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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 JUNE 30, 1995
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-14161
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ANALYSIS & TECHNOLOGY, INC.
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(Exact name of registrant as specified in its charter)
Connecticut 95-2579365
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 2, North Stonington, Connecticut 06359
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(Address of principal executive office)
(Zip Code)
(203) 599-3910
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(Registrant's telephone number, including area code)
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(Former name, former address, and former fiscal year,
if changed since last report.)
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
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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 No
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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 the close of business August 8, 1995, the registrant had outstanding
2,412,815 shares of Common Stock.
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CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 5
PART II. OTHER INFORMATION REQUIRED IN REPORT
ITEM 1. LEGAL PROCEEDINGS 7
ITEM 2. CHANGES IN SECURITIES 7
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 7
ITEM 5. OTHER INFORMATION 7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 7
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE QUARTERS ENDED JUNE 30, 1995 AND 1994
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, 1995 JUNE 30, 1994
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<S> <C> <C>
Revenues $31,671 $31,404
Costs & expenses 30,117 30,128
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Operating earnings 1,554 1,276
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Other deductions:
Interest expense 184 107
Interest income (1) (2)
Other, net 130 23
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313 128
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Earnings before income taxes 1,241 1,148
Income taxes 527 466
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Net earnings $ 714 $ 682
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Earnings per common and
common equivalent share $ 0.29 $ 0.28
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Weighted average shares and
common equivalent shares
outstanding during the period $ 2,455 $ 2,473
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</TABLE>
See accompanying note to the consolidated financial statements.
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ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1995 MARCH 31, 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 789 $ 502
Contract receivables 26,795 27,816
Notes and other receivables 1,099 1,147
Prepaid expenses 687 1,009
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Total current assets 29,370 30,474
Property, buildings, and equipment, net 15,056 15,604
Other assets:
Goodwill, net 6,788 6,783
Deposits and other receivables 362 429
Product development costs, net 9,059 8,532
Other 3,457 3,227
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19,666 18,971
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TOTAL ASSETS $64,092 $65,049
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 404 $ 4
Current installments of long-term debt 317 309
Accounts payable 2,802 4,013
Accrued expenses 6,147 8,708
Dividends payable -- 616
Deferred income taxes 991 1,214
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Total current liabilities 10,661 14,864
Long-term debt, excluding current installments 8,762 6,933
Deferred income taxes 4,160 3,675
Other long-term liabilities 2,567 2,403
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TOTAL LIABILITIES 26,150 27,875
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Shareholders' equity:
Common stock, $.125 stated value
Authorized 7,500,000 shares; issued
2,377,390 shares at June 30, 1995 and
2,371,399 at March 31, 1995. 297 296
Additional paid-in capital 9,339 9,286
Retained earnings 28,306 27,592
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TOTAL SHAREHOLDERS' EQUITY 37,942 37,174
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $64,092 $65,049
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</TABLE>
See accompanying note to the consolidated financial statements.
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ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED JUNE 30, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1995 JUNE 30, 1994
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<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 714 $ 682
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Depreciation and amortization of fixed assets 672 688
Amortization of goodwill 111 100
Amortization of product development costs 153 173
Loss on sale of equipment 252 14
Advance from customer 0 25
Decrease (increase) in:
Contract receivables 1,021 (252)
Notes and other receivables 48 (98)
Prepaid expenses 322 (153)
Other assets (163) (163)
Increase (decrease) in:
Accounts payable and accrued expenses (3,772) 1,096
Deferred income taxes 262 203
Other long-term liabilities 164 43
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (216) 2,358
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INVESTING ACTIVITIES:
Additions to property, buildings, and equipment (381) (987)
New product development costs (680) (1,133)
Proceeds from the sale of equipment 5 3
Acquisition of business units (net of cash acquired) (116) (970)
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NET CASH USED BY INVESTING ACTIVITIES (1,172) (3,087)
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FINANCING ACTIVITIES:
Net proceeds from (repayments of) short-term borrowings 400 (395)
Proceeds from long-term debt borrowings 1,910 1,305
Principal repayments of long-term debt (73) (67)
Proceeds from sale of common stock 54 145
Dividends paid (616) (556)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 1,675 432
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Increase (decrease) in cash and cash equivalents 287 (297)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 502 729
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End of period $ 789 $ 432
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</TABLE>
See accompanying note to the consolidated financial statements.
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ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
The information furnished in the accompanying unaudited Consolidated Statement
of Earnings, Consolidated Balance Sheets, and Consolidated Statements of Cash
Flows reflect all adjustments (consisting only of items of a normal recurring
nature) which are, in the opinion of management, necessary for a fair statement
of the Company's results of operations and financial position for the interim
periods. These financial statements should be read in conjunction with the
audited consolidated financial statements and notes included in the Company's
Annual Report for the year ended March 31, 1995.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
A summary of comparative results for the quarters ended June 30, 1995
and June 30, 1994 is as follows:
THREE MONTHS ENDED JUNE 30
<TABLE>
<CAPTION>
PERCENT
1995 1994 CHANGE
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<S> <C> <C> <C>
Revenue $31,671,000 $31,404,000 0.9%
Operating Earnings 1,554,000 1,276,000 21.8%
Earnings before income taxes 1,241,000 1,148,000 8.1%
Net Earnings 714,000 682,000 4.7%
Earnings per common and
common equivalent share 0.29 0.28 3.6%
Weighted average shares
and common equivalent
shares outstanding during
the period 2,455,000 2,473,000 (0.7%)
</TABLE>
Revenue increased 0.9% to $31.7 million for the three months ended June 30,
1995 (the first quarter of fiscal 1996) from $31.4 million for the three months
ended June 30, 1994. The Company's labor related revenues increased
approximately $700 thousand for the quarter while non-labor related revenue
generated by purchased components, computer usage, travel and work subcontracted
to other companies decreased approximately $400 thousand.
Operating earnings for the quarter ended June 30, 1995 increased 21.8% to
$1.6 million from $1.3 million for the quarter ended June 30, 1994. Operating
earnings as a percentage of revenue (operating margins) increased to 4.9%
compared with 4.1% in the previous year's comparable quarter. The increase in
operating margins was due primarily to higher fees earned on the Company's
defense related work and improved operating efficiencies in its commercial
interactive multimedia operations, including higher than anticipated earnings on
a large fixed price project. Overall, operating margins in both the current and
prior year quarter were adversely affected by expenditures for new business
initiatives in information technologies and interactive multimedia systems. The
Company plans to continue these expenditures and future margins may be adversely
affected.
The total of interest expense, interest income and other net expenses as a
percentage of revenue increased to 1.0% for the current quarter ended June 30,
1995 as compared with 0.4% in the prior fiscal year first quarter. Interest
expense, net of interest income, as a percentage of revenue increased to 0.6% in
the first quarter of fiscal 1996 as compared with 0.3% in the first quarter of
fiscal 1995. The increase was primarily the result of higher interest rates and
increased borrowing under the Company's revolving credit agreement primarily due
to continuing investment in on-line registration systems and an increase in the
time for payment of contract receivables by the Government as discussed more
fully below in Liquidity and Capital Resources. Other net expense increased to
0.4% in the first quarter of fiscal 1996 as compared with 0.1% in the first
quarter of fiscal 1995. Other net expense was low in the first quarter of fiscal
1995 due to the effect of a key person insurance payment received by Automated
Software Inc. (ASI), a joint venture company. The effect of this payment, net of
expenses, on the Company's fiscal 1995 earnings was $115,000.
Earnings before income taxes increased 8.1% to $1.2 million from $1.1
million in the first quarter of fiscal 1996. The increase was a result of a
higher operating earnings partially offset by higher interest and other expenses
as discussed above.
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The Company's effective tax rate was 42.5% for the three-month period ended
June 30, 1995 compared with 40.6% for the three-month period ended June 30,
1994. The lower effective tax rate in fiscal 1995 was due, in part, to higher
earnings in ASI as a result of the key person insurance payment. ASI's earnings
are reported by the Company on an after-tax basis and are not included in the
Company's taxable income.
Net earnings for the first quarter of fiscal 1996 increased 4.7% to
$714,000 from $682,000 in the first quarter of fiscal 1995. Earnings per share
increased 3.6% to $0.29 in the first quarter of fiscal 1996 from $0.28 in the
prior year's first quarter. The weighted average number of common shares and
common equivalent shares outstanding decreased slightly to 2.46 million for the
current fiscal quarter compared with 2.47 million in fiscal 1995 first quarter.
This was due to a decrease in the average price of the Company's stock which
decreased the number of common equivalent shares attributable to stock options.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from financing activities in the first quarter of fiscal
1996 totaled $1.7 million. The primary contributor to cash provided from
financing activities was borrowings under the Company's revolving credit
agreement. Significant uses of cash during the quarter were for reduction of
accounts payable and accrued expenses and for continued investment in new
product development. Capitalized software development costs, primarily for
on-line registration system product development, totaled $680,000 during the
quarter.
Contract receivables totaled $26.8 million at June 30, 1995, $27.8 million
at March 31, 1995, and $24.7 million at June 30, 1994 and represented 42%, 43%,
and 42%, respectively, of total assets at each of those dates. The average
period for payment to the Company was 77 days at June 30, 1995, and 72 days at
March 31, 1995 and June 30, 1994. The increase in the average period for payment
to the Company was due to continuing software problems and procedural changes at
the Government paying office which delayed the processing of the Company's
invoices.
Any capital needs not satisfied by cash generated from operations were, and
in the future will be, met with money borrowed by the Company under its line of
credit and revolving credit agreement. The total funds available to the Company
under these agreements at June 30, 1995 was $20.0 million. Borrowings under
these agreements were $5.8 million at June 30, 1995, $3.5 million at March 31,
1995, and $2.1 million as of June 30, 1994, respectively.
It is anticipated that the Company's existing cash, together with funds
generated from operations and borrowings under its line of credit and revolving
credit agreements, will be sufficient to meet its normal working capital
requirements and investments in software product development for the foreseeable
future. As of June 30, 1995, the Company does not have any major capital
commitments.
The Company believes that inflation has not had a material effect on its
business.
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PART II. OTHER INFORMATION REQUIRED IN REPORT
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 2. CHANGES 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
A. EXHIBITS
27 FINANCIAL DATA SCHEDULE
B. REPORTS
NONE.
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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.
ANALYSIS & TECHNOLOGY, INC.
Date: August 9, 1995 /s/ Gary P. Bennett
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Gary P. Bennett
President and CEO
Date: August 9, 1995 /s/ David M. Nolf
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David M. Nolf
Executive Vice President
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EXHIBIT INDEX
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Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000310876
<NAME> ANALYSIS & TECHNOLOGY, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 789
<SECURITIES> 0
<RECEIVABLES> 26,795
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,370
<PP&E> 32,033
<DEPRECIATION> 16,977
<TOTAL-ASSETS> 64,092
<CURRENT-LIABILITIES> 10,661
<BONDS> 0
<COMMON> 297
0
0
<OTHER-SE> 37,645
<TOTAL-LIABILITY-AND-EQUITY> 64,092
<SALES> 0
<TOTAL-REVENUES> 31,671
<CGS> 0
<TOTAL-COSTS> 30,117
<OTHER-EXPENSES> 130
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 183
<INCOME-PRETAX> 1,241
<INCOME-TAX> 527
<INCOME-CONTINUING> 714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 714
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0
</TABLE>
