<PAGE> 1
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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 SEPTEMBER 30, 1996
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 0-14161
ANALYSIS & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Connecticut 95-2579365
--------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 2, North Stonington, Connecticut 06359
(Address of principal executive office)
(Zip Code)
(860) 599-3910
(Registrant's telephone number, including area code)
________________________________________________________________________________
(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
--- ---
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 November 7, 1996, the registrant had
outstanding 2,341,414 shares of Common Stock.
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<PAGE> 2
CONTENTS
Page
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 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of
Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
For the Quarters and Six-Month Periods Ended September 30, 1996 and 1995
(Amounts in Thousands Except per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenue from continuing
operations $35,507 $31,120 $67,995 $62,455
Costs & expenses 33,709 29,536 64,700 59,241
------- ------- ------- -------
Operating earnings from
continuing operations 1,798 1,584 3,295 3,214
------- ------- ------- -------
Other deductions (income):
Interest expense 98 188 174 371
Interest income (23) (3) (60) (4)
Equity in (income) loss
of joint venture 37 (92) (22) (156)
Other, net 176 154 339 349
------- ------- ------- -------
288 247 431 560
------- ------- ------- -------
Earnings from continuing
operations before income
taxes 1,510 1,337 2,864 2,654
Income taxes 660 156 1,222 713
------- ------- ------- -------
Net earnings from
continuing operations 850 1,181 1,642 1,941
Discontinued Operations:
Loss from discontinued
operations, net of income
tax benefit -- (96) -- (142)
Loss on the disposal of
discontinued operations,
net of income tax benefit -- (1,316) -- (1,316)
------- ------- ------- -------
Net earnings (loss) $ 850 $ (231) $ 1,642 $ 483
======= ======= ======= =======
Earnings (loss) per common
and common equivalent
share:
Continuing operations $ 0.35 $ 0.47 $ 0.68 $ 0.79
Discontinued operations -- (0.56) -- (0.59)
------- ------- ------- -------
Net earnings (loss) $ 0.35 $ (0.09) $ 0.68 $ 0.20
======= ======= ======= =======
Weighted average shares
and common equivalent
shares outstanding 2,411 2,500 2,417 2,473
</TABLE>
See accompanying notes to the consolidated financial statements.
1
<PAGE> 4
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in Thousands)
<TABLE>
<CAPTION>
September 30, 1996
Assets (Unaudited) March 31, 1996
- ---------------------------- ------------------ --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,179 $ 4,179
Marketable equity
securities 195 --
Contract receivables 25,187 24,250
Notes and other receivables 1,100 1,260
Prepaid expenses 1,391 1,543
------- -------
Total current assets 30,052 31,232
Property, buildings, and
equipment, net 13,999 14,132
Other assets:
Goodwill, net of
accumulated amortization 10,337 6,548
Product development costs,
net of accumulated
amortization 530 362
Deposits and other 316 261
Deferred Compensation Plan
investments 2,871 2,601
Investment in joint venture 1,323 1,301
Deferred income taxes 54 --
------- -------
15,431 11,073
------- -------
TOTAL ASSETS $59,482 $56,437
======= =======
LIABILITIES AND SHARE-
HOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $ 193 $ 180
Accounts payable 1,744 1,779
Accrued expenses 8,591 7,648
Dividends payable -- 659
Deferred income taxes 1,162 1,176
------- -------
Total current liabilities 11,690 11,442
Long-term debt, excluding
current installments 4,442 2,901
Deferred income taxes -- 114
Other long-term liabilities 3,724 2,701
------- -------
TOTAL LIABILITIES 19,856 17,158
------- -------
Shareholders' equity:
Common stock, $.125
stated value
Authorized 7,500,000
shares; issued and
outstanding, 2,338,015
shares at September 30,
1996 and 2,440,303 at
March 31, 1996 292 305
Additional paid-in capital 8,657 9,964
Unrealized holding gains
on marketable equity
securities 25 --
Retained earnings 30,652 29,010
------- -------
TOTAL SHAREHOLDERS' EQUITY 39,626 39,279
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $59,482 $56,437
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE> 5
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six-Month Periods Ended September 30, 1996 and 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 1,642 $ 483
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY CONTINUING OPERATIONS:
Loss associated with discontinued operations -- 1,458
Equity in income of joint venture (22) (92)
Depreciation and amortization of fixed assets 1,270 1,139
Amortization of goodwill 241 222
Amortization of product development costs 28 58
Provision for deferred income taxes (182) (373)
Loss on sale of equipment 33 652
Decrease (increase) in:
Contract receivables 2,198 2,148
Notes and other receivables 166 60
Prepaid expenses 245 480
Other assets (1) 11
Increase (decrease) in:
Accounts payable and accrued expenses (564) (1,316)
Other long-term liabilities (77) 59
------- -------
NET CASH PROVIDED BY CONTINUING OPERATIONS 4,977 4,989
NET CASH USED BY DISCONTINUED OPERATIONS -- (2,346)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,977 2,643
------- -------
INVESTING ACTIVITIES:
Additions to property, buildings, and equipment (876) (1,279)
Product development costs - continuing operations (196) (72)
Product development costs - discontinued operations -- (1,045)
Proceeds from the sale of equipment 5 6
Acquisition of business units (net of cash acquired) (5,485) (123)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (6,552) (2,513)
------- -------
FINANCING ACTIVITIES:
Net proceeds from short-term borrowings -- 400
Proceeds from long-term borrowings 1,690 825
Repayments of long-term debt (136) (150)
Proceeds from sale of common stock 161 408
Repurchase of common stock (1,481)
Dividends paid (659) (616)
------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (425) 867
------- -------
Increase (decrease) in cash and cash equivalents (2,000) 997
CASH AND CASH EQUIVALENTS:
Beginning of period 4,179 502
------- -------
End of period $ 2,179 $ 1,499
======= =======
</TABLE>
During the six-month period ended September 30, 1996 unrealized holding
gains on marketable equity securities resulted in increases to shareholders'
equity and to marketable equity securities of $25 thousand.
See accompanying notes to the consolidated financial statements.
3
<PAGE> 6
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. The information furnished in the accompanying unaudited Consolidated
Statements of Operations, 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, 1996.
2. On October 31, 1995, the Company sold the commercial business of its Groton,
Connecticut-based subsidiary, General Systems Solutions, Inc. (GSS), to GE
Capital Corporation. GSS's Navy business was transferred to the Company prior
to the sale and its commercial business was reclassified retroactively as a
discontinued operation.
3. On July 26, 1996, the Company entered into a Stock Purchase Agreement whereby
it acquired all of the stock of Vector Research Company, Inc. ("Vector") of
Rockville, Maryland, for approximately $6.0 million in cash plus related
expenses and assumption of tax liabilities. Vector provides engineering and
technical services to U.S. Navy customers. Goodwill totaling approximately
$4.0 million was recorded in connection with this acquisition.
4. During the second quarter of fiscal 1996, the Company analyzed research
expenditures incurred in prior years by the Company and its subsidiaries. As
a result of this analysis, the Company determined it was entitled to certain
federal and state research and development tax credits. The total amount of
such credits accrued in the quarter ended September 30, 1995, was $400,000
and is presented as a reduction of income taxes on earnings from continuing
operations in the accompanying unaudited Consolidated Statements of
Operations for the quarter and six-month periods ended September 30, 1995.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
A summary of comparative results for the quarter and six-month periods
ended September 30, 1996 and September 30, 1995 is as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, PERCENT
1996 1995 CHANGE
---- ---- ------
<S> <C> <C> <C>
Revenue from continuing operations $35,507 $31,120 14.1
Operating earnings from continuing operations 1,798 1,584 13.5
Earnings from continuing operations
before income taxes 1,510 1,337 13.0
Net earnings from continuing operations
Without R&D tax credit 850 781 8.8
Including R&D tax credit N/A 1,181 --
Loss from discontinued operations,
net of income tax benefit -- (96) --
Loss on the disposal of discontinued operations
net of income tax benefit -- (1,316) --
Net earnings (loss) 850 (231) --
Earnings (loss) per common share:
Continuing operations
Without R&D tax credit 0.35 0.31 12.9
Including R&D tax credit N/A 0.47 --
Discontinued operations -- (0.56) --
Net earnings (loss) per common share 0.35 (0.09) --
Weighted average shares and common
equivalent shares outstanding 2,411 2,500 (3.5)
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED SEPTEMBER 30, PERCENT
1996 1995 CHANGE
---- ---- ------
<S> <C> <C> <C>
Revenue from continuing operations $67,995 $62,455 8.9
Operating earnings from continuing operations 3,295 3,214 2.5
Earnings from continuing operations
before income taxes 2,864 2,654 7.9
Net earnings from continuing operations
Without R&D tax credit 1,642 1,541 6.6
Including R&D tax credit N/A 1,941 --
Loss from discontinued operations,
net of income tax benefit -- (142) --
Loss on the disposal of discontinued operations,
net of income tax benefit -- (1,316) --
Net earnings (loss) 1,642 483 --
Earning (loss) per common and common
equivalent share:
Continuing operations
Without R&D tax credit 0.68 0.63 7.9
Including R&D tax credit N/A 0.79 --
Discontinued operations -- (0.59) --
Net earnings per common share 0.68 0.20 --
Weighted average shares and common
equivalent shares outstanding 2,417 2,473 (2.3)
</TABLE>
5
<PAGE> 8
Revenue from continuing operations increased 14.1% to $35.5 million for
the three months ended September 30, 1996 from $31.1 million for the three
months ended September 30, 1995. For the six-month period ended September 30,
1996 (the first six months of fiscal 1997), revenues increased 8.9% to $68.0
million compared with $62.5 million in the first six months of fiscal 1996. The
increase in revenue is attributable, in part, to an increase in non-labor
related revenue due to purchased materials and work subcontracted to other
companies, and in part to the purchase of Vector Research Company, Inc. (Vector
Research) on July 26, 1996. Non-labor related revenue contributed $1.6 million
and $2.7 million for the quarter and six month periods respectively, and Vector
Research added $2.4 million.
For the quarter and six-month period ended September 30, 1996,
operating earnings from continuing operations were $1.8 million and $3.3
million, respectively, compared with $1.6 million and $3.2 million in the
comparable quarter and six-month period ended September 30, 1995.
Operating margins from continuing operations for both the current and
prior year quarter were 5.1%. Operating margins for the six-month period ended
September 30, 1996 were 4.8% as compared with 5.1% in the prior six-month
period. Operating margin for the six-month period last year was up due to
higher than anticipated earnings on a large fixed price project. Excluding this
project's earnings from the comparison, operating margins were relatively
constant from year to year.
Total other expenses as a percentage of revenue remained constant at
0.8% for both the current and prior year quarter. For the six-month period
ended September 30, 1996, total other expenses as a percentage of revenue
decreased to 0.6% compared with 0.9% for the six month period ended September
30, 1995. For both the current quarter and six-month period ended September 30,
1996, a decrease in interest expense and an increase in interest income
resulted from additional cash generated by the sale of the commercial business
of the Company's subsidiary, General Systems Solutions (GSS) on October 31,
1995. The proceeds from the sale enabled the Company to repay amounts borrowed
under its revolving credit agreement and to increase cash and cash equivalents.
This savings was partially offset in the current quarter due to a loss incurred
by the Company's joint venture, Automation Software Incorporated (ASI). The
Company's share of ASI's loss in the current quarter was $37,000 as compared to
income of $92,000 for the quarter ended September 30, 1995. The loss was
primarily due to a slowdown of sales during the transition to a new Windows 95
compatible software product.
Earnings from continuing operations before income taxes increased 13.0%
to $1.5 million for the second quarter of fiscal 1997 from $1.3 million in the
second quarter of fiscal 1996. For the first six months of fiscal 1997,
earnings from continuing operations before income taxes increased 7.9% to $2.9
million from $2.7 million for the same period in the prior fiscal year.
The Company's effective tax rate on earnings from continuing operations
was 43.7% for the second quarter and 42.7% for the first six months of fiscal
1997 compared with 11.6% and 26.9% for the second quarter and first six months
of fiscal 1996. The lower effective tax rate in the prior fiscal year periods
was mainly the result of the Company's one-time accrual of federal and state
research and development (R&D) tax credits totaling $400,000. The effective tax
rate for the current quarter was adversely affected by the Company's share of
the loss in ASI. This loss is reported on an after tax basis which reduces
income but not taxes payable by the Company.
Net earnings for the second quarter of fiscal 1997 were $850,000, or
$0.35 per share. This compared to net earnings from continuing operations for
the second quarter of fiscal 1996, not including a one-time R&D tax credit, of
$781,000 or $0.31 per share. Upon the sale of GSS in October 1995, its
commercial business was reclassified retroactively as a discontinued operation.
Net earnings for the second quarter of fiscal 1996 included a loss of $1.4
million from this discontinued operation and the one-time R&D tax credit of
$400,000, which resulted in a net loss of $0.09 per share for the quarter.
For the first six months of fiscal 1997, net earnings from continuing
operations were $1.6 million, or $0.68 per share. This compares to net earnings
from continuing operations for the first six months of fiscal 1996, not
including the one-time R&D tax credit previously mentioned, of $1.5 million, or
$0.63 per share. Net earnings for
6
<PAGE> 9
the first six months of fiscal 1996 included the R&D tax credit of $400,000 and
a loss from discontinued operations of $1.5 million which resulted in net
earnings of $0.20 per share.
The weighted average number of common and common equivalent shares
outstanding decreased to 2.4 million in the second quarter and first six months
of fiscal 1997 compared with 2.5 million in the fiscal 1996 comparable periods.
The decrease was due in part to the repurchase of the Company's common shares as
discussed more fully below in liquidity and capital resources.
LIQUIDITY & CAPITAL RESOURCES
For the six-month period ended September 30, 1996, net cash provided by
operating activities totaled $5.0 million. The net cash increase resulted
primarily from earnings from continuing operations of $1.6 million and a
decrease in contract receivables. Contract receivables decreased $2.2 million
due in part to the collection of receivables under a large firm fixed price
contract. Vector Research added $3.5 million of contract receivables. Contract
receivables totaled $25.2 million at September 30, 1996 and September 30, 1995
and $24.2 million at March 31, 1996 and represented 42%, 43%, and 41%,
respectively of total assets at each of those dates. The average period for
payment to the Company was 65 days at September 30, 1996; 71 days at March 31,
1996 and 73 days as of September 30, 1995.
Net cash used by investing activities for the six-month period ended
September 30, 1996 was $6.6 million. The primary use of cash was for the
acquisition of Vector Research. On July 26, 1996, the Company purchased all of
the shares of Vector Research for approximately $6.0 million plus related
expenses and assumption of tax liabilities. The purchase was made from existing
cash and funds available under the Company's revolving credit agreement.
The primary use of cash from financing activities for the six-month
period ended September 30, 1996 was the repurchase of the Company's common
shares. On March 25, 1996, the Company's Board of Directors announced that it
had authorized the repurchase of up to 200 thousand common shares over a one
year period. Through September 30, 1996, the Company had repurchased 119.2
thousand shares under this repurchase program at current market prices on the
dates of purchases. These purchases together with the additional borrowing
related to the Vector Research acquisition, resulted in net cash used by
financing activities in the first six-months of fiscal 1997 of $425 thousand.
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 revolving credit agreement. The total funds available to the Company under
this agreement at September 30, 1996 was $20.0 million. Borrowings under the
Company's borrowing agreements were $1.7 million as of September 30, 1996, and
$4.8 million at September 30, 1995. There were no borrowings under the
Company's revolving credit agreement at March 31, 1996.
It is anticipated that the Company's existing cash, together with
funds generated from operations and borrowings under its revolving credit
agreement, will be sufficient to meet its normal working capital requirements
for the foreseeable future.
As of September 30, 1996, the Company does not have any other major
capital commitments.
The Company believes that inflation has not had a material effect on
its business.
7
<PAGE> 10
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
a. The 1996 Annual Meeting of Shareholders was held on
August 13, 1996.
b. The following matters were voted upon at the meeting and the
votes cast for, against or withheld, as well as the number of
abstentions and broker non-votes as to each such matter, are
as follows:
(1) Election of the following individuals to the Board of
Directors:
<TABLE>
<CAPTION>
Total Votes Cast For Withheld
---------------- --- --------
<S> <C> <C> <C>
Gary P. Bennett 1,736,302 1,723,834 12,468
James B. Fox 1,736,302 1,724,114 12,188
</TABLE>
Directors Whose Term of Office as Director Continued After
the Meeting:
Larry M. Fox
Nelda S. Nardone
Thurman F. Naylor
David M. Nolf
Dennis G. Punches
(2) Appointment of KPMG Peat Marwick as independent auditors
of the Company for fiscal year 1997: 1,679,009 FOR;
54,341 AGAINST; and 2,952 ABSTAINED.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10 Amendment to Analysis & Technology, Inc. Savings and
Investment Plan dated August 12, 1996
11 Earnings Per Share Calculation
27 Financial Data Schedule
b. Reports on Form 8-K
During the quarter, the Company filed a report on Form 8-K
dated July 29, 1996 and amendments thereto reporting in
response to Items 2 and 7.
Financial statements included in these filings were:
In accordance with Item 7 (a)(4) of Form 8-K, the Audited
Financial Statements for Vector Research Co. Inc., for the
years ended October 31, 1995 and 1994 and the Independent
Auditors' Report and the Unaudited Balance Sheet and
Statement of Earnings for the eight month period ended
June 30, 1996.
In accordance with Item 7 (b)(2) of Form 8-K, the Unaudited
Proforma Consolidated Statements of Income, Proforma
Consolidated Balance Sheet and Notes to Unaudited Proforma
Consolidated Financial Statements.
8
<PAGE> 11
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: November 12, 1996 /s/ Gary P. Bennett
---------------------------------
Gary P. Bennett
President and CEO
Date: November 12, 1996 /s/ David M. Nolf
---------------------------------
David M. Nolf
Executive Vice President
9
<PAGE> 12
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
EXHIBITS
TO
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
---------------
FOR THE QUARTER ENDED: SEPTEMBER 30, 1996
COMMISSION FILE NUMBER: 0-14161
---------------
ANALYSIS & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
================================================================================
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENTS
- -------------- ------------------------
<S> <C>
10 Amendment to Analysis & Technology, Inc. Savings and
Investment Plan dated August 12, 1996
11 Earnings Per Share Calculation
27 Financial Data Schedule
</TABLE>
i
<PAGE> 1
AMENDMENT TO
ANALYSIS & TECHNOLOGY, INC.
SAVINGS AND INVESTMENT PLAN
WHEREAS, Analysis & Technology, Inc. (the "Employer") heretofore adopted the
Analysis & Technology, Inc. Savings and Investment Plan (the "Plan"); and
WHEREAS, the Employer reserved the right to amend the Plan; and
WHEREAS, the Employer desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective, except as otherwise
specifically provided, as of October 1, 1996, as follows:
1. Section 2.1 of the Plan shall be amended by adding the following
paragraph to the conclusion of said Section:
Any Participant who was formerly employed by Vector Research Company,
Inc., and who transferred employment to the Sponsoring Employer in
connection with the Sponsoring Employer's acquisition of such company,
shall be credited with any prior "Years of Service" completed under the
Vector Research Company, Inc. Profit Sharing and/or Pension Plans.
2. Section 3.1 of the Plan shall be amended to read in its entirety as
follows:
3.1 PARTICIPATION. All Employees participating in the Plan prior to
October 1, 1996 shall continue to participate, subject to the terms
hereof.
Each other Employee shall become a Participant under the Plan effective
as of the first day of the month coincident with or next following the
later of (i) his Employment Date or (ii) his attainment of age
twenty-one (21).
Notwithstanding the foregoing provisions of this Section 3.1, only
"full-time Employees" of the Sponsoring Employer employed at a Cost
Center, Segment, or Subsidiary from time to time designated by its
board of directors shall be eligible to participate in the Plan. For
this purpose, a "full-time Employee" is any Employee employed by the
Sponsoring Employer who customarily completes at least one thousand
(1,000) Hours of Service per year. An Employee who does not satisfy the
requirements of the preceding sentence but who, during the twelve
(12)-month computation period beginning on his initial Employment Date
or on the first day of any Plan Year commencing thereafter, is credited
with one thousand (1,000) or more Hours of Service shall be deemed to
be a "full-time Employee" for purposes of this Section 3.1.
1
<PAGE> 2
Notwithstanding the foregoing provisions of this Section 3.1, any
"full-time Employee" (as defined above) who was formerly employed by
Vector Research Company, Inc., and who transferred employment to the
Sponsoring Employer in connection with the Sponsoring Employer's
acquisition of such company, shall become a Participant under the Plan
as of August 1, 1996, or as soon as administratively possible
thereafter.
3. Article Seven of the Plan shall be amended by adding the following
Sections 7.9 and 7.10
7.9 JOINT AND SURVIVOR ANNUITY. Notwithstanding the foregoing
provisions of this Article Seven, this Section shall apply only to the
portion of a Participant's Account, if any, derived from funds
transferred from the Vector Research Company, Inc. Profit Sharing
and/or Pension Plans.
(a) If distribution of a Participant's vested Account balance
commences during his lifetime, the portion of his vested
Account (subject to the provisions of this Section 7.9) shall
be applied to the purchase of an annuity for the life of the
Participant or, if the Participant is married as of his
benefit commencement date, applied to the purchase of a
"qualified joint and survivor annuity" for the life of the
Participant and his spouse. For this purpose, a "qualified
joint and survivor annuity" is an immediate annuity for the
life of the Participant with a survivor annuity for the life
of the spouse which is not less than fifty percent (50%) and
not more than one hundred percent (100%) of the amount of the
annuity which is payable during the joint lives of the
Participant and his spouse.
(b) The Participant may elect to waive the life annuity or
qualified joint and survivor annuity form of benefit at any
time during the election period. Such an election must be made
in writing in a form acceptable to the Administrator. However,
an election to waive the qualified joint and survivor annuity
shall not take effect unless (1) the Participant's spouse
consents in writing to the election, (2) the election
designates a specific alternate Beneficiary, if applicable,
including any class of Beneficiaries or any contingent
Beneficiaries, which may not be changed without spousal
consent (unless the Participant's spouse expressly permits
designations by the Participant without any further spousal
consent), (3) the spouse's consent acknowledges the effect of
the election, and (4) the spouse's consent is witnessed by a
Plan representative or a notary public. In addition, a
Participant's waiver of a qualified joint and survivor annuity
shall not be effective unless the election designates a form
of benefit payment which may not be changed without spousal
consent (or the Participant's spouse expressly permits
designation by the Participant without any further spousal
consent). Notwithstanding the foregoing, spousal consent
hereunder shall not be required if it is established to the
satisfaction of the Administrator that the spouse's consent
cannot be obtained because such spouse cannot be located, or
because of such other circumstances as may be prescribed in
regulations pursuant to Section 417 of the Code.
(c) Any consent by a spouse obtained under this Section (or
establishment that the consent of such spouse cannot be
obtained) shall be effective only with respect to such spouse.
A consent that permits designations by the Participant without
any requirement of further consent by such spouse must
acknowledge that the spouse has the right to limit consent to
a specific Beneficiary, and a specific form of benefit where
applicable, and that the spouse voluntarily elects to
relinquish either or both of such rights. No consent obtained
under this provision shall be valid unless the Participant has
received notice as provided below. In addition, any
2
<PAGE> 3
waiver made in accordance with this Section may be revoked at
any time prior to the commencement of benefits under the Plan.
A Participant is not limited to the number of revocations or
elections that may be made hereunder.
(d) The "election period" under this Section shall be the ninety
(90)-day period prior to the "annuity starting date," which
date shall be the first day of the first period in which an
amount is payable as an annuity or, if such benefit is not
payable as an annuity, the first day on which the Participant
may begin to receive a distribution from the Plan.
(e) The Administrator shall provide to each Participant, not more
than ninety (90) days prior to the commencement of benefits, a
written explanation of:
(1) the terms and conditions of the qualified joint and
survivor annuity or life annuity;
(2) the Participant's right to waive such applicable
annuity and the effect of such waiver;
(3) the rights of the Participant's spouse regarding the
required consent to an election to waive the
qualified joint and survivor annuity; and
(4) the right to make, and the effect of, a revocation of
an election to waive the applicable annuity.
(f) Notwithstanding the foregoing, the provisions of this Section
shall not apply if the vested balance of the Participant's
Account subject to the provisions of this Section does not
exceed $3,500.
7.10 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY.
Notwithstanding the foregoing provisions of this Article Seven, the
provisions of this Section shall apply only to the portion of a
Participant's Account, if any, derived from funds transferred from the
Vector Research Company, Inc. Profit Sharing and/or Pension Plans.
(a) If a Participant dies before distribution of benefits has
commenced and is survived by his spouse, the portion of his
vested Account balance subject to the provisions of this
Section 7.10 shall be applied to the purchase of an annuity
for the life of the Participant's surviving spouse.
(b) The Participant may elect to waive such survivor annuity death
benefit during the period commencing on the first day of the
Plan Year in which the Participant attains age thirty-five
(35) (or the date he terminates employment, if earlier) and
ending on the date of his death. Any such election, however,
shall not take effect unless it is accompanied by the written
consent of the Participant's spouse, which consent
acknowledges the effect of such election and is witnessed by a
Plan representative or a notary public. A Participant who will
not yet attain age thirty-five (35) as of the end of any
current Plan Year may make a special qualified election to
waive the qualified pre-retirement survivor annuity for the
period beginning on the date of such election and ending on
the first day of the Plan Year in which the Participant will
attain age thirty-five (35). Such election shall not be valid
unless the Participant receives a written explanation of the
qualified pre-retirement survivor annuity in such terms as are
comparable to the explanation required under Section 7.9(c).
Qualified pre-retirement survivor annuity
3
<PAGE> 4
coverage shall be reinstated automatically as of the first day
of the Plan Year in which the Participant attains age
thirty-five (35). Any new waiver on or after such date shall
be subject to the full requirements of this Section .
The election to waive such survivor annuity death benefit must
be made in writing in a form acceptable to the Administrator
and must include the Participant's designation of a
Beneficiary. The designation of a Beneficiary may not be
changed unless a new consent is signed by the Participant's
spouse.
Following the death of the Participant, the Participant's
surviving spouse may elect to waive the survivor annuity death
benefit. In the event of such an election, hereunder, any
death benefit derived from the portion of the Participant's
Account, otherwise subject to the provisions of this Section
7.10, shall be paid to the Participant's surviving spouse or
other Beneficiary in accordance with the provisions of Section
7.1.
(c) The Administrator shall furnish to each Participant, subject
to the provisions of this Section 7.10, a written explanation
of: (1) the terms and conditions of the survivor annuity; (2)
the Participant's right to make, and the effect of, an
election to waive the survivor annuity, and to revoke such
election; and (3) the right of the Participant's spouse to
prevent such an election by withholding the necessary consent.
Such explanation shall be provided to the Participant within
the period beginning on the later of the first day of the Plan
Year in which the Participant attains age thirty-two (32) and
ending on the last day of the Plan Year preceding the Plan
Year in which the Participant attains age thirty-five (35), or
within a reasonable period after the Participant commences
participation in the Plan, or after the Participant separates
from Service if the Participant has not attained age
thirty-five (35) at the time of his separation from Service.
For purposes of the preceding paragraph, a "reasonable period" shall
mean the end of the two (2)-year period beginning one (1) year prior to
the date the applicable event occurs, and ending one (1) year after
that date. In the case of a Participant who separates from Service
before the Plan Year in which age thirty-five (35) is attained, notice
shall be provided within the two (2) year period beginning one (1) year
prior to separation and ending one (1) year after separation. If such a
Participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
Notwithstanding the foregoing, the provisions of this Section shall not
apply if the vested balance of the Participant's Account subject to the
provisions of this Section does not exceed $3,500.
4. Section 8.1 of the Plan shall be amended by adding the following
paragraph to the conclusion of said Section:
Notwithstanding the foregoing provisions of this Section 8.1, if the
Participant requesting a loan from the Plan is married, and if any
portion of the Participant's loan shall consist of amounts transferred
from the Vector Research Company, Inc. Profit Sharing and/or Pension
Plans, no such loan shall be extended without the written and notarized
consent of the Participant's spouse.
4
<PAGE> 5
5. Sections 8.2 and 8.3 of the Plan shall be amended to read in their
entirety as follows:
8.2 HARDSHIP DISTRIBUTIONS. In the case of a financial hardship
resulting from a proven immediate and heavy financial need, a
Participant may receive a distribution not to exceed the lesser of (i)
the vested value of the Participant's Account (without regard to any
fail-safe contributions made under Article Ten, any income allocable to
his elective deferrals earned after December 31, 1988, and any amounts
transferred from the Vector Research Company, Inc. Profit Sharing
and/or Pension Plans in connection with the merger of such plan(s))
determined as of the Valuation Date immediately preceding such
withdrawal request, or (ii) the amount necessary to satisfy the
financial hardship. The amount of any such immediate and heavy
financial need may include any amounts necessary to pay Federal, state
or local income taxes or penalties reasonably anticipated to result
from the distribution. Such distribution shall be made in accordance
with nondiscriminatory and objective standards consistently applied by
the Administrator. Hardship distributions under this Section shall be
deemed to be the result of an immediate and heavy financial need if
such distribution is to (a) pay expenses for medical care (as described
in Section 213(d) of the Code) previously incurred by the Participant,
the Participant's spouse, or any dependents of the Participant (as
defined in Section 152 of the Code), or to permit the Participant, the
Participant's spouse, or any dependents of the Participant to obtain
such medical care, (b) purchase the principal residence of the
Participant (excluding mortgage payments), (c) pay tuition and related
educational fees for the next twelve (12) months of post-secondary
education for the Participant, Participant's spouse, or any of the
Participant's dependents or (d) prevent the eviction of the Participant
from his principal residence or foreclosure on the Participant's
principal residence. In addition, any hardship distribution hereunder
shall only be made provided that the funds for such hardship are not
available from other financial resources of the Participant, the
Participant's spouse or the Participant's children. Distributions paid
pursuant to this Section shall be deemed to be made as of the Valuation
Date immediately preceding the hardship distribution, and the
Participant's Account shall be reduced accordingly.
The provisions of this Section (relating to hardship distributions) are
intended to comply with Treasury Regulations issued under Section
401(k) of the Code, and shall be so interpreted.
8.3 WITHDRAWALS AFTER AGE 59-1/2. After attaining age fifty-nine and
one-half (59-1/2), a Participant, by giving written notice to the
Administrator, may withdraw from the Plan a sum (a) not in excess of
the credit balance of his vested Account as of the Valuation Date
preceding such notice (without regard to any amounts transferred from
the Vector Research Company, Inc. Profit Sharing and/or Pension Plans
in connection with the merger of such plan(s)) and (b) not less than
such minimum amount as the Administrator may establish from time to
time to facilitate administration of the Plan. Any such withdrawals
shall be made in accordance with nondiscriminatory and objective
standards consistently applied by the Administrator.
6. Except as hereinabove amended, the provisions of the Plan shall
continue in full force and effect.
5
<PAGE> 6
IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has caused
this Amendment to be executed on the 12th day of August , 1996.
ANALYSIS & TECHNOLOGY, INC.
By: /s/ David M. Nolf
--------------------------------------
David M. Nolf
Executive Vice President
<PAGE> 1
Exhibit 11
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
FOR THE QUARTERS AND SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------ -----------------
Primary: 1996 1995 1996 1995
- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares
outstanding 2,339,817 2,405,298 2,343,680 2,390,258
Net effect of dilutive stock
options based on the treasury
stock method using the
ending market price 71,210 94,384 73,039 82,787
---------- ---------- ---------- ----------
Total 2,411,027 2,499,682 2,416,719 2,473,045
========== ========== ========== ==========
Net earnings $ 849,559 $ (231,161) $1,642,306 $ 482,954
========== ========== ========== ==========
Earnings per common and
common equivalent share $0.35 $(0.09) $0.68 $0.20
========== ========== ========== ==========
Fully Diluted:
- -------------
Weighted average shares
outstanding 2,339,817 2,405,298 2,343,680 2,390,258
Net effect of dilutive stock
options based on the treasury
stock method using the
ending market price 89,251 112,045 89,394 110,928
---------- ---------- ---------- -----------
Total 2,429,068 2,517,343 2,433,074 2,501,186
========== ========== ========== ==========
Net earnings $ 849,559 $ (231,161) $1,642,306 $ 482,954
========== ========== ========== ==========
Earnings per common and
common equivalent share $0.35 $(0.09) $0.68 $0.20
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000310876
<NAME> ANALYSIS AND TECHNOLOGY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 2,179
<SECURITIES> 0
<RECEIVABLES> 25,187
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,052
<PP&E> 33,152
<DEPRECIATION> 19,153
<TOTAL-ASSETS> 59,482
<CURRENT-LIABILITIES> 11,690
<BONDS> 0
0
0
<COMMON> 292
<OTHER-SE> 39,334
<TOTAL-LIABILITY-AND-EQUITY> 59,482
<SALES> 0
<TOTAL-REVENUES> 67,995
<CGS> 0
<TOTAL-COSTS> 64,700
<OTHER-EXPENSES> 317
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 2,864
<INCOME-TAX> 1,222
<INCOME-CONTINUING> 1,642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,642
<EPS-PRIMARY> .68
<EPS-DILUTED> 0
</TABLE>
