939 759 208,832 209,591
Exercise of Stock Options 127,530 1,276 1,007,536 1,008,812
Translation adjustment (323,858) (323,858)
Net Income 3,273,976 3,273,976
-------------------------------------------------------------------------------
Balance, September 30, 2000 6,865,652 $69,113 $12,694,188 $(327,647) $15,662,357 $28,098,011
===============================================================================
</TABLE>
4. Acquisitions:
------------
On November 13, 1997, the Company acquired substantially all of the assets
(primarily fixed assets of $483,978) and businesses of McLagan Partners
Incorporated and its related entities (collectively, "McLagan"). The
consideration paid by the Company for the assets of McLagan included (i) $15.5
million paid in cash; (ii) $5 million in subordinated notes bearing interest at
8 percent per annum and payable in three equal principal installments on each of
April 30, 1998, April 30, 1999 and April 30, 2000; and (iii) 50,000 shares of
the common stock, par value $.01 per share, of the Company. The Company
incurred $828,188 of costs associated with the acquisition. The Company also
discharged approximately $1 million of McLagan's outstanding liabilities and
agreed to make deferred payments in an aggregate amount of $1 million, on April
30, 2000, to certain employees of McLagan, provided that such employees continue
to be employed by the McLagan subsidiaries as of such date.
The acquisition has been accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets purchased
based upon the fair values at the date of the acquisition. As a result,
$22,294,210 of the purchase price has been allocated to goodwill, customer lists
and other intangibles which are being amortized on a straight-line basis over
periods from 5 to 40 years. The Company has an incentive compensation program
with former officers of McLagan which provides for payments to such officers
when certain milestone earnings are attained.
5. Industry Segment Information:
-----------------------------
ASI Solutions' reportable segments are performance improvement services,
employment process outsourcing and compensation services and market share
studies.
<PAGE>
Revenues and profits in the performance improvement services segment are
generated by designing custom solutions for a client where ASI assesses job
candidates, trains existing employees and measures employee performance through
monitoring customer contact. Fees charged are generally based on the number of
people and calls processed plus a fee for the development of a customized
solution.
Revenues and profits in the employee process outsourcing segment are generated
by providing the following services: advertising for and recruiting of
applicants; establishing automated telephonic voice response systems to screen
prospective applicants; arranging for the physical facilities and equipment
necessary for the pre-screening process and performing background checks on
applicants. For larger engagements, the Company generally charges a fixed
minimum monthly fee that may increase based on the total number of people
processed. For other assignments, such as background checks, revenue is based
on a fixed fee for each candidate processed.
Revenues and profits in the compensation services and market share studies
segment are generated by providing survey services to the financial and
securities industries. These include compensation as well as market share
survey services for retail operations within the financial services industry.
Only participating clients may purchase surveys. The Company also provides
compensation services where revenue is generated based on a fee per assignment
basis.
ASI Solutions evaluates the performance of its segments and allocates resources
to them based on their operating contribution, which represents segment revenues
less direct costs of operation, excluding the allocation of corporate expenses.
Identifiable assets of the operating segments principally consist of net
accounts receivable associated with the segment activities. Accounts receivable
from performance improvement services and employment process outsourcing are
managed on a combined basis. All other identifiable assets not attributable to
industry segments are included in corporate assets. The Company does not track
expenditures for long-lived assets on a segment basis.
<PAGE>
The table below presents information on the revenues and operating contribution
for each segment for the six months ended September 30, 2000 and 1999, and items
which reconcile segment operating contribution to the Company's reported pre-tax
income.
<TABLE>
<CAPTION>
Six Months Ended September 30,
2000 1999
(in thousands)
<S> <C> <C>
Revenue:
Performance Improvement Services $12,190 $ 9,211
Employment Process Outsourcing 17,118 12,325
Compensation Services and Market Share Studies 11,680 9,603
------- -------
$40,988 $31,139
======= =======
Operating contribution:
Performance Improvement Services $ 4,176 $ 3,193
Employment Process Outsourcing 6,559 3,982
Compensation Services and Market Share Studies 2,850 2,027
------- -------
$13,585 $ 9,202
------- -------
Consolidated expenses:
Interest, net $ 471 $ 781
Depreciation and Amortization 1,436 1,220
Selling, General and Administrative and
Research and Development 5,936 5,173
------- -------
$ 7,843 $ 7,174
------- -------
Income before income taxes $ 5,742 $ 2,028
======= =======
Identifiable Assets:
Performance Improvement and Employment Process
Outsourcing $10,154 $11,570
Compensation Services and Market Share Studies 5,225 5,349
Corporate 10,406 2,255
------- -------
$25,785 $19,174
======= =======
</TABLE>
<PAGE>
6. Subsequent Event:
----------------
On October 6, 2000 the Company closed a $3 million equity financing of CyberU,
Inc., a California based Delaware corporation. The Company obtained a 25.6%
equity interest (on a fully diluted and converted basis) of CyberU, Inc., a
comprehensive source of online education and training for corporations, small
business and individuals.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Quarterly Comparison of Results of Operations
Revenue increased $2.7 million, or 17.5%, to $17.9 million in the second quarter
of fiscal 2001 from $15.2 million in the second quarter of fiscal 2000.
Performance Improvement Services revenue increased 6.4% to $5 million in fiscal
2001's second quarter from $4.7 million in the second quarter of fiscal 2000.
Performance Measurement revenue increased strongly, Assessment and Selection
revenue also increased while Training and Development revenue decreased after a
very strong first quarter.
Employment Process Outsourcing revenue increased by 25.5% to $7.1 million in
fiscal 2001's second quarter from $5.6 million in the second quarter of fiscal
2000. Both background investigation and hiring outsourcing had strong revenue
growth in the quarter.
Compensation Services and Market Share Studies revenue increased by 18.9%, to
$5.8 million in the second quarter of fiscal 2001 from $4.9 million in fiscal
2000's second quarter. Revenue increased in both the survey and consulting
areas.
Cost of services increased by $1.4 million, or 16.2%, to $9.7 million in the
second quarter of fiscal 2001 from $8.4 million in the second quarter of fiscal
2000. Higher personnel expenses, related to the higher business volume, account
for the increase. As a percentage of revenue, cost of services was 54.4% in the
second quarter of fiscal 2001 compared to 55% in fiscal 2000's second quarter.
The cost of service percentage is generally highest in the second fiscal quarter
because of seasonal lower relative revenue level compared to the other three
quarters.
General and administrative expense decreased by 1%, to $4.1 million in the
second fiscal quarter of 2001 from $4.14 million in the second quarter of fiscal
2000. Lower incentive provisions account for the decease partially offset by
higher professional fees. Because of the exceptional strength of the first
quarter, a greater percentage of the annual incentive was absorbed in the first
quarter as compared to the second quarter of fiscal 2001. As a percentage of
revenue, general and administrative expense was 22.9% in fiscal 2001's second
quarter compared to 27.2% in the second quarter of fiscal 2000.
Sales and marketing expense decreased by $.1 million or 7.1%, to $1.4 million in
the second quarter of fiscal 2001 from $1.5 million in the second quarter of
fiscal 2000. Lower business development expenses such as travel, advertising
and conferences account for the decease. Many of the year's business
development activities were accelerated into the first quarter this year to
accelerate their impact in revenues. As a percentage of revenue, sales and
marketing expense was 7.7% in the second quarter of fiscal 2001 compared to 9.7%
in fiscal 2000's second quarter.
Research and development expense was $.6 million in both the second quarter of
fiscal 2001 and 2000. Higher professional fees were largely offset by lower
travel expense. As a percentage of revenue
<PAGE>
research and development expense was 3.1% in fiscal 2001's second quarter and
3.7% in the second fiscal quarter of 2000.
Net interest expense decreased to $.2 million in the second quarter of fiscal
2001 from $.4 million the second quarter of fiscal 2000 due to lower debt
outstanding and to interest income on higher cash balances.
The provision for income taxes as a percentage of pre tax income was 44.1% in
the second quarter of fiscal 2001 and 42.3% in the second quarter of fiscal
2000. The increase is due primarily to the geographic mix of business.
(Percentages are based on actual amounts as opposed to the rounded amounts shown
above.)
Year to Date Comparison of Results of Operations
Revenue increased $9.9 million, or 31.6%, to $41 million in the first six months
of fiscal 2001 from $31.1 million in the first six months of fiscal 2000.
Performance Improvement Services revenue increased 32.4% to $12.2 million in the
first six months of fiscal 2001 from $9.2 million in the first six months of
fiscal 2000. The increase was fueled by strong growth across all service areas
within Performance Improvement Services.
Employment Process Outsourcing revenue increased by $4.8 million or 38.9%, to
$17.1 million in the first six months of fiscal 2001 from $12.3 million in the
first six months of fiscal 2000. Both, our hiring outsourcing services and
background investigations, contributed substantial revenue gains.
Compensation Services and Market Share Studies revenue increased $2.1 million,
or 21.6%, to $11.7 million in the first six months of fiscal 2001 from $9.6
million in the first six months of fiscal 2000. Both survey revenue and
consulting revenue reported strong growth.
Cost of services increased $5 million, or 29.7%, to $21.7 million in the first
six months of fiscal 2001 from $16.7 million in the first six months of fiscal
2000. Personnel related expenses including salaries, benefits and recruiting
accounted for much of the increase as headcount was expanded to meet the demands
of higher business volume. Service delivery expenses also increased as a result
of the higher volume. As a percentage of revenue, cost of services was 52.8%
for the first six months of fiscal 2001 compared to 53.6% for the first six
months of fiscal 2000.
General and Administrative expense increased by $.9 million, or 11.8% to $8.7
million for the first six months of fiscal 2001 from $7.8 million in the first
six months of fiscal 2000. Higher personnel expenses and professional fees
accounted for the increase. As a percentage of revenue, general and
administrative expense was 21.2% in the first six months of fiscal 2001 compared
to 25% in the first six months of fiscal 2000.
Sales and marketing expense increased by $.5 million, or 17.2% to $3.3 million
in the first six months of fiscal 2001 from $2.8 million in the first six months
of fiscal 2000. Higher personnel related and business development expenses
accounted for the increase. As a percentage of revenue, sales and marketing
expense was 8% in the first six months of fiscal 2001 compared to 9% in the
first six months of fiscal 2000.
Research and Development expense increased by $.1 million or 9.2% to $1.1
million in the first six months of fiscal 2001 from $1 million in the first six
months of fiscal 2000. Higher personnel related expenses and professional fees
accounted for the increase. As a percentage of revenue, research and
<PAGE>
development expense was 2.8% in the first six months of fiscal 2001 compared to
3.4% in the first six months of fiscal 2000.
Net interest expense decreased to $.5 million in the first six months of fiscal
2001 from $.8 million in the first six months of fiscal 2000 due to lower debt
balances outstanding and to interest income earned on higher cash balances
maintained in the first six months of fiscal 2001.
As a percentage of pretax income, the provision for income taxes was 42.9% in
the first six months of fiscal 2001 compared to 41.7% in the first six months of
fiscal 2000. The difference is due principally to changes in the geographic mix
of business.
(Percentages are based on actual amounts as opposed to the rounded amounts shown
above.)
Liquidity and Capital Resources
The Company's liquidity needs arise from capital requirements, capital
expenditures and principal and interest payments on debt. Historically, the
Company's source of liquidity has been cash flow generated internally from
operations, supplemented by short-term borrowings under bank lines of credit and
long-term equipment financing.
Cash flow provided by operating activities during the first half of fiscal 2001
was $1,212,618, due to increases in accounts receivable and reductions in
accounts payable and accrued expenses. Cash flow used in investing activities
of $1,237,018 in the first half of 2001 were primarily for fixed asset
additions. Cash flow used in financing activities was $2,122,671 in the first
half of fiscal 2001 and was primarily attributable to the repayment of
outstanding debt.
In November 1997, the Company entered into a new bank credit agreement (the
"Credit Facility") which provides a $15 million term loan and a $5 million
revolving credit facility. The revolving credit facility was subsequently
increased to $10 million in December 1998. This agreement expires November 13,
2003. At September 30, 2000, borrowings under the term loan were $9,250,000 and
there were no borrowings under the revolving credit facility. The Company also
had borrowings at September 30, 2000 under an equipment lease facility of
approximately $371,000. The Credit Facility contains various financial and other
covenants and conditions, including, but not limited to, limitations on capital
expenditures and paying dividends, making acquisitions and incurring additional
indebtedness.
Management believes its working capital, line of credit and cash flows from
operations will be sufficient to meet expected future working capital
requirements.
Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to market risk, i.e. the risk of loss arising from
adverse changes in interest rates and foreign currency exchange rates
Interest Rate Exposure: The Company has entered into an interest rate swap at a
fixed rate of 9% per annum on borrowings under its credit facility of up to
$5,000,000.
Foreign Exchange Exposure: Portions of the Company's operations are conducted in
Hong Kong, Japan and the United Kingdom. Exchange rate fluctuations between the
US dollar/Hong Kong dollar, US dollar/Japanese Yen and the US dollar/Pound
Sterling result in fluctuations in the amounts relating to the Hong Kong, Japan
and United Kingdom operations reported in the Company's consolidated financial
statements. The Company has not entered into hedging transactions with respect
to its foreign currency exposure, but may do so in the future.
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this report:
Exhibit Number Description
-------------- -----------
27.1 Financial Data Schedule.
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.
ASI SOLUTIONS INCORPORATED
Date: November 9, 2000 By: /s/ MICHAEL J. MELE
-------------------------
Michael J. Mele
Senior Vice President and Chief Financial Officer
(on behalf of the registrant and as principal
financial and accounting officer)
