================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
(mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the Quarterly Period Ended July 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For transition period from ________________ to
_________________
0-16438
------------------------
(Commission File Number)
NATIONAL TECHNICAL SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-4134955
------------------------ -------------
(State of Incorporation) (IRS Employer
Identification number)
24007 Ventura Boulevard, Calabasas, California
---------------------------------------------------
(Address of registrant's principal executive office)
(818) 591-0776 91302
------------------------------- ----------
(Registrant's telephone number) (Zip 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 [ ]
The number of shares of common stock, par value $.01 per share, outstanding as
of September 8, 1997 was 6,894,682
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Exhibit Index on Page 17
1
<PAGE>
NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Index
PART I. FINANCIAL INFORMATION Page No.
Financial Statements:
Condensed Consolidated Balance Sheets
July 31, 1997 (unaudited) and January 31, 1997 3
Unaudited Condensed Consolidated Statements of Income
Six Months Ended July 31, 1997 and 1996 4
Unaudited Condensed Consolidated Statements of Income
Three Months Ended July 31, 1997 and 1996 5
Unaudited Condensed Consolidated Statements of Cash Flows
Six Months Ended July 31, 1997 and 1996 6
Notes to the Unaudited Condensed Consolidated Financial
Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION & SIGNATURE 16
Item 6. Exhibits and Reports on Form 8-K 16
EXHIBIT INDEX 17
2
<PAGE>
PART I -- FINANCIAL INFORMATION
NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
July 31, 1997 January 31,
(unaudited) 1997
ASSETS ----------- ----------
Current assets:
Cash $ 590,000 $ 1,204,000
Receivables, less allowance for doubtful accounts
of $792,000 at July 31, 1997 and $703,000 at
January 31, 1997 12,278,000 12,292,000
Inventories 2,479,000 2,271,000
Deferred income taxes 514,000 440,000
Prepaid expenses 1,130,000 813,000
----------- -----------
Total current assets 16,991,000 17,020,000
Property, plant and equipment, at cost 46,813,000 44,409,000
Less: accumulated depreciation 28,363,000 27,309,000
----------- -----------
Net property, plant and equipment 18,450,000 17,100,000
Intangible assets 415,000 438,000
Property held for sale 544,000 544,000
Other assets 286,000 194,000
----------- -----------
TOTAL ASSETS $36,686,000 $35,296,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,178,000 $ 3,395,000
Accrued expenses 2,795,000 2,007,000
Income taxes payable 60,000 40,000
Current installments of long-term debt 1,513,000 1,878,000
----------- -----------
Total current liabilities 6,546,000 7,320,000
Long-term debt, excluding current installments 9,639,000 9,183,000
Deferred income taxes 2,144,000 2,057,000
Minority Interest 2,000 1,000
Stockholders' equity:
Common stock of $.01 par value. Authorized,
20,000,000; issued and outstanding 6,893,000
as of July 31, 1997 and 6,736,000 as of
January 31, 1997 69,000 67,000
Additional paid-in capital 10,884,000 10,577,000
Retained earnings 7,402,000 6,091,000
----------- -----------
Total stockholders' equity 18,355,000 16,735,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,686,000 $35,296,000
=========== ===========
See accompanying notes to Unaudited Condensed Consolidated Financial Statements.
3
<PAGE>
NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
for Six Months Ended July 31, 1997 and 1996
1997 1996
------------- -------------
REVENUES $ 26,694,000 $ 22,549,000
Cost of sales 19,486,000 17,028,000
------------ ------------
Gross profit 7,208,000 5,521,000
Selling, general and administrative expense 4,277,000 3,684,000
------------ ------------
Operating income 2,931,000 1,837,000
Other income (expense):
Interest expense, net (548,000) (517,000)
Other (2,000) 26,000
------------ ------------
Total other expense (550,000) (491,000)
------------ ------------
Income before income taxes, minority interest
and discontinued operations 2,381,000 1,346,000
Income taxes 1,069,000 607,000
------------ ------------
Income before minority interest and
discontinued operations 1,312,000 739,000
Minority interest (1,000) 9,000
------------ ------------
INCOME FROM CONTINUING OPERATIONS 1,311,000 748,000
Loss from discontinued operations 0 (64,000)
------------ ------------
NET INCOME $ 1,311,000 $ 684,000
============ ============
PRIMARY AND FULLY DILUTED NET INCOME
PER COMMON SHARE
Continuing operations $ 0.19 $ 0.11
Discontinued operations 0.00 (0.01)
------------ ------------
TOTAL $ 0.19 $ 0.10
============ ============
Weighted average number of common shares and
common stock equivalents outstanding 6,768,000 6,676,000
============ ============
See accompanying notes to Unaudited Condensed Consolidated Financial Statements.
4
<PAGE>
NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
for Three Months Ended July 31, 1997 and 1996
1997 1996
------------- -------------
REVENUES $ 13,541,000 $ 11,400,000
Cost of sales 9,897,000 8,599,000
------------ ------------
Gross profit 3,644,000 2,801,000
Selling, general and administrative expense 2,152,000 1,852,000
------------ ------------
Operating income 1,492,000 949,000
Other income (expense):
Interest expense, net (286,000) (262,000)
Other (1,000) 24,000
------------ ------------
Total other expense (287,000) (238,000)
------------ ------------
Income before income taxes, minority interest
and discontinued operations 1,205,000 711,000
Income taxes 540,000 321,000
------------ ------------
Income before minority interest and
discontinued operations 665,000 390,000
Minority interest (2,000) 5,000
------------ ------------
INCOME FROM CONTINUING OPERATIONS 663,000 395,000
Loss from discontinued operations 0 (49,000)
------------ ------------
NET INCOME $ 663,000 $ 346,000
============ ============
Primary and fully diluted net income
per common share
Continuing operations $ 0.10 $ 0.06
Discontinued operations 0.00 (0.01)
------------ ------------
TOTAL $ 0.10 $ 0.05
============ ============
Weighted average number of common shares and
common stock equivalents outstanding 6,794,000 6,704,000
============ ============
See accompanying notes to Unaudited Condensed Consolidated Financial Statements.
5
<PAGE>
NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
for Six Months Ended July 31, 1997 and 1996
1997 1996
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 1,311,000 $ 748,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,080,000 1,147,000
Provision for losses on receivables 89,000 60,000
Deferred income taxes 13,000 316,000
Tax benefit from sale of stock options
exercised 84,000 0
Net changes in assets and liabilities:
Accounts receivable (75,000) (1,792,000)
Inventories (208,000) (500,000)
Prepaid expenses (317,000) (37,000)
Other assets (92,000) (21,000)
Accounts payable (1,217,000) 668,000
Accrued expenses 788,000 613,000
Income taxes 20,000 38,000
Distributed earnings of affiliate 0 (51,000)
Undistributed earnings of affiliate 1,000 (9,000)
----------- -----------
Net cash provided by continuing operations 1,477,000 1,180,000
Loss from discontinued operations 0 (64,000)
----------- -----------
Net cash provided by operating activities 1,477,000 1,116,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,407,000) (1,421,000)
Investment in new subsidiary 0 (253,000)
----------- -----------
Net cash used for investing activities (2,407,000) (1,674,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 4,151,000 1,137,000
Repayments of current and long-term debt (4,060,000) (932,000)
Proceeds from stock options exercised 225,000 36,000
----------- -----------
Net cash provided by financing activities 316,000 241,000
----------- -----------
Net decrease in cash (614,000) (317,000)
Beginning cash balance 1,204,000 1,949,000
----------- -----------
ENDING CASH BALANCE $ 590,000 $ 1,632,000
=========== ===========
See accompanying notes to Unaudited Condensed Consolidated Financial Statements.
6
<PAGE>
NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
1. In accordance with instructions to Form 10-Q the accompanying financial
statements and notes have been condensed and, therefore, do not contain
all disclosures required by generally accepted accounting principles.
These statements should be read in conjunction with the financial
statements and notes thereto included in the Registrant's Form 10-K for
the year ended January 31, 1997.
2. The statements presented as of and for the six-month and three-month
periods ended July 31, 1997 and 1996 are unaudited. In Management's
opinion, all adjustments have been made to present fairly the results of
such unaudited interim periods. All such adjustments are of a normal
recurring nature.
3. While the Registrant's business is not materially seasonal, the quarterly
results of operations should not be construed as representing pro rata
results of the Registrant's fiscal year.
4. Income taxes for the interim periods are computed using the effective tax
rates estimated to be applicable for the full fiscal year.
5. Primary income per share for the six-month and three-month periods ended
July 31, 1997, were computed on the weighted average number of shares of
common stock and stock equivalents (stock options) outstanding. The
effect of stock options on the fully diluted calculations was either
immaterial or antidilutive. In February 1997, the Financial Accounting
Standards Board issued Statement No. 128, "Earnings per Share", which is
required to be adopted on December 31, 1997. At that time, the Registrant
will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of stock
options will be excluded. The impact of Statement 128 will have no
material effect on the calculation of earnings per share for the
six-month and three-month periods ended July 31, 1997.
6. The consolidated financial statements include the accounts of the
Registrant and its wholly owned and financially controlled subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation.
7. Inventories consist of accumulated costs applicable to uncompleted
contracts and are stated at actual cost which is not in excess of
estimated net realizable value.
8. Cash paid for interest and taxes for the six months ended July 31, 1997
was $ 502,000 and $ 582,000 respectively. Cash paid for interest and
taxes for the six months ended July 31, 1996 was $559,000 and $337,000
respectively.
9. Minority interest in the Registrant's NQA-USA, Inc. subsidiary is a
result of 50% of the stock of NQA-USA, Inc. being issued to National
Quality Assurance, Ltd. in December 1996. Profits are shared 64% to
NQA-USA, Inc. and 36% to National Quality Assurance, Ltd.
7
<PAGE>
10. In January 1997, the Registrant, after considering the highly competitive
and unreliable nature of the business and the inability to operate at
profitable levels, elected to discontinue and abandon its Environmental
Services segment. All historical data has been restated to reflect this
discontinued operation.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the consolidated
quarterly financial statements and notes thereto. All information is based upon
operating results of National Technical Systems, Inc. for the six months ended
July 31.
(tabular header information: Dollars in thousands)
RESULTS OF OPERATIONS
- ---------------------
REVENUES
Six months ended July 31 1997 % Change 1996
=============================
Technical Services $20,464 13.5% $18,036
Registration Services 1,515 15.7% 1,309
Technical Staffing 4,715 47.2% 3,204
======= =======
Total net revenue $26,694 18.4% $22,549
======= =======
For the six months ended July 31, 1997, consolidated revenues increased by
$4,145,000 or 18.4% when compared to the same period in 1996. In 1997, the
Technical Services segment revenues increased due to increases in its
traditional aerospace and defense testing business resulting from increased
research and development budgets of government defense and aerospace contractors
as well as an increase in outsourcing of testing and engineering services by
prime contractors.
Revenues in the Technical Staffing segment increased by $1,511,000 due to
increases in the expanding information technology portion of its business and
the continuing success of its strategic alliances with a major technical
staffing company.
Revenues in the Registration Services segment increased $206,000 as a result of
continuing marketing efforts and an increase in demand by U.S.
companies for ISO 9000 certification.
It is anticipated by the Registrant that revenues in the Technical Services and
Technical Staffing segments will continue to increase at about the same rate
through fiscal 1998. The Registrant also anticipates that revenues in the
Registration Services segment will continue to grow moderately through 1998.
9
<PAGE>
GROSS PROFIT
Six months ended July 31 1997 % Change 1996
=============================
Technical Services $ 5,614 28.2% $ 4,378
% to segment revenue 27.4% 24.3%
Registration Services 568 44.2% 394
% to segment revenue 37.5% 30.1%
Technical Staffing 1,026 37.0% 749
% to segment revenue 21.8% 23.4%
-------- -------
Total $ 7,208 30.6% $ 5,521
======== =======
% to total net revenue 27.0% 24.5%
Total gross profit for the six-month period ended July 31, 1997 increased by
$1,687,000 as a result of increased revenues in 1997 compared to 1996. Gross
profit as a percentage of net revenues in 1997 also increased when compared to
the same period in 1996. This increase was due primarily to the success of the
Registrant in obtaining more profitable fixed price contracts in its Technical
Services segment and the success of its continuing cost containment programs in
all segments of its business.
SELLING, GENERAL & ADMINISTRATIVE
Six months ended July 31 1997 % Change 1996
=============================
Technical Services $ 2,961 7.3% $ 2,759
% to segment revenue 14.5% 15.3%
Registration Services 425 38.0% 308
% to segment revenue 28.1% 23.5%
Technical Staffing 823 47.8% 557
% to segment revenue 17.5% 17.4%
Corporate 68 13.3% 60
------- -------
Total S G & A $ 4,277 16.1% $ 3,684
======= =======
% to total net revenue 16.0% 16.3%
10
<PAGE>
Total selling, general and administrative expenses increased $593,000 for the
six-month period ended July 31, 1997 when compared to the same period in 1996.
This increase was due primarily to the increase in revenues in addition to the
opening of three new marketing offices in the Registrant's Technical Staffing
segment, and a new laboratory in its Technical Services segment. Selling,
general and administrative expenses decreased slightly as a percentage of net
revenues due to the success of the Registrant's continuing cost containment
activities. The Registrant continues to look for new ways to reduce costs yet
remain effective in all segments of its business.
INTEREST EXPENSE
Net interest expense increased $31,000 in the six months ended July 31, 1997
when compared to the same period in 1997. This increase was principally due to
increases in the term loan and line of credit balances.
INCOME TAXES
The income tax provisional rate for the first six months of 1997 and 1996
reflects a rate in excess of the U.S. federal statutory rate primarily due to
the inclusion of state income taxes. The Registrant's provision for the six
months ended July 31, 1997 increased over the same period in 1996 due to the
higher income before taxes in 1997. Current income tax liability was reduced by
$84,000 related the tax benefit of stock options exercised. Management has
determined that it is more likely than not that the deferred tax asset will be
realized on the basis of offsetting it against deferred tax liabilities. It is
the Registrant's intention to evaluate the realizability of the deferred tax
asset quarterly.
DISCONTINUED OPERATIONS
The loss from discontinued operations represents the operating results of the
Registrant's Environmental Services segment prior to its discontinuance in
fiscal 1997 and estimated future shutdown expenses.
NET INCOME
The increase in net income in the six months ended July 31, 1997 compared to the
same period in 1997 was due to increased revenues and higher gross profit
margins.
The following information is based upon results for National Technical Systems,
Inc. for the three months ended July 31.
REVENUES
Quarter ended July 31 1997 % Change 1996
=============================
Technical Services $10,227 13.3% $ 9,024
Registration Services 779 1.6% 767
Technical Staffing 2,535 57.6% 1,609
------- -------
Total net revenue $13,541 18.8% $11,400
======= =======
11
<PAGE>
For the three months ended July 31, 1997, consolidated revenues increased by
$2,141,000 or 18.8% when compared to the same period in 1996. In 1997, the
Technical Services segment revenues increased $1,203,000 due to the increases in
its traditional aerospace and defense testing business resulting from increased
research and development budgets of government defense and aerospace contractors
as well as their continued outsourcing of testing and engineering services.
Revenues in the Technical Staffing segment increased $926,000 due to increases
in the expanding information technology portion of its business and the
continuing success of its strategic alliances with a major technical staffing
company.
It is anticipated by the Registrant that revenues in the Technical Services and
Technical Staffing segments will continue to increase through the end of fiscal
1998. The Registrant also anticipates that revenues in the Registration Services
segment will continue to grow moderately for the remainder of fiscal 1998.
GROSS PROFIT
Quarter ended July 31 1997 % Change 1996
=============================
Technical Services $ 2,769 26.0% $ 2,198
% to segment revenue 27.1% 24.4%
Registration Services 343 65.7% 207
% to segment revenue 44.0% 27.0%
Technical Staffing 532 34.3% 396
% to segment revenue 21.0% 24.6%
------- -------
Total $ 3,644 30.1% $ 2,801
======= =======
% to total net revenue 26.9% 24.6%
Total gross profit for the quarter ended July 31, 1997 increased by $843,000 as
a result of increased revenues in 1997 compared to 1996. Gross profit as a
percentage of net revenues in 1997 also increased when compared to the same
period in 1996. This increase was due primarily to the success of the Registrant
in obtaining more profitable fixed price contracts in its Technical Services
segment and the success of its continuing cost containment programs in all
segments of its business.
12
<PAGE>
SELLING, GENERAL & ADMINISTRATIVE
Quarter ended July 31 1997 % Change 1996
=============================
Technical services $ 1,474 6.8% $ 1,380
% to segment revenue 14.4% 15.3%
Registration services 216 44.0% 150
% to segment revenue 27.7% 19.6%
Contract labor services 428 46.1% 293
% to segment revenue 16.9% 18.2%
Corporate 34 17.2% 29
------- -------
Total S G & A $ 2,152 16.2% $ 1,852
======= =======
% to total net revenue 15.9% 16.2%
Total selling, general and administrative expenses increased $300,000 for the
quarter ended July 31, 1997 when compared to the same period in 1996. This
increase was due primarily to the increase in revenues in addition to the
opening of a third new marketing office in the Registrant's Technical Staffing
segment, and a new laboratory in its Technical Services segment. Selling,
general and administrative expenses decreased slightly as a percentage of net
revenues due to the success of the Registrant's continuing cost containment
activities. The Registrant continues to look for new ways to reduce costs yet
remain effective in all segments of its business.
INTEREST EXPENSE
Net interest expense increased $24,000 in the quarter ended July 31, 1997 when
compared to the same period in 1997. This increase was principally due to
increases in the term loan and line of credit balances.
INCOME TAXES
The income tax provisional rate for the second quarters of 1997 and 1996
reflects a rate in excess of the U.S. federal statutory rate primarily due to
the inclusion of state income taxes. The Registrant's provision for the quarter
ended July 31, 1997 was higher than the same period in 1996 due to the increase
in income before taxes and minority interest. Management has determined that it
is more likely than not that the deferred tax asset will be realized on the
basis of offsetting it against deferred tax liabilities. It is the Registrant's
intention to evaluate the realizability of the deferred tax asset quarterly.
DISCONTINUED OPERATIONS
The loss from discontinued operations represents the operating results of the
Registrant's Environmental Services segment prior to its discontinuance in
fiscal 1997 and estimated future shutdown expenses.
13
<PAGE>
NET INCOME
The increase in net income in the quarter ended July 31, 1997 compared to the
same period in 1997 was due to increased revenues and higher gross profit
margins.
BUSINESS ENVIRONMENT
During the course of the last fiscal year, the business climate in the aerospace
and defense industry, which in the past had shown signs of uncertainty, seems to
have stabilized and, in some areas, shows signs of strengthening. Various major
prime government contractors have won significant development contracts which
increases the market for the Registrant's Technical Services segment. During the
period of uncertainty the Registrant developed a strategy of growth through
diversification and taking advantage of opportunities created by the aerospace
and defense industry's merger activities and ultimate downsizing. In addition,
increased activity in commercial satellite and launch vehicles has increased
demand for component and systems testing. As the demand for nuclear staff
augmentation has decreased, the Registrant has aggressively pursued additional
business in the growing Information Technology ("IT") portion of its Technical
Staffing segment's business. The Registrant supplies IT professionals in support
of customers who need help-desk analysts and managers; relational database
administrators and developers; application and systems programmers;
configuration and project managers; and multiple levels of system operations
personnel. Also, the Registrant continues to pursue ISO registration business
through its Registration Services segment as demand for these services continues
to increase as more companies must compete for business in the global market
place. Because of the foregoing, as well as other factors affecting the
Registrant's operating results, past financial performance should not be
considered to be a reliable indicator of future performance.
LIQUIDITY AND CAPITAL RESOURCES
In the six ended July 31, 1997, cash provided by operations after discontinued
operations increased by $361,000 when compared to the same period in 1996. Major
items contributing to this increase were significant increases in net income and
accrued expenses offset by decreases in accounts payable and increases in
inventory and prepaid expenses.
Net cash used in investing activities in the six months ended July 31, 1997
increased $733,000 over the same period in 1996. The Registrant anticipates that
its capital spending level in fiscal 1998 will be higher than fiscal 1997. The
actual level of spending will be dependent on a variety of factors, including
general economic conditions, bank covenants and the Registrant's operating
requirements.
In the six months ended July 31, 1997, net cash provided by financing activities
consisted of increases in bank term loans and lines of credit of $4,151,000 and
proceeds from the exercise of stock options of $225,000, offset by debt
reduction on short term and long term debt of $4,060,000. Long term debt
increased $413,000 for the six-month period ended July 31, 1997 when compared to
the same period in 1996 due to new borrowings in excess of regularly scheduled
payments on long-term debt. In May 1997, the Registrant paid off its revolving
lines of credit and term loans with Bank of America NT & SA and replaced them
14
<PAGE>
with a new $6,000,000 revolving line of credit with Sanwa Bank California at an
interest rate of prime plus 0.5%, which expires on August 1, 1998, and is in the
process of being extended to August 1, 1999, and a $3,250,000 term loan with
Sanwa Bank California at an interest rate of prime plus 0.75% which matures on
May 1, 2002. In addition, the Registrant has entered into an agreement with
Sanwa Bank California for a $2,000,000 equipment line of credit which matures
on February 1, 2003 with interest only payments through January 31, 1998. This
line was used to retire the leases outstanding with Bank of America NT & SA
which were approximately $1,170,000 at May 31, 1997, and to finance a portion
of future requirements.
The Registrant has negotiated with Sanwa Bank California as agent and Mellon
Bank a new credit agreement which will replace the above agreements which were
in effect on July 31, 1997. The new agreements include a new $6,000,000
revolving line of credit at an interest rate of the Bank's reference rate plus
0.25% which expires in September 1999. Also included in the new agreements is a
$6,500,000 term loan at an interest rate of the Bank's reference rate plus 0.50%
which expires in January 2003.
Management is not aware of any significant demands for capital funds that may
materially affect the short or long-term liquidity in the form of large fixed
asset acquisitions, unusual working capital commitments or contingent
liabilities. In addition, the Registrant has made no material commitments for
capital expenditures. The Registrant's future working capital will be provided
from operations, plus the new revolving lines of credit. The Registrant's bank
revolving lines of credit, which at July 31, 1997 aggregated $6,000,000 for
short-term liquidity needs, had $2,788,000 available.
FORWARD-LOOKING INFORMATION
Certain statements or assumptions in Management's Discussion and Analysis
contain or are based on "forward-looking" information (as defined in the Private
Securities Litigation and Reform Act of 1997) that involves risk and
uncertainties inherent in the Registrant's business. Actual outcomes are
dependent upon the Registrant's successful performance of internal plans,
customer changes in short range and long range plans, competition in the
Registrant's services areas and pricing, continued acceptance of new services,
performance issues with key customers, and general economic risks and
uncertainties.
15
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Form 8-K
During the quarter ended July 31, 1997 the registrant did
not file a current report on Form 8-K.
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.
NATIONAL TECHNICAL SYSTEMS, INC.
Date: September 9, 1997 By: /s/ Lloyd Blonder
---------------------- -------------------------------
Lloyd Blonder
Senior Vice President
Chief Financial Officer
(Signing on behalf of the
registrant and as principal
financial officer)
16
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- -------------------------------------------------------------------------------
27 Financial Data Schedule 18
17
<PAGE>
[insert FDS here]
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-31-1997
<CASH> 590
<SECURITIES> 0
<RECEIVABLES> 12,278
<ALLOWANCES> 792
<INVENTORY> 2,479
<CURRENT-ASSETS> 16,991
<PP&E> 46,813
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0
0
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<SALES> 26,694
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<CGS> 19,486
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<CHANGES> 0
<NET-INCOME> 1,311
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
