<PAGE> 1
================================================================================
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED: MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
P.O. BOX 220
NORTH STONINGTON, CONNECTICUT 06359
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (860) 599-3910
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, NO
PAR VALUE
---------------
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ] [Added in Release No.
34-28869 (Paragraph 84,709), effective May 1, 1991, 56 F.R. 7242.]
The aggregate market value of the common stock held by shareholders
considered by the registrant for this purpose to be non-affiliates of the
registrant on June 19, 1996 was approximately $29,811,898, based upon the last
reported sales price of the common stock on the NASDAQ National Market System on
that date.
Number of shares of common stock, no par value, outstanding at June 19,
1996: 2,342,317
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are hereby incorporated herein by reference:
Certain information in Parts I and II of the Form 10-K is incorporated
by reference from the registrant's 1996 Annual Report to Shareholders.
Certain information in Part III of the Form 10-K is incorporated by
reference from the registrant's Proxy Statement for the 1996 Annual Meeting of
Shareholders to be held on August 13, 1996.
================================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS.
General
Analysis & Technology, Inc. ("A&T") was incorporated in Connecticut in
1969. A&T initially provided tactical analysis to the Office of Naval Research
and sonar analysis to the Naval Underwater Systems Center, now known as the
Naval Undersea Warfare Center. During the past twenty-seven years, A&T and its
subsidiaries ("the Company") have expanded the Company's business to provide
engineering services, interactive multimedia training systems, and information
technology services for the military, civil government agencies, and private
industry.
The Company is implementing a strategic plan to continue building its
business with the Department of Defense (DOD) while transferring its expertise
in interactive multimedia training systems and information technologies to
additional government and commercial markets. In recent years, the Company has
created several new business units through internal development and acquisition
in connection with the implementation of this strategic plan, and may create or
acquire additional business units in the future.
A&T has the following wholly owned subsidiaries:
- Applied Science Associates, Inc. ("ASA"), which designs and
implements training programs for private industry and government;
- Integrated Performance Decisions, Inc. ("IPD"), which develops and
implements performance decision software products for U.S. Navy (the
"Navy") customers and provides software and information technology
products and services for commercial customers. In fiscal 1995, IPD
formed a Canadian subsidiary, Numerical Decisions Group Inc., to
perform similar work, primarily for the Canadian Government; and
- Analysis & Technology Australia Pty. Ltd. and Analysis & Technology
International Corporation, each of which provides training systems
to international markets;
<PAGE> 3
2
- Prism-Dae, Inc. and Continental Dynamics, Inc. ("CDI") which are
companies that held contracts with the Federal Office of Personnel
Management for services in government training and information
resource management. These contracts have been transferred to A&T
and the companies are in the process of being dissolved.
The corporate office of the Company is located in North Stonington,
Connecticut. The Company presently employs 1,371 full-time employees at 25
offices in 12 states, Australia and Canada.
In February 1986, the Company conducted an underwritten public offering
of its common shares. Since that time, the Company's stock has traded on the
NASDAQ National Market under the symbol AATI.
Products and Services
The Company provides professional and technical services to commercial
and government clients. The three main categories of the Company's business are:
engineering services, interactive multimedia training systems, and information
technology. Although separately described below, these categories overlap and
should not be considered separate and distinct areas of business. During the
past year, the Company reorganized its operations along product lines. The
descriptions set forth below reflect that reorganization.
ENGINEERING SERVICES
The Company provides engineering services primarily for the Navy and,
to a lesser extent, for other military and government agency customers. The
Company's engineering services are provided in the general areas of engineering
technologies and system technologies. Each area is described below.
<PAGE> 4
3
Engineering Technologies
The Company provides design, analytical and experimental
studies in several engineering technology areas. These are performed
primarily for the Navy and to a lesser extent for commercial customers.
Company engineers and scientists support the Navy in
engineering technologies related to the development of submarines and
surface ships. The Company provides services in acoustics, applied
mechanics, and naval architecture. In acoustics, the company provides
the full spectrum of noise control engineering, structural acoustic
analysis, and experimental acoustics support. Applied mechanics
engineers design, analyze, and test a wide variety of structures and
equipment in a multitude of dynamic environments with particular
emphasis on ship survivability. The company's naval architects offer
professional naval architecture and marine engineering services for the
complete range of ships, submarines and submersibles, advanced marine
vehicles, small craft, and yachts. They also develop and market naval
architectural software packages, as well as custom software
applications for the commercial marine field.
Company engineers design, develop, implement, and analyze
signal processing algorithms related to submarine and surface ship
combat systems. The algorithms are developed to estimate target range,
bearing, course, speed, and depth, as well as other variables such as
frequency of the acoustic signal. Company engineers also develop,
implement, and verify digital signal processing systems for both
military and commercial customers. The work involves active and passive
processing systems, custom high-speed spectrum analyzers and other
software systems for commercial off-the-shelf (COTS) hardware. Company
software and hardware engineers provide complex electromechanical
systems from research and development through installation and testing
for both military and commercial customers.
System Technologies
The primary areas of emphasis within system technologies
include requirements analysis, systems engineering and integration,
test and evaluation, training and documentation, and in-service
engineering support.
<PAGE> 5
4
Requirements analysis includes assessment of mission
requirements, systems performance criteria, specifications review and
development, and trade-off analysis to determine cost versus
performance benefits.
Systems engineering and integration tasks typically include
systems design; prototype development, including modeling and
simulation; acquisition support; reliability, maintainability, and
availability trade-offs; hardware and software systems development to
support combat systems operability; and new technology planning and
implementation.
As a part of test and evaluation, Company engineers and
analysts are involved in the design and development of laboratory and
at-sea test procedures to assess functional and operational performance
at the hardware, software, and integrated systems level. Duties include
dockside and at-sea test conduct, data acquisition, and performance
analysis of test data.
In-service engineering support addresses the life cycle
maintenance and support of deployed systems. Company engineers and
technicians are involved in equipment installation and check-out;
configuration management; integrated logistics support; system upgrades
and modifications; systems grooming, repair, rebuilding and
refurbishing at-sea, dockside, and at company facilities.
Company instructional designers and engineers support a broad
range of military training needs including training requirements
analysis and curricula development for enlisted and officer personnel
addressing maintenance, operability and tactics; training conduct
ashore and at-sea; and personnel performance evaluation and analysis.
Closely aligned to the Company's training tasks is the
development and revision of tactical documentation for the Navy's
submarine, surface ship, and air commands. Much of this work involves
planning and evaluating exercises at sea; deriving information on
system, platform, and battle group performance; and incorporating this
information into applicable tactical doctrine.
In response to acquisition reform initiatives within the DOD,
Company engineers are involved in incorporating COTS technology into
naval systems.
<PAGE> 6
5
These efforts include COTS software applications development, hardware
fabrication, and prototype, pre-production, and limited production
custom product development to support rapid COTS systems introduction
to the fleet.
INTERACTIVE MULTIMEDIA TRAINING SYSTEMS
The Company employs interactive multimedia technology in designing,
developing, and implementing instructional training and delivery systems, and
performance support systems for defense, civil government, and commercial
customers. Interactive multimedia technology is computer-based and includes
computer-generated graphics and animation, full motion video and high-fidelity
audio.
Instructional training and delivery systems employ interactive
multimedia technology in a stand-alone, networked, or embedded systems
environment. These systems allow students to proceed at their own pace, at their
own work site and, in general, achieve training objectives more quickly than
with non-interactive forms of training. The Company develops applications
software, computer-based networks, and enterprise-wide data bases to meet
customer training objectives using the combined talents of it's instructional
designers, courseware application development programmers and software/systems
engineers.
Performance support systems employ interactive multimedia technology
including interactive electronic documentation to provide job aids, just-in-time
training, and on-line reference materials for engineering design, equipment
maintenance, and systems operability support. Company training specialists and
engineers design, develop, and implement performance support systems for both
commercial and military applications in order to improve productivity and
leverage work experience and system knowledge across the workforce.
The Company's training organization currently includes personnel within
the Company's defense-related operations and in the Company's subsidiary, ASA.
INFORMATION TECHNOLOGY
The Company provides information technology products and services
including software development, communications and connectivity, modeling and
<PAGE> 7
6
simulation, and data base management. The Company assists commercial customers
to implement groupware and document imaging and retrieval solutions.
Company engineers and programmers create real-time, object-oriented
applications software in an open architecture environment. They design and
develop software for the event-triggered computation and analysis of
mission-critical data. They also develop, integrate, document, and test software
and develop tactical performance aids for submarines, surface ships, aircraft,
and land-based facilities. This software supports real-time data collection,
performance modeling, data analysis, and rapid decision-making.
Communications and connectivity services involve distributing real-time
data across geographically dispersed sites to support decision making. For
example, Company-developed systems are used to process satellite meteorological
data with the primary goal of forecasting weather systems that would adversely
affect operations in and around a conflict area.
In addition, Company-developed modeling and simulation is used to train
combatants prior to exposure to actual operational environments. The training
materials include three dimensional graphical images that run on
Company-designed systems using COTS hardware and software.
Database management services are provided to support complex systems,
programs, and organizations for the Navy and other customers. Computerized
databases are developed to support acquisition strategy development, risk
analysis, decision making and to fulfill extensive reporting requirements They
also support program planning and scheduling, engineering change assessment and
control, inventory control, equipment maintenance, financial control and budget
justification, and documentation libraries.
A&T's IPD subsidiary is the largest provider of information technology
services within the Company.
Automation Software Incorporated ("ASI"), the Company's joint venture
with Brown & Sharpe Manufacturing Company, provides software to the precision
measurement (metrology) industry for data collection and analysis and to the
factory automation market for inspection and manufacturing operations.
<PAGE> 8
7
Contracts
The Company generates a substantial amount of its revenue from
contracts with agencies of the U.S. Government (the "Government"). Government
contracts obtained by the Company are generally competitive in nature, and are
usually awarded on the basis of price and technical capability, and may be
awarded to more than one company. Contracts typically provide for either a
general range of tasks to be performed over a number of years or for specific
services to be provided over a shorter period. While task-type contracts have
an absolute dollar ceiling, the customer has complete discretion to allocate the
funds among the range of contracted tasks. Additionally, many of the Company's
contracts require the issuance of delivery orders, the periodic addition of
funds, or the exercise of annual options by the customer.
The Company's contracts with the Government typically are structured as
one of the following: (i) cost-reimbursement; (ii) time-and-materials; or (iii)
fixed-price.
Under cost-reimbursement contracts, the customer reimburses the Company
for contracted costs within cost categories permitted by Government regulations.
The Company is paid a fee in addition to its costs. Reimbursable costs include
direct labor and other direct costs, allocated overhead, and general and
administrative costs, but exclude interest expense, donations, and certain other
costs. Indirect costs are reimbursed at the lower of actual or estimated costs,
and if the Company revises its estimated costs, the revised cost estimates will
be applied prospectively to previously executed cost-reimbursement contracts.
The fee is either fixed at the time of award (fixed fee), at a fixed hourly rate
paid as hours of service are provided (hourly fee), or is awarded based on
performance, at the sole discretion of the Government (award fee). The majority
of the Company's cost-reimbursement contracts are either cost plus fixed fee or
cost plus hourly fee contracts. The contracts may either require completion of
defined tasks or delivery of a specific number of hours of service. The current
trend continues to be to contracts of the latter type. The total of the cost and
the fee cannot exceed the ceiling set forth in the contract. If a contracted
task has not been completed or the specific number of hours of service have not
been delivered at the time the authorized cost is expended, the Company may be
required to complete the work and will be reimbursed for the additional costs
but will not receive an additional fee or the fee may be prorated
proportionately to the number of hours actually provided. To date, the impact of
such revisions has not been material.
<PAGE> 9
8
Under time-and-materials contracts, the customer pays a fixed rate per
hour for a specified number of hours. These fixed rates are intended to cover
salary costs attributable to work performed on the contract and related indirect
expenses, as well as a fee. To the extent the Company's costs differ from those
assumed in the fixed rate, the Company may experience higher or lower profit
margins than anticipated, or may realize a loss. The Company is reimbursed
separately for other direct costs without any profit or fee.
Under fixed-price contracts, the customer pays a specific price for
services or products. The Company bears the risk that increased or unexpected
costs may reduce its profit or cause it to sustain a loss. Conversely, when
costs are lower than expected, the Company may realize additional profit.
The revenue and earnings of the Company could be substantially affected
by changes in Government procurement or fiscal policies, by reductions in
Government expenditures for services or products provided by the Company, or by
organizational changes within the Government or Navy which impact the Company's
customer base. Additionally, procedural changes may impact the timing of the
receipt of contracts, related funding, and cash payments by the Company.
Government contracts are subject to termination at the convenience of
the Government or for default. If a Government contract were to be terminated
for convenience, the Company would be reimbursed for its allowable costs to the
date of termination and be paid a proportionate amount of the stipulated profits
or fees attributable to the work actually performed. During the entire history
of the Company, the Government has never terminated any of the Company's
contracts for default.
The books and records of the Company are subject to audit by the
Defense Contract Audit Agency ("DCAA"), which can result in adjustments to
contract costs and fees as well as penalties and interest costs. The Government
retains a portion of the fee earned by the Company until contract completion and
audit by the DCAA. See Note 4 of "Notes to Consolidated Financial Statements" on
page 24 of the Company's 1996 Annual Report to Shareholders. Audits of A&T by
DCAA have been completed for all fiscal years through 1994 without material
adjustments. In the opinion of management, the audits for fiscal years 1995 and
1996 will not result in adjustments having a material adverse effect on the
Company's financial position or results of operations. However, no assurances
can be given that future material adjustments will not be required.
<PAGE> 10
9
Products developed by the Company under Government contracts are the
property of the Government.
The Company's commercial contracts are generally in its interactive
multimedia training systems and information technologies areas. These contracts
typically are structured as time-and-materials or fixed-price.
Time-and-materials and fixed-price contracts in the commercial environment are
similar to those types of contracts with the Government as described above.
The following table gives the approximate percentages of the Company's
revenues realized from the three basic contract types during the periods
indicated for its continuing operations:
<TABLE>
<CAPTION>
Fiscal Years Ended March 31,
----------------------------
Contract Type 1994 1995 1996
- ------------- ---- ---- ----
<S> <C> <C> <C>
Cost-Reimbursement 70% 71% 76%
Time-and-Materials 11% 6% 4%
Fixed-Price 19% 23% 20%
---
=======================================
Total Company 100% 100% 100%
</TABLE>
The Company often commits to provide non-labor items such as purchased
materials, computer services, travel, and work subcontracted as part of its
contract services. Non-labor items as a percentage of revenue from continuing
operations in fiscal 1994, 1995 and 1996 were approximately 24.8%, 23.5%, and
21.1%, respectively. The Company typically earns lower fees on non-labor items
than it does on labor services. The Company sometimes commits to subcontract a
portion of its work to other companies to obtain special services or materials
when the Company believes that such action will give it a competitive advantage.
Subcontract costs are included in the non-labor percentages provided above.
Subcontracting expenses as a percentage of revenue from continuing operations
were approximately 10.7%, 9.9%, and 7.7% in fiscal 1994, 1995, and 1996
respectively. In addition, the Company receives subcontracts from other
companies on which it earns a fee comparable to a fee earned on work performed
directly for the Government. In fiscal 1994, 1995, and 1996, the Company
received subcontracted work
<PAGE> 11
10
from other companies for amounts representing approximately 12.4%, 9.7%, and
10.4% of its revenue, respectively.
Revenue under cost-reimbursement, time-and-materials, and fixed-price
contracts, including applicable fee or profit, are recognized concurrently with
costs incurred thereunder. Certain amounts not yet billed to customers are
included in recognized revenues and in contract receivables on the balance
sheet. See Note 4 of "Notes to Consolidated Financial Statements" on page 24 of
the Company's 1996 Annual Report to Shareholders.
Backlog
The Company's total backlog represents the aggregate contract revenue
remaining to be earned by the Company at a given time over the life of its
contracts. When more than one company is awarded contracts for a given work
requirement, the Company includes in total backlog its estimate of the contract
revenue it expects to earn over the remaining life of the contract. Funded
backlog consists of the aggregate revenue remaining to be earned at a given time
under (a) contracts for which funding has been contractually committed to the
Company in writing by a procuring Government agency; (b) requests to the Company
from a procuring Government agency to commence work before execution of the
written authorization under which the work is to be done; and (c) contracts with
non-Government customers. Unfunded backlog is the difference between total
backlog and funded backlog.
Funding under the Company's contracts with the Government is dependent
upon congressional approval of program level funding and contracting agency
approval of the funding for the Company's work. There can be no assurance that
any program or contract will be funded in its entirety. During fiscal 1996,
total backlog varied between $405.7 million and $462.2 million. During the year,
$6.3 million of backlog expired that was not funded. Backlog at March 31, 1996
was $458.8 million, a 14.2% increase from $401.6 million a year ago. The funded
and unfunded backlog of the Company varies from time to time because delivery
orders, new contract awards, and extensions of existing contracts are executed
at various dates throughout the year with varying periods of performance. The
Company believes that year-to-year comparisons of backlog are not necessarily
indicative of any revenue trends but may be indicative of the Company's ability
to be competitive in its marketplaces.
<PAGE> 12
11
For commercial contracts, total backlog and funded backlog are
generally the same, i.e., the contracts are usually fully funded.
The Company's total backlog at March 31, 1994, 1995, and 1996 was as
follows:
<TABLE>
<CAPTION>
March 31,
(in thousands)
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Funded Backlog $ 33,817 $ 33,583 $ 29,056
Unfunded Backlog 338,992 367,996 429,711
----------------------------------------------
Total $372,809 $401,579 $458,767
</TABLE>
Substantially all of the funded backlog at March 31, 1996 is expected to
be expended by the end of the Government's current fiscal year on September 30,
1996.
Customers
The Navy is the Company's principal customer, accounting for
approximately 80% of the Company's revenue. Within the Navy, the Company does
business with approximately 20 different contracting agencies and in fiscal
1996, the Company had approximately 90 contracts with ceilings in excess of
$500,000. The Company provides its services and products to numerous Navy
customers including: (i) several Navy laboratories, such as the Naval Undersea
Warfare Center; Coastal Systems Station, Dahlgren Division, Naval Surface
Warfare Center; Carderock Division, Naval Surface Warfare Center; and the Naval
Research Laboratory, each of which performs research, development, and test and
evaluation functions for the Navy; (ii) acquisition commands which are
responsible for procurement of ships, aircraft, weapons, major systems and
equipment, such as the Naval Sea Systems Command; and (iii) operational commands
which operate and maintain the ships, aircraft, weapons, and systems, such as
Commander-in-Chief, U.S. Atlantic Fleet and Commander Submarine Force,
Atlantic. The degree of effect, if any, on the Company's future revenues created
by any changes in customer operations due to facility closings or relocations
cannot be determined at this time.
<PAGE> 13
12
The Company also has contracts with civil government customers. The
principal civil government customer is the Office of Personnel Management which
contracts with the Company for training services. Working through the Office of
Personnel Management, the Company also provides training services to other
governmental entities.
Commercial customers tend to be large corporations which retain A&T for
custom system development. Examples include Nortel, Ameritech, and NYNEX.
Sales and Marketing
The Company's marketing activities relating to government contracts are
conducted by its professional and technical staff located in its various
offices. This decentralized approach enables the Company's customers to
communicate directly with the employees of the Company responsible for both
sales and work performance and aids the Company in maintaining an awareness of
customer needs, developing new business opportunities, and preparing project
proposals. These marketing activities are identified and coordinated through the
Company's strategic planning process, which includes the annual development and
monthly update of operating plans for each existing and prospective customer
organization. The corporate marketing office provides proposal development
guidance, information systems, and training; data on markets, competition, and
internal capabilities; marketing literature; and trade show coordination.
Commercial interactive multimedia systems applications are sold to a
wide range of clients in the telecommunications, pharmaceutical, financial, and
aerospace industries. Sales and marketing activities are conducted primarily
from offices in Pennsylvania, the Washington, D.C. area, Florida and
Connecticut.
Competition
The Company's business is very competitive. There are a substantial
number of large, diversified companies with greater financial resources and
larger technical staffs than those of the Company that are capable of rendering
services similar to those offered by the Company. The in-house capabilities of
the Company's governmental customers are also, in effect, in competition with
the Company since they may perform many of the types of services that might
otherwise be performed by the Company. In addition, there are many smaller
companies which have developed specialized capabilities
<PAGE> 14
13
in areas similar to those of the Company. As the markets in which the Company
operates continue to mature, other companies continue to be attracted to them.
It is not possible to predict the future intensity of competition which
the Company will encounter as a result of changing economic or competitive
conditions, customer requirements, or technological developments. However, to
the extent that defense budgets are reduced, competition for remaining defense
business can be expected to increase. The principal competitive factors for the
Company's businesses are technical capability, price, quality of services and
products, responsiveness, record of delivering on time and within budget, and
reputation and familiarity of the Company and its personnel with customers.
While the Company's ability to compete in defense markets is not dependent on
intangible property rights such as proprietary processes, patents, or licenses,
these factors do affect its ability to compete in commercial areas.
Human Resources
The principal resource of the Company is its 1,371 full-time employees,
approximately 1,096 of whom are professional and technical personnel. Because
the Company is diversifying by transferring its core competencies to new
markets, the make-up of the professional and technical staff of the Company is
similar for Government and commercial work and includes engineers, scientists,
mathematicians, educators, analysts, and programmers.
The Company has no collective bargaining units and considers its
employee relations to be excellent.
Government Requirements
The Company's ability to maintain its current base of defense and other
Government business is dependent on providing employees and facilities which
meet rigorous Government requirements. Each facility has a continuing program to
meet applicable Government requirements and to maintain employee awareness of
the paramount need for compliance.
<PAGE> 15
14
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
Except for historical matters, the matters discussed in this Form 10-K
are forward-looking statements that involve risks and uncertainties. The Company
wishes to caution readers that in addition to the important factors described
elsewhere in this Form 10-K, the factors listed below, among others, sometimes
have affected, and in the future could affect, the Company's actual results and
could cause the Company's actual consolidated results during fiscal year 1997,
and beyond, to materially differ from those contained in or indicated by any
forward-looking statements made by, or on behalf of, the Company. There may be
additional factors not enumerated which could have a similar impact, including
factors which affect business generally, such as economic conditions.
The factors identified elsewhere in this Form 10-K include but are not
limited to those described under the following headings in this Item 1: (a)
"Contracts," concerning the risks of engaging in the government contracting
business; (b) "Backlog," about the Company's dependence upon congressional and
contracting agency approvals; (c) "Customers," concerning the Company's
dependence on the Navy as the Company's principal customer; and (d)
"Competition," concerning the competitive nature of the Company's business.
Additional important factors include:
(a) Budget reductions and Navy program funding priorities: total
planned spending by the Navy, the Company's principal customer, has fallen 34%
in the past five years. The effect of this reduction in overall spending was
exacerbated in the past year by uncertainty in Department of Defense program
funding priorities and reductions in submarine torpedo programs. While the
business environment appears to have improved in recent months, the Company
continues to be susceptible to changes in the Government's requirements and
priorities.
(b) Product development and acceptance: the development of new customer
purchased products is complex and involves many risks. The Company's results
could be adversely affected by such factors as development delays, increases in
costs, and delays in customer purchases.
<PAGE> 16
15
(c) New ventures: the Company from time to time enters into new
ventures, including some with other companies. While the Company believes that
these new ventures are strategically important, there are substantial
uncertainties associated with the development of new services, products, and
technologies. Initial timetables for development and introduction of products
may not be achieved. Cost and performance targets may not be feasible. External
factors, such as development of competitive alternatives or government
regulation, may cause anticipated markets not to develop or to evolve in
unexpected directions.
Certain portions of the Company's Annual Report to Shareholders
including Management's Discussion and Analysis are incorporated by reference
into this Form 10-K. There are additional important factors included therein,
including those beginning on page 15 that sometimes have affected, and in the
future could affect, the Company's actual results and could cause the Company's
actual consolidated results during fiscal year 1997, and beyond, to differ
materially from those expressed in any forward-looking statement made by, or on
behalf of, the Company.
ITEM 2. PROPERTIES.
The Company owns its corporate office building complex on approximately
19 acres of land in North Stonington, Connecticut. The complex includes 60,330
square feet of office space. The Company also owns buildings in New London,
Connecticut which provide 50,220 square feet of office and shop space, and in
Butler, Pennsylvania which provides 53,000 square feet of office and storage
space. The Company presently leases to a tenant approximately 13,000 square feet
of its Butler office space.
The Company leases office, shop, or warehouse space in 30 locations in
11 states, Australia and Canada totaling approximately 225,000 square feet.
Approximately 12,000 square feet of leased office space is subleased to third
parties. A summary of the Company's principal leases is as follows:
<PAGE> 17
16
<TABLE>
<CAPTION>
Square
Location Footage Lease Expiration
- -------- ------- ----------------
<S> <C> <C> <C>
A&T
Middletown, R.I. One Corporate Place 45,103 06/30/99
Arlington, VA Jefferson Davis Highway 33,958 09/05/98
Chesapeake, VA Greenbrier Circle 22,912 02/28/98
San Diego, CA Camino Del Rio North 16,468 08/31/99
Mystic, CT 240 Oral School Road 12,050 07/12/97
</TABLE>
The Company believes its facilities and equipment are in good condition
and adequate for its current business needs. The Company has not experienced,
and does not anticipate experiencing, any difficulty in obtaining satisfactory
facilities.
For additional information on the Company's leases and rental expenses
thereunder, see Note 11 of "Notes to Consolidated Financial Statements" on page
27 of A&T's 1996 Annual Report to Shareholders.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not engaged in any legal proceeding which is material to
the business or financial condition of the Company nor is the property of the
Company subject to any such proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1996.
<PAGE> 18
17
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of the executive officers of the Company as of June
14, 1996 are set forth below, together with the primary positions held by each
such person in A&T or its subsidiaries:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Gary P. Bennett 54 President, Chief Executive Officer, and
Director of A&T
David M. Nolf 53 Executive Vice President, Chief Financial and
Administrative Officer, Secretary, and
Director of A&T
Jay W. Ryerson 61 Executive Vice President and Chief
Operating Officer of A&T
Gerald Snyder 51 Senior Vice President, Planning, and
Corporate Manager of Finance and
Management Information Systems of A&T
Joseph M. Marino 46 Senior Vice President,
Business Unit Manager
Richard P. Mitchell 48 Senior Vice President, Acquisitions, and
General Manager of Fleet Support Center of
A&T
V. Lehman Woods 48 Senior Vice President, Contracts
Robert M. Gorman 54 Senior Vice President and General Manager
of Engineering Technology Center of A&T
James R. Lavoie 49 Senior Vice President and President of
Integrated Performance Decisions, Inc.
</TABLE>
<PAGE> 19
18
Officers of A&T serve until the annual Board of Directors meeting
following the Annual Meeting of shareholders or until their successors are
chosen and qualify, or until earlier resignation or removal.
Gary P. Bennett has been employed by A&T since 1972. He was elected
President in May 1991 and served as Chief Operating Officer from 1984 until he
was named Chief Executive Officer in November 1992. He was an Executive Vice
President from 1978 to 1991. Mr. Bennett has been a Director of A&T since 1979.
David M. Nolf has been employed by A&T since 1971 and served as Senior
Vice President, Finance and Administration from 1979 until May 1985, when he was
elected to serve as Executive Vice President, Chief Financial and Administrative
Officer and Secretary of A&T. Mr. Nolf has been a Director of A&T since 1976 and
served as Chairman of the Board of Directors from 1978 to May 1985.
Jay W. Ryerson has been employed by A&T since 1972. Mr. Ryerson served
as department manager from 1982 until he became division manager in 1985. He
became a sector manager and was elected a Vice President in 1987, a Senior Vice
President in 1989, and was elected Executive Vice President in 1992. In November
1992 he became A&T's Chief Operating Officer.
Gerald Snyder has been employed by A&T since 1984. Mr. Snyder served as
Corporate Manager of Finance and Budgets from 1984 until he was elected Vice
President, Planning in 1987. In 1991 he was elected Senior Vice President,
Planning.
Joseph M. Marino has been employed by A&T since 1980. Mr. Marino served
as a department manager from 1984 until 1987 when he became a division manager.
He was elected Vice President in 1991 and became an operations center manager
heading up the New England Operations Center in 1992. In 1994 he was elected
Senior Vice President. He is the business unit manager of A&T's System
Technologies business unit and the business unit manager of A&T's Training
Technologies business unit.
Richard P. Mitchell has been employed by A&T since 1982. Mr. Mitchell
served as a department manager from 1984 until 1989 when he became a corporate
administrator and cost center manager. He assumed responsibilities for the
Chesapeake division of A&T in 1990 and was named Vice President in 1991. In 1994
he was elected
<PAGE> 20
19
Senior Vice President. In 1995, he was assigned responsibility for the Company's
acquisition program.
V. Lehman Woods has been employed by A&T since 1977. Mr. Woods served
as a department manager from 1981 until he became Vice President, Contracts in
1985. In 1991 he was elected Senior Vice President, Contracts.
Robert M. Gorman joined A&T in 1989 as part of A&T's acquisition of
Acoustics and Mechanics, Inc. Mr. Gorman served as general manager of A&T's AMI
business unit and became general manager of the Engineering Technology Center of
A&T upon its formation in 1992. He served as Vice President until his election
to Senior Vice President in 1991.
James R. Lavoie has been employed by A&T since 1979. Mr. Lavoie served
as department manager from 1982 until his promotion to division manager in 1985.
He was elected Vice President and sector manager in 1987 and was elected to
Senior Vice President in 1993. He became the President of A&T subsidiary, IPD
when it was formed in 1993. He is also the business unit manager of A&T's
Information Technologies business unit.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Pursuant to General Instruction G to Form 10-K, the information
required by this Item is incorporated by reference to information set forth
under Corporate Information in the Company's 1996 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA.
Pursuant to General Instruction G to Form 10-K, the information
required by this Item is incorporated by reference to information set forth
under Selected Financial Data: A Five-Year Summary in the Company's 1996 Annual
Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
<PAGE> 21
20
Pursuant to General Instruction G to Form 10-K, the information
required by this Item is incorporated by reference to information set forth
under Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's 1996 Annual Report to Shareholders.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pursuant to General Instruction G to Form 10-K, the information
required by this Item is incorporated by reference to information set forth in
the Consolidated Financial Statements and notes on pages 18 through 28 of the
Company's 1996 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pursuant to General Instruction G to Form 10-K, the information
required by this Item with respect to directors is incorporated by reference to
the information set forth under Item 1. ELECTION OF DIRECTORS in the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held on August 13,
1996. Information concerning executive officers is set forth under Item 4A of
this Form 10-K pursuant to Instruction 3 to Item 401(b) of Regulation S-K.
<PAGE> 22
21
ITEM 11. EXECUTIVE COMPENSATION.
Pursuant to General Instruction G to Form 10-K, the information
required by this Item is incorporated by reference to information set forth
under the following headings: Compensation of Executive Officers; Option/SAR
Grants in Last Fiscal Year; Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values; and "Report of the Compensation Committee and the
Stock Option Committee on Executive Compensation" in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held on August 13, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Pursuant to General Instruction G to Form 10-K, the information
required by this Item is incorporated by reference to information set forth
under Security Ownership of Management and 5% Shareholders in the Company's
Proxy Statement for the Annual Meeting of shareholders to be held on August 13,
1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
Number in
1996
Annual
Report
------
(a) 1. Financial Statements 18
Independent Auditors' Report 28
<PAGE> 23
22
Consolidated Balance Sheets as of March 31, 1996 18
and 1995
Consolidated Statements of Earnings for Each of the 19
Years in the Three-Year Period Ended March 31, 1996
Consolidated Statements of Shareholders' Equity for Each 20
of the Years in the Three-Year Period Ended
March 31, 1996
Consolidated Statements of Cash Flows for Each of the 21
Years in the Three-Year Period Ended March 31, 1996
Notes to Consolidated Financial Statements 22
(a) 2. Financial Statement Schedules
No longer required.
(a) 3. Exhibits (* denotes filed herewith):
EXHIBIT
NUMBER
- ------
3(i) Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3A to the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended September 30, 1990).
3(ii) By-laws, Amended and Restated to February 6, 1993 (incorporated by
reference to Exhibit 3(ii) to the Registrant's Report on Form 10-K,
File No. 0-14161, for the year ended March 31, 1993).
4A Specimen Certificate of Common Stock (incorporated by reference to
Exhibit 4A to Amendment No. 1 to the Registrant's Registration
Statement on Form S-1, No. 33-2314), Articles 6 and 7 of the
Certificate of Incorporation and Article II, Article III, Sections 3
to 6, Article VI, and
<PAGE> 24
23
Article VIII of the By-laws (included in Exhibits 3(i) and 3(ii),
respectively).
4B Amended and Restated Revolving Credit and Term Loan Agreement
between Analysis & Technology, Inc. and Shawmut Bank Connecticut,
National Association formerly known as The Connecticut National
Bank, dated December 9, 1994 (incorporated by reference to Exhibit
4A to the Registrant's Report on Form 10-Q, File No. 0-14161 for the
quarter ended December 31, 1994).
4C Second Amendment to Revolving Credit and Term Loan Agreement and
Revolving Credit Note between Analysis & Technology, Inc. and Fleet
National Bank of Connecticut, formerly known as Shawmut Bank
Connecticut, National Association, dated November 29, 1995
(incorporated by reference to Exhibit 4 to the Registrant's Report
on Form 10-Q, File No. 0-14161 for quarter ended December 31, 1995).
4D(1) Open-End Mortgage Deed and Security Agreement, dated November 25,
1987, and related documents between Analysis & Technology, Inc. and
The Connecticut National Bank.
4E(1) Open-End Mortgage Deed and Security Agreement, dated May 30, 1986,
and related documents between Analysis & Technology, Inc. and The
Connecticut National Bank.
4F(1) Open-End Mortgage, dated March 8, 1978, and related documents of
Analysis & Technology, Inc. to Groton Savings Bank.
4G(1) Notes payable, due in monthly installments, with various interest
rates and maturity dates, secured by equipment.
10A Analysis & Technology, Inc. 1983 - 1986 Stock Option Plans, as
amended (incorporated by reference to Exhibits 28(b) through 28(g)
of the Registrant's Registration Statement on Form S-8, No.
33-17313).
10B Analysis & Technology, Inc. 1987 Stock Option Plan (incorporated by
reference to Exhibit A to Proxy Statement, dated July 6, 1987 of
Analysis & Technology, Inc.).
<PAGE> 25
24
10C Analysis & Technology, Inc. 1988 Stock Option Plan (incorporated by
reference to Exhibit A to Proxy Statement dated July 1, 1988 of
Analysis & Technology, Inc.).
10D Analysis & Technology, Inc. 1989 Stock Option Plan (incorporated by
reference to Exhibit A to the Proxy Statement dated July 3, 1989 of
Analysis & Technology, Inc.).
10E Analysis & Technology, Inc. 1990 Stock Option Plan (incorporated by
reference to Exhibit B to the Proxy Statement dated July 3, 1990 of
Analysis & Technology, Inc.).
10F Analysis & Technology, Inc. 1992 Stock Option Plan (incorporated by
reference to Exhibit A to Proxy Statement dated July 7, 1992 of
Analysis & Technology, Inc.).
10G Analysis & Technology, Inc. 1994 Stock Option Plan (incorporated by
reference to Exhibit A to Proxy Statement dated July 8, 1994 of
Analysis & Technology, Inc.).
10H Analysis & Technology, Inc. 1995 Stock Option Plan. (incorporated by
reference to Exhibit A to Proxy Statement dated July 7, 1995 of
Analysis & Technology, Inc.)
10I Amendments, dated June 30, 1989, to the Analysis & Technology, Inc.
1981 - 1986 Stock Option Plans (incorporated by reference to
Exhibits 19B through 19G to the Registrant's Report on Form 10-Q,
File No. 0-14161, for the quarter ended June 30, 1989).
10J Amendment, dated June 30, 1989, to the Analysis & Technology, Inc.
1987 Stock Option Plan (incorporated by reference to Exhibit 19H to
the Registrant's Report on Form 10-Q, File No. 0-14161, for the
quarter ended June 30, 1989).
10K Amendment, dated June 30, 1989, to the Analysis & Technology, Inc.
1988 Stock Option Plan (incorporated by reference to Exhibit 19I to
the Registrant's Report on Form 10-Q, File No. 0-14161, for the
quarter ended June 30, 1989).
<PAGE> 26
25
10L Amendment, dated December 1, 1994, to the Analysis & Technology,
Inc. Savings & Investment Plan effective January 1, 1995.
10M Amendment dated December 4, 1995, to the Analysis & Technology, Inc.
Savings & Investment Plan effective December 4, 1995, (incorporated
by reference to Exhibit 10 of the Registrant's Report on Form 10-Q,
File No. 0-14161, for the quarter ended December 31, 1995).
10N Amendment dated September 9, 1995, to the Analysis & Technology,
Inc. Savings & Investment Plan effective September 30, 1995
(incorporated by reference to Exhibit 10 of the Registrant's Report
on Form 10-Q, File No. 0-14161 for the quarter ended September 30,
1995).
10O Amended and Restated Analysis & Technology, Inc. Savings &
Investment Plan effective August 10, 1993 (incorporated by reference
to Exhibit 3(ii) of the Registrant's Report on Form 10-K, File No.
0-14161, for the year ended March 31, 1994).
10P Amended and Restated Analysis & Technology, Inc. Employee Stock
Ownership Plan dated November 21, 1994, effective January 1, 1994.
10Q Analysis & Technology, Inc. Performance Incentive Compensation Plan
dated September 19, 1991 (incorporated by reference to Exhibit 19B
of the Registrant's Report on Form 10-Q, File No. 0-14161, for the
quarter ended September 30, 1991).
10R Amended and Restated Analysis & Technology., Inc. Deferred
Compensation Plan effective June 5, 1996 (incorporated by reference
to Exhibit 99A to the Registrant's Registration Statement on Form
S-8, No. 333-05267).
10S Analysis & Technology, Inc. 401(k) Restitution Plan, dated August 8,
1994, effective April 1, 1994.
10T Joint Venture Agreement by and among Brown & Sharpe Manufacturing
Company, Analysis & Technology, Inc., and Automation Software
Incorporated (incorporated by reference to Exhibit 10H of the
Registrant's Registration Statement on Form S-1, No. 33-2314).
<PAGE> 27
26
10U Group Medical Reimbursement Insurance for Officers (incorporated by
reference to Exhibit 10J of Amendment No. 1 to the Registrant's
Registration Statement on Form S-1, No. 33-2314).
10V Analysis & Technology, Inc. Managers' Benefit Options Plan
(incorporated by reference to Exhibit 10J of the Registrant's Report
on Form 10-Q, File No. 0-14161, for the quarter ended December 31,
1986).
10W Analysis & Technology, Inc. Officers' Benefit Options Plan
(incorporated by reference to Exhibit 10L of the Registrant's Report
on Form 10-K, File No. 0-14161, for the year ended March 31, 1989).
10X Stock Purchase Agreement, dated June 1, 1989, among Analysis &
Technology, Inc., Applied Science Associates, Inc. and the Sellers
(as defined therein) (incorporated by reference to Exhibit 2.1 on
the Registrant's Report on Form 8-K, File No. 0-14161, dated June 1,
1989).
10Y Stock Purchase Agreement dated October 31, 1995, among Analysis &
Technology, Inc., General Systems Solutions, Inc. and the Buyers (as
defined therein) (incorporated by reference to Item 2 on the
Registrant's Report on Form 8-K, File No. 0-14161, dated October 31,
1995).
11* Earnings per share calculation.
13* Analysis & Technology, Inc. 1996 Annual Report to Shareholders
(required textual portions).
21* List of Subsidiaries of Analysis & Technology, Inc.
23* Consent of KPMG Peat Marwick LLP with respect to the incorporation
by reference of its reports dated May 3, 1996.
27* Financial Data Schedule.
<PAGE> 28
27
(1) Copies of these documents are not being filed as exhibits, since the
indebtedness represented thereby does not exceed 10% of the total assets of the
Company. The Company agrees to provide copies of these documents to the
Securities and Exchange Commission upon request.
(b) A report on Form 8-K, dated March 25, 1996 reporting Item 5 -
Other Events, was filed by the Registrant on April 3, 1996.
<PAGE> 29
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ Gary P. Bennett
---------------------------------
Gary P. Bennett
President and
Chief Executive Officer
Date: June 26, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dated indicated.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ Gary P. Bennett President and Chief Executive Officer and Director June 26, 1996
- ------------------- (Principal Executive Officer)
Gary P. Bennett
/s/ David M. Nolf Executive Vice President, Chief Financial and June 26, 1996
- ----------------- Administrative Officer and Director (Principal Financial
David M. Nolf Officer and Principal Accounting Officer)
/s/ James B. Fox Chairman of the Board June 26, 1996
- ----------------
James B. Fox
/s/ Larry M. Fox Director June 26, 1996
- ----------------
Larry M. Fox
/s/ Nelda S. Nardone Director June 26, 1996
- --------------------
Nelda S. Nardone
/s/ Thurman F. Naylor Director June 26, 1996
- ---------------------
Thurman F. Naylor
/s/ Dennis G. Punches Director June 26, 1996
- ---------------------
Dennis G. Punches
</TABLE>
<PAGE> 30
29
INDEX TO EXHIBITS
Exhibit
Number Description of Documents
- ------ ------------------------
3(i) Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3A to the Registrant's Report on
Form 10-Q, File No. 0-14161, for the quarter ended
September 30, 1990).
3(ii) By-laws, Amended and Restated to February 6, 1993
(incorporated by reference to Exhibit 3(ii) to the
Registrant's Report on Form 10-K, file No.
0-14161, for the year ended March 31, 1993).
4A Specimen Certificate of Common Stock (incorporated
by reference to Exhibit 4A to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1, No.
33-2314), Articles 6 and 7 of the Certificate of
Incorporation and Article II, Article III, Sections 3 to
6, Article VI and Article VIII of the By-laws (included
in Exhibits 3(i) and 3(ii), respectively).
4B Amended and Restated Revolving Credit and Term
Loan Agreement between Analysis & Technology, Inc.
and Shawmut Bank Connecticut, National Association
formerly known as The Connecticut National Bank,
dated December 9, 1994. (incorporated by reference
to Exhibit 4A of the Registrant's Report on Form 10-Q,
File No. 0-14161 for the quarter ended December 31,
1994).
4C Second Amendment to Revolving Credit and Term
Loan Agreement and Revolving Credit Note between
Analysis & Technology, Inc. and Fleet National Bank
of Connecticut, formerly known as Shawmut Bank
Connecticut, National Association, dated November
29, 1995 (incorporated by reference to Exhibit 4 to the
Registrant's Report on Form 10-Q, File No. 0-14161,
for the quarter ended December 31, 1995).
<PAGE> 31
30
4D(1) Open-End Mortgage Deed and Security Agreement,
dated November 25, 1987, and related documents
between Analysis & Technology, Inc. and The
Connecticut National Bank.
4E(1) Open-End Mortgage Deed and Security Agreement,
dated May 30, 1986, and related documents between
Analysis & Technology, Inc. and The Connecticut
National Bank.
4F(1) Open-End Mortgage, dated March 8, 1978, and related
documents of Analysis & Technology, Inc. to Groton
Savings Bank.
4G(1) Notes payable, due in monthly installments, with
various interest rates and maturity dates, secured
by equipment.
10A Analysis & Technology, Inc. 1983 - 1986 Stock Option
Plans, as amended (incorporated by reference to
Exhibits 28(b) through 28(g) of the Registrant's
Registration Statement on Form S-8, No. 33-17313).
10B Analysis & Technology, Inc. 1987 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy
Statement, dated July 6, 1987 of Analysis &
Technology, Inc.).
10C Analysis & Technology, Inc. 1988 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy
Statement dated July 1, 1988 of Analysis &
Technology, Inc.).
10D Analysis & Technology, Inc. 1989 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy
Statement dated July 3, 1989 of Analysis &
Technology, Inc.).
10E Analysis & Technology, Inc. 1990 Stock Option Plan
(incorporated by reference to Exhibit B to the Proxy
Statement dated July 3, 1990 of Analysis &
Technology, Inc.).
10F Analysis & Technology, Inc. 1992 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy
<PAGE> 32
31
Statement dated July 7, 1992 of Analysis &
Technology, Inc.).
10G Analysis & Technology, Inc. 1994 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy
Statement dated July 8, 1994 of Analysis &
Technology, Inc.).
10H Analysis & Technology, Inc. 1995 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy
Statement dated July 7, 1995 of Analysis &
Technology, Inc.).
10I Amendments, dated June 30, 1989, to the Analysis &
Technology, Inc. 1981 - 1986 Stock Option Plans
(incorporated by reference to Exhibits 19B through
19G to the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended June 30, 1989).
10J Amendment, dated June 30, 1989, to the Analysis &
Technology, Inc. 1987 Stock Option Plan
(incorporated by reference to Exhibit 19H to the
Registrant's Report on Form 10-Q, File No. 0-14161,
for the quarter ended June 30, 1989).
10K Amendment, dated June 30, 1989, to the Analysis &
Technology, Inc. 1988 Stock Option Plan
(incorporated by reference to Exhibit 19I to the
Registrant's Report on Form 10-Q, File No. 0-14161,
for the quarter ended June 30, 1989).
10L Amendment, dated December 1, 1994, to the Analysis
& Technology, Inc. Savings & Investment Plan
effective January 1, 1995.
10M Amendment, dated September 9, 1995, to the Analysis &
Technology, Inc. Savings & Investment Plan effective January
1, 1995.
10N Amendment, dated December 4, 1995, to the Analysis &
Technology, Inc. Savings & Investment Plan effective January
1, 1995.
<PAGE> 33
32
10O Amended and Restated Analysis & Technology, Inc.
Savings & Investment Plan effective August 10, 1993
(incorporated by reference to Exhibit 3(ii) of the
Registrant's Report on Form 10-K, File No. 0-14161,
for the year ended March 31, 1994).
10P Amended and Restated Analysis & Technology, Inc.
Employee Stock Ownership Plan dated November 21, 1994,
effective January 1, 1994.
10Q Analysis & Technology, Inc. Performance Incentive
Compensation Plan dated September 19, 1991
(incorporated by reference to Exhibit 19B of the
Registrant's Report on Form 10-Q, File No. 0-14161,
for the quarter ended September 30, 1991).
10R Amended and Restated Analysis & Technology, Inc.
Deferred Compensation Plan effective June 5, 1996
(incorporated by reference to Exhibit 99A to the
Registrant's Registration Statement on Form S-8,
No. 333-05267).
10S Analysis & Technology, Inc. 401(k) Restitution Plan,
dated August 8, 1994, effective April 1, 1994.
10T Joint Venture Agreement by and among Brown &
Sharpe Manufacturing Company, Analysis &
Technology, Inc. and Automation Software
Incorporated (incorporated by reference to Exhibit 10H
of the Registrant's Registration Statement on Form S-1,
No. 33-2314).
10U Group Medical Reimbursement Insurance for Officers
(incorporated by reference to Exhibit 10J of
Amendment No. 1 to the Registrant's Registration
Statement on Form S-1, No. 33-2314).
10V Analysis & Technology, Inc. Managers' Benefit
Options Plan (incorporated by reference to Exhibit 10J
of the Registrant's Report on Form 10-Q, File No. 0-
14161, for the quarter ended December 31, 1986).
10W Analysis & Technology, Inc. Officers' Benefit Options
Plan (incorporated by reference to Exhibit 10L of the
<PAGE> 34
33
Registrant's Report on Form 10-K, File No. 0-14161,
for the year ended March 31, 1989).
10X Stock Purchase Agreement, dated June 1, 1989, among
Analysis & Technology, Inc., Applied Science
Associates, Inc., and the Sellers (as defined therein)
(incorporated by reference to Exhibit 2.1 to the
Registrant's Report on Form 8-K, File No. 0-14161,
dated June 1, 1989).
10Y Stock Purchase Agreement, dated October 31, 1995, among
Analysis & Technology, Inc., General Systems Solutions,
Inc. and the Buyers (as defined therein) (incorporated
by reference to Item 2 on the Registrant's Report on
Form 8-K, File No. 0-14161, dated October 31, 1995).
11* Earnings per share calculation.
13* Analysis & Technology, Inc. 1996
Annual Report to Shareholders (required textual
portions).
21* List of Subsidiaries of Analysis & Technology, Inc.
23* Consent of KPMG Peat Marwick LLP with respect to
the incorporation by reference of its reports dated May
3, 1996.
27* Financial Data Schedule.
<PAGE> 1
Exhibit 11
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Computation of Earnings Per Share
For the years ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Primary:
Weighted average shares outstanding 2,415,970 2,346,487 2,215,778
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 77,781 122,661 150,692
Total 2,493,751 2,469,148 2,366,470
Net earnings $2,077,621 $2,773,144 $2,498,578
Earnings per common and common
equivalent share $0.83 $1.12 $1.06
Fully Diluted:
Weighted average shares outstanding 2,415,570 2,346,487 2,215,778
Net effect of dilutive stock options
based on the treasury stock method
using the period end price 85,198 130,325 186,579
Total 2,500,768 2,476,812 2,402,357
Net earnings $2,077,621 $2,773,144 $2,498,578
Earnings per common and common
equivalent share $0.83 $1.12 $1.04
</TABLE>
<PAGE> 1
DIRECTORS AND OFFICERS
[INSERT GRAPHIC HERE]
Left to right: David M. Nolf, Thurman F. Naylor, Gary P. Bennett, James B. Fox,
Nelda S. Nardone, Dennis G. Punches, Larry M. Fox
Board of Directors
ANALYSIS & TECHNOLOGY, INC.
JAMES B. FOX
Chairman of the Board,
Analysis & Technology, Inc.
Retired President,
Mobil Oil Credit Corporation
GARY P. BENNETT
President and Chief Executive Officer,
Analysis & Technology, Inc.
LARRY M. FOX
Applications Integration Group, Operations Manager,
VTEL Corporation
NELDA S. NARDONE
Retired Secretary,
Analysis & Technology, Inc.
THURMAN F. NAYLOR
Retired Chairman and
Chief Executive Officer,
Standard Thomson Corporation
DAVID M. NOLF
Executive Vice President,
Analysis & Technology, Inc.
DENNIS G. PUNCHES
Chairman,
Payco American Corporation
Officers
ANALYSIS & TECHNOLOGY, INC.
GARY P. BENNETT
President and
Chief Executive Officer
DAVID M. NOLF
Executive Vice President,
Chief Financial and
Administrative Officer,
Secretary
JAY W. RYERSON
Executive Vice President,
Chief Operating Officer
ROBERT M. GORMAN
Senior Vice President
JAMES R. LAVOIE
Senior Vice President
JOSEPH M. MARINO
Senior Vice President
RICHARD P. MITCHELL
Senior Vice President
GERALD SNYDER
Senior Vice President, Planning
V. LEHMAN WOODS
Senior Vice President, Contracts
DOUGLAS L. CLARK
Vice President
MARK A. CLIFTON
Vice President
KATHRYN M. CONLON
Vice President
DANIEL R. CONWAY
Vice President
RUSSELL J. DESIMONE
Vice President
DAVID C. GHEN
Vice President
STEPHEN E. JOHNSTON
Vice President, Human Resources
ADELAIDE K. MAYHEW
Vice President
G. MICHAEL NIKODEM
Vice President
SCOTT A. PRICE
Vice President
ROBERT F. URSO
Vice President
SUSAN C. VARNADOE
Vice President
RALPH L. VOLK, III
Vice President
NANCY S. HOBERT
Assistant Secretary
Subsidiary Officers
APPLIED SCIENCE ASSOCIATES, INC. (ASA)
JOSEPH M. MARINO
President and Chief Executive Officer (Acting)
JOHN T. MCCOY
Senior Vice President,
Chief Financial Officer
JOHN G. DRUGO
Senior Vice President
DAVID M. NOLF
Secretary
PAMELA J. SEMLER
Assistant Secretary
INTEGRATED PERFORMANCE
DECISIONS, INC. (IPD)
JAMES R. LAVOIE
President
LINDA M. EDWARDS
Vice President
ELEANOR S. HOLMES
Vice President
DENNIS J. KELLY, JR.
Vice President
JAMES A. MCNITT
Vice President
DAVID M. NOLF
Secretary
ANALYSIS & TECHNOLOGY AUSTRALIA PTY LIMITED
PAUL A. FOTHERGILL
Managing Director
Secretary
A & T INTERNATIONAL
CORPORATION (ATIC)
GARY P. BENNETT
President and
Chief Executive Officer
V. LEHMAN WOODS
Executive Vice President,
Chief Financial Officer
ADELAIDE K. MAYHEW
Vice President
WILLIAM A. REED
Vice President
DAVID M. NOLF
Secretary
Joint Venture
AUTOMATION SOFTWARE
INCORPORATED (ASI)
BRYN EDWARDS
President and
Chief Executive Officer
STEPHEN E. LOGEE
Vice President
THOMAS KUNEMAN
Secretary and
Chief Financial Officer
12
<PAGE> 2
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
<S> <C>
Selected Financial Data 14
Management's Discussion and Analysis 15
Consolidated Financial Statements 18
Notes to Consolidated Financial Statements 22
Independent Auditor's Report 28
</TABLE>
13
<PAGE> 3
SELECTED FINANCIAL DATA: A FIVE-YEAR SUMMARY
<TABLE>
<CAPTION>
Years Ended March 31, 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Amounts in thousands except per share and employee data
Revenue from continuing operations $ 122,924 $ 131,174 $ 129,359 $ 116,462 $ 107,885
Costs and expenses 116,670 125,222 124,000 111,966 104,752
Operating earnings from continuing operations 6,254 5,952 5,359 4,496 3,133
Interest expense, net 512 542 554 434 413
Other, net 338 269 433 485 354
Earnings from continuing operations
before income taxes 5,404 5,141 4,372 3,577 2,366
Income taxes on earnings from
continuing operations 1,816 2,171 1,856 1,585 977
Net earnings from continuing operations $ 3,588 $ 2,970 $ 2,516 $ 1,992 $ 1,389
Discontinued operations:
Earnings (loss) from discontinued operations,
net of income tax expense (benefit) (195) (197) (17) (13) 51
Loss on disposal of discontinued operations,
net of income tax benefit (1,316) --- --- --- ---
Net earnings $ 2,077 $ 2,773 $ 2,499 $ 1,979 $ 1,440
Earnings (loss) per common and common
equivalent share
Continuing operations $ 1.44 $ 1.20 $ 1.07 $ 0.92 $ 0.64
Discontinued operations (0.61) (0.08) (0.01) (0.01) 0.03
Net earnings $ 0.83 $ 1.12 $ 1.06 $ 0.91 $ 0.67
Weighted average shares and
common equivalent shares outstanding 2,494 2,469 2,367 2,173 2,163
Dividends per share $ 0.27 $ 0.26 $ 0.24 $ 0.22 $ 0.20
Working capital $ 19,789 $ 15,610 $ 12,676 $ 10,290 $ 12,085
Contract receivables $ 24,250 $ 27,322 $ 24,174 $ 23,574 $ 19,535
Total assets $ 56,437 $ 61,003 $ 54,438 $ 51,793 $ 49,102
Long-term debt (including current
installments) $ 3,081 $ 7,242 $ 4,631 $ 4,653 $ 4,617
Shareholders' equity $ 39,279 $ 37,174 $ 34,442 $ 30,890 $ 29,353
Book value per common share $ 16.10 $ 15.68 $ 14.87 $ 14.34 $ 13.65
Number of full-time employees 1,373 1,535 1,556 1,558 1,477
</TABLE>
Analysis & Technology, Inc. and Subsidiaries
14
<PAGE> 4
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
The following table shows the relationship of selected income statement items to
revenue and presents earnings per share for the last three years:
<TABLE>
<CAPTION>
Years Ended March 31, 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of revenue:
Revenue from continuing
operations 100.0% 100.0% 100.0%
Costs and expenses 94.9 95.5 95.9
Operating earnings from
continuing operations 5.1 4.5 4.1
Earnings from continuing
operations before
income taxes 4.4 3.9 3.4
Income taxes on earnings from
continuing operations 1.5 1.7 1.4
Net earnings from
continuing operations 2.9 2.3 1.9
Discontinued operations:
Loss from discontinued
operations, net of income
tax benefit (0.2) (0.2) --
Loss on disposal
of discontinued operations,
net of income tax benefit (1.1) -- --
Net earnings 1.7% 2.1% 1.9%
Earnings (loss) per common
and common equivalent
share:
Continuing operations $ 1.44 $ 1.20 $ 1.07
Discontinued operations (0.61) (0.08) (0.01)
- --------------------------------------------------------------------------------
Net earnings $ 0.83 $ 1.12 $ 1.06
================================================================================
</TABLE>
FISCAL 1996 COMPARED WITH FISCAL 1995
The major factors in the comparison of fiscal 1996 with fiscal 1995 are as
follows:
- - Revenue from continuing operations decreased 6.3%.
- - Operating earnings from continuing operations increased 5.1%.
- - Operating earnings from continuing operations as a percentage of revenue
(operating margins) increased to 5.1% in fiscal 1996 from 4.5% in the prior
year.
- - Net earnings from continuing operations were affected positively by R&D tax
credits and increased 20.8%.
- - The Company sold the commercial business of its Groton, Connecticut-based
subsidiary, General Systems Solutions, Inc. (GSS), resulting in a $1.3
million after tax loss.
- - Net earnings were adversely affected by the loss on the sale of GSS and
decreased 25.1%.
- - Earnings per common and common equivalent share were $0.83, a 25.9%
decrease.
- - Earnings per common and common equivalent share from continuing operations,
not including R&D tax credits, were $1.28, a 6.7% increase from the prior
year.
Revenue from continuing operations decreased 6.3% to $122.9 million from $131.2
million in fiscal 1995. Revenue for the Company's core defense operations was
down 8.2% from the prior year. Although contractual backlog at year end was up
14.2% to $458.8 million, uncertainty in Navy program funding priorities and
budget reductions in submarine torpedo programs slowed the flow of funds to
Company contracts, which adversely affected revenue. Funded backlog at year end
was $29.1 million, down 13.5% from the prior year. In addition, the
year-to-year revenue comparison was adversely affected by work for NAVAIR
performed by a Company subsidiary in fiscal 1995, some of which did not continue
in fiscal 1996. The decrease in revenue in fiscal 1996 is also attributable to a
decrease in non-labor related revenue. Non-labor related revenue generated by
purchased components, computer usage, travel and work subcontracted to other
companies totaled $25.9 million in fiscal 1996, a $4.9 million dollar decrease
as compared with fiscal 1995. Non-labor related revenue decreased due to reduced
purchases of components by the Company under a contract to provide minesweeping
equipment to the U.S. Navy and due to reduced funding by the U.S. Navy for
projects that would have been subcontracted by the Company to others.
Non-defense revenue in fiscal 1996 was about level with the prior year at 15% of
total revenue. Of this, commercial revenue was up 10% to $12.0 million. The
commercial revenue increase was primarily due to an increase in training work
for telecommunications companies.
During fiscal 1996, total contractual backlog varied between $405.7 million and
$462.2 million. During the year, $6.3 million of backlog expired without being
funded, while in fiscal 1995, $10.7 million of backlog expired without being
funded. The backlog used during fiscal 1996, plus the unfunded backlog that
expired, was more than offset by newly awarded contracts. As noted above,
backlog as of March 31, 1996 was $458.8 million, a 14.2% increase from $401.6
million a year ago. Government funding continues to be dependent on
congressional approval of program level funding and on contracting agency
approval for the Company's work. The extent to which the Company's backlog will
be funded in the future cannot be determined.
Operating earnings from continuing operations increased 5.1% to $6.3 million
from $6.0 million in fiscal 1995. Operating margins from continuing operations
were 5.1% in fiscal 1996 compared with 4.5% in fiscal 1995. The increase in
operating margins was due to higher fees earned on the Company's defense-related
work, as well as in its commercial interactive multimedia operations, including
higher than anticipated earnings on fixed price contracts.
Total other expenses as a percentage of revenue increased to 0.7% in fiscal 1996
compared with 0.6% in fiscal 1995. Interest expense increased because of higher
interest rates and increased borrowing under the Company's revolving credit
agreement to fund investment in GSS software product development. This increase
was offset by interest income earned from investment of the GSS sale proceeds
(the sale of GSS is discussed below). Equity in income from the Company's joint
venture, Automation Software Incorporated (ASI), was $346 thousand, a 7.7%
increase from the prior year. Other net expense increased to 0.6% of revenue in
fiscal 1996 from 0.4% in fiscal 1995, primarily due to an increase in
amortization expense associated with the Company's past acquisitions.
Analysis & Technology, Inc. and Subsidiaries
15
<PAGE> 5
Earnings from continuing operations before income taxes increased 5.1% to $5.4
million from $5.1 million in fiscal 1995. The Company's effective tax rate on
earnings from continuing operations was 33.6% in fiscal 1996 compared with 42.2%
in fiscal 1995. The lower effective tax rate for fiscal 1996 was primarily due
to accrual of federal and state research and development (R&D) tax credits
totaling $400 thousand. 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 R&D tax credits.
Net earnings from continuing operations increased 20.8% to $3.6 million from
$3.0 million in fiscal 1995. Net earnings from continuing operations were
affected positively by the R&D tax credits discussed above. Earnings per share
from continuing operations were $1.44 in fiscal 1996 compared with $1.20 in
fiscal 1995. Without R&D tax credits, earnings per share from continuing
operations in fiscal 1996 were $1.28, a 6.7% increase from fiscal 1995.
On October 31, 1995, the Company sold the commercial business of its GSS
subsidiary to GE Capital Corporation for $9.25 million in cash. The level of
future capital investment necessary to realize GSS's potential, in comparison to
A&T's net worth, was an important factor in the Company's decision to sell. Of
the $9.25 million purchase price, approximately $8.0 million was paid to A&T.
The balance was paid to minority shareholders. GSS's Navy business was
transferred to the Company prior to the sale, and its commercial business was
reclassified retroactively as a discontinued operation. The Company accrued a
$1.3 million after tax loss ($0.53 per share) associated with the sale during
the second quarter of fiscal 1996.
The operating results of GSS's commercial business for the current and prior
year periods have been reported separately as discontinued operations in the
Consolidated Statements of Earnings. The after tax loss from discontinued
operations, excluding the loss associated with the sale, totaled $195 thousand
or $0.08 per share for fiscal 1996, as compared with $197 thousand or $0.08 per
share for fiscal 1995.
Net earnings per share after deducting the loss from discontinued operations and
the loss on the disposal of discontinued operations were $0.83 in fiscal 1996
compared with $1.12 in fiscal 1995. The weighted average number of common and
common equivalent shares outstanding remained relatively constant at
approximately 2.5 million shares.
FISCAL 1995 COMPARED WITH FISCAL 1994
Revenue from continuing operations increased 1.4% to $131.2 million from $129.4
million in fiscal 1994. Revenue for the Company's core defense operations was
about level with that of the prior year. Non-labor related revenue generated by
purchased components, computer usage, travel, and work subcontracted to other
companies totaled $30.8 million in fiscal 1995, a $1.2 million decrease as
compared with fiscal 1994. The decrease in non-labor revenue was primarily due
to reduced purchases of components by GSS under its contracts to provide
minesweeping equipment to the U.S. Navy.
During fiscal 1995, total contractual backlog varied between $357.0 million and
$418.9 million. During the year, $10.7 million of backlog expired without being
funded, while in fiscal 1994, $5.3 million of backlog expired without being
funded. Backlog as of March 31, 1995 was $401.6 million, a 7.7% increase from
$372.8 million in fiscal 1994.
Operating earnings from continuing operations increased 11.1% to $6.0 million
from $5.4 million in fiscal 1994. Operating margins from continuing operations
were 4.5% in fiscal 1995 compared with 4.1% in fiscal 1994. During fiscal 1995,
the Company bid and earned higher fees in its defense operations due, in part,
to higher fees bid and earned in the Company's field services operations.
Contract overruns on work for NAVAIR performed by a Company subsidiary were
partly offset by higher than budgeted earnings on certain of the Company's firm
fixed price contracts.
Total other expenses as a percentage of revenue decreased to 0.6% in fiscal 1995
compared with 0.8% in fiscal 1994. Interest expense, net of interest income, as
a percentage of revenue remained constant at 0.4% in fiscal 1995 and fiscal
1994. Equity in income from the Company's joint venture, ASI, increased to $321
thousand in fiscal 1995 from $171 thousand in fiscal 1994, due, in part, to a
key person insurance payment resulting from the death of ASI's president. The
effect of this payment, net of expenses, on the Company's earnings was $115
thousand. Other net expense, primarily amortization expense associated with the
Company's past acquisitions, was about level in fiscal 1995 and fiscal 1994.
Earnings from continuing operations before income taxes increased 17.6% to $5.1
million in fiscal 1995 compared with $4.4 million in fiscal 1994. The Company's
effective tax rate decreased to 42.2% in fiscal 1995 from 42.5% in fiscal 1994.
The lower effective tax rate was due, in part, to higher earnings by ASI which
are reported on an after-tax basis and are not included in the Company's taxable
income.
Net earnings from continuing operations increased 18.1% to $3.0 million from
$2.5 million in fiscal 1994. The loss from discontinued operations increased to
$197 thousand in fiscal 1995 from $17 thousand in fiscal 1994. Earnings per
share increased 5.7% to $1.12 from $1.06 in fiscal 1994. The weighted average
number of common shares and common equivalent shares outstanding increased 4.3%
to 2.47 million in fiscal 1995. The increase in the number of common shares and
common equivalent shares outstanding was principally due to exercises of stock
options.
Analysis & Technology, Inc. and Subsidiaries
16
<PAGE> 6
LIQUIDITY AND CAPITAL RESOURCES
For fiscal 1996, net cash provided by operating activities totaled $3.1 million.
Cash generated by continuing operations totaled $6.5 million. A $3.1 million
decrease in contract receivables contributed to the cash generated. Contract
receivables totaled $24.2 million, $27.3 million, and $24.2 million as of March
31, 1996, 1995, and 1994 and represented approximately 43%, 45%, and 44% of
total assets as of those dates. The average period for payment to the Company
was 71 days at March 31, 1996; 71 days at March 31, 1995; and 66 days at March
31, 1994. Discontinued operations used $3.3 million of cash due, in part, to
operating losses and, in part, to the loss on the sale of GSS.
For fiscal 1996, net cash provided by investing activities totaled $4.6 million.
The sale of GSS provided approximately $8.0 million of cash. Uses of cash
included purchase of computer software, hardware and other equipment, as well as
software development costs for GSS commercial products.
Net cash used in financing activities for fiscal 1996 totaled $4.1 million. This
was primarily for repaying borrowings under the Company's line of credit and
revolving credit agreements. In conjunction with the sale of GSS, a $1.5 million
line of credit was terminated and was replaced by a $1.5 million increase in the
amount available under the Company's revolving credit agreement. The total funds
available to the Company under its revolving credit agreement at March 31, 1996
were $20.0 million. There was no borrowing under the Company's agreement as of
March 31, 1996. Borrowings under these agreements were $3.5 million at March 31,
1995 and $1.2 million at March 31, 1994.
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, or about 8% of the approximately 2.5 million common shares currently
outstanding. The stock will be purchased in amounts and at times and prices to
be determined by management. The repurchase will provide shares which can be
used for Company employee benefit plans or for future acquisitions. Through
April 30, 1996, the Company had repurchased 115 thousand shares under this
repurchase program at current market prices on the date of purchase. Any future
capital needs, including capital for the stock repurchase or for acquisitions,
which are not satisfied by cash generated from operations, will be met with
money borrowed by the Company under its revolving credit agreement.
The Company's working capital (excluding deferred taxes) was $21.0 million at
March 31, 1996 compared with $16.7 million at March 31, 1995. The Company's
current ratio was 2.7:1 at March 31, 1996 and 2.1:1 at March 31, 1995.
It is anticipated that the Company's existing cash, together with funds
generated from operations and borrowing under its revolving credit agreements,
will be sufficient to meet its normal working capital requirements for the
foreseeable future. As of March 31, 1996, the Company does not have any major
capital commitments.
This report contains forward-looking statements which are subject to a number of
risks and uncertainties. Actual results could differ materially from those in
the forward-looking statements. The factors that could cause actual results to
differ materially include the following: general economic conditions, changes in
Navy program funding priorities, budget reductions in defense programs, delays
in the development and acceptance of new commercial products and pricing
pressures from competitors and/or customers.
The Company believes that inflation has not had a material effect on its
business.
Analysis & Technology, Inc. and Subsidiaries
17
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As of March 31, 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,179,499 $ 502,372
Contract receivables (note 4) 24,249,824 27,322,376
Notes and other receivables 1,259,500 1,142,191
Prepaid expenses 1,542,891 943,309
- --------------------------------------------------------------------------------------------------
Total current assets 31,231,714 29,910,248
- --------------------------------------------------------------------------------------------------
Property, buildings, and equipment, net (notes 5 and 6) 14,132,108 15,335,864
- --------------------------------------------------------------------------------------------------
Other assets (note 5):
Goodwill, net of accumulated amortization 6,547,854 6,783,335
Product development costs, net of accumulated amortization 361,744 200,603
Deferred Compensation Plan investments (note 9) 2,601,020 2,139,274
Investment in joint venture 1,301,103 955,262
Deposits and other 261,565 561,341
Net non-current assets of discontinued operations (note 3) -- 5,117,501
- --------------------------------------------------------------------------------------------------
11,073,286 15,757,316
- --------------------------------------------------------------------------------------------------
Total assets $56,437,108 $61,003,428
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 6) $ 179,906 $ 309,258
Accounts payable 1,779,481 3,702,478
Accrued expenses (note 10) 7,648,023 8,540,497
Dividends payable 658,881 616,153
Deferred income taxes (note 7) 1,176,288 1,062,900
Net current liabilities of discontinued operations (note 3) -- 69,005
- --------------------------------------------------------------------------------------------------
Total current liabilities 11,442,579 14,300,291
Long-term debt, excluding current installments (note 6) 2,900,787 6,933,174
Deferred income taxes (note 7) 113,571 193,591
Other long-term liabilities (note 9) 2,700,782 2,402,679
- --------------------------------------------------------------------------------------------------
Total liabilities 17,157,719 23,829,735
- --------------------------------------------------------------------------------------------------
Commitments and contingencies (notes 4, 9, and 11)
Shareholders' equity (notes 8 and 9):
Common stock, $.125 stated value. Authorized 7,500,000
shares; issued and outstanding 2,440,303 shares in 1996
and 2,371,399 shares in 1995 305,038 296,425
Additional paid-in capital 9,964,210 9,285,867
Retained earnings 29,010,141 27,591,401
- --------------------------------------------------------------------------------------------------
Total shareholders' equity 39,279,389 37,173,693
- --------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $56,437,108 $61,003,428
==================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
Analysis & Technology, Inc. and Subsidiaries
18
<PAGE> 8
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Years ended March 31, 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue from continuing operations $122,923,875 $131,173,804 $129,359,173
Costs and expenses 116,669,930 125,222,189 124,000,434
- -------------------------------------------------------------------------------------------------------------
Operating earnings from continuing operations 6,253,945 5,951,615 5,358,739
- -------------------------------------------------------------------------------------------------------------
Other expense (income):
Interest expense (note 6) 640,660 564,862 607,373
Interest income (129,105) (22,980) (53,625)
Equity in income of joint venture (345,842) (321,252) (171,433)
Other, net 684,309 589,762 604,579
- -------------------------------------------------------------------------------------------------------------
850,022 810,392 986,894
- -------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 5,403,923 5,141,223 4,371,845
Income taxes on earnings from continuing operations (note 7) 1,815,542 2,171,031 1,856,299
- -------------------------------------------------------------------------------------------------------------
Net earnings from continuing operations $ 3,588,381 $ 2,970,192 $ 2,515,546
- -------------------------------------------------------------------------------------------------------------
Discontinued operations (note 3):
Loss from discontinued operations, net of income
tax benefit of $135,321, $136,932 and $11,791 in 1996, (194,730) (197,048) (16,968)
1995 and 1994, respectively
Loss on disposal of discontinued operations,
net of income tax benefit of $1,392,730 (1,316,030) -- --
- -------------------------------------------------------------------------------------------------------------
Net earnings $ 2,077,621 $ 2,773,144 $ 2,498,578
=============================================================================================================
Earnings (loss) per common and common equivalent share
Continuing operations $ 1.44 $ 1.20 $ 1.07
Discontinued operations (0.61) (0.08) (0.01)
- -------------------------------------------------------------------------------------------------------------
Net earnings $ 0.83 $ 1.12 $ 1.06
=============================================================================================================
Weighted average shares and common equivalent shares
outstanding (notes 2 and 8) 2,493,751 2,469,148 2,366,470
=============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
Analysis & Technology, Inc. and Subsidiaries
19
<PAGE> 9
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common stock
----------------------- Additional Total
Stated paid-in Retained shareholders'
Years ended March 31, 1996, 1995, and 1994 Shares value capital earnings equity
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at March 31, 1993 2,154,066 $269,259 $7,128,765 $23,491,888 $30,889,912
Proceeds from sale of common stock 161,554 20,194 1,589,243 -- 1,609,437
Net earnings -- -- -- 2,498,578 2,498,578
Cash dividends declared - $.24 per share -- -- -- (556,056) (556,056)
- ------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1994 2,315,620 289,453 8,718,008 25,434,410 34,441,871
Proceeds from sale of common stock 55,779 6,972 567,859 -- 574,831
Net earnings -- -- -- 2,773,144 2,773,144
Cash dividends declared - $.26 per share -- -- -- (616,153) (616,153)
- ------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1995 2,371,399 296,425 9,285,867 27,591,401 37,173,693
Proceeds from sale of common stock 68,904 8,613 678,343 -- 686,956
Net earnings -- -- -- 2,077,621 2,077,621
Cash dividends declared - $.27 per share -- -- -- (658,881) (658,881)
- ------------------------------------------------------------------------------------------------------------------------
BALANCES AT MARCH 31, 1996 2,440,303 $305,038 $9,964,210 $29,010,141 $39,279,389
========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
Analysis & Technology, Inc. and Subsidiaries
20
<PAGE> 10
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended March 31, 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 2,077,621 $ 2,773,144 $ 2,498,578
Adjustments to reconcile net earnings to net cash
provided by continuing operations:
Loss associated with discontinued operations 1,510,760 197,048 16,968
Equity in income of joint venture (345,841) (321,252) (171,433)
Depreciation and amortization of property, buildings, and equipment 2,670,248 2,262,468 2,834,530
Amortization of goodwill 452,840 429,727 320,184
Amortization of product development costs 116,142 69,322 --
Provision for deferred income taxes 33,368 (524,164) (590,976)
Loss on sale of equipment 275,958 78,970 70,174
Decrease (increase) in:
Contract receivables 3,072,552 (3,122,957) (1,124,278)
Notes and other receivables (117,309) (775,111) 41,111
Prepaid expenses (599,582) (103,821) (51,246)
Other assets (161,970) (252,669) (201,122)
Increase (decrease) in:
Accounts payable and accrued expenses (2,815,471) 1,903,696 395,164
Other long-term liabilities 298,103 268,229 351,984
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by continuing operations 6,467,419 2,882,630 4,389,638
Net cash provided by (used for) discontinued operations (3,344,693) 1,860,751 1,501,903
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,122,726 4,743,381 5,891,541
- -------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Proceeds from sale of discontinued operations 8,006,989 -- --
Additions to property, buildings, and equipment (1,748,387) (2,258,138) (2,776,097)
Product development costs - continuing operations (277,283) (220,414) --
Product development costs - discontinued operations (1,124,560) (3,585,585) (2,895,290)
Proceeds from the sale of equipment 5,937 6,563 85,872
Acquisition of business units (net of cash acquired) (217,359) (987,222) (405,024)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities 4,645,337 (7,044,796) (5,990,539)
- -------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net repayments of short-term borrowings -- (555,000) (600,811)
Proceeds provided by long-term borrowings -- 2,895,000 345,698
Repayments of long-term borrowings (4,161,739) (283,681) (367,042)
Proceeds from sale of common stock 686,956 574,831 1,609,437
Dividends paid (616,153) (556,056) (473,587)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities (4,090,936) 2,075,094 513,695
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 3,677,127 (226,321) 414,697
Cash and cash equivalents:
Beginning of year 502,372 728,693 313,996
- -------------------------------------------------------------------------------------------------------------------------
End of year $ 4,179,499 $ 502,372 $ 728,693
=========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
Analysis & Technology, Inc. and Subsidiaries
21
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[1] DESCRIPTION OF BUSINESS AND ACQUISITIONS
Analysis & Technology, Inc. (A&T) initially provided tactical analysis to the
Office of Naval Research and sonar analysis to the Naval Underwater Systems
Center, now known as the Naval Undersea Warfare Center. During the past 26
years, A&T and Subsidiaries (the Company) has expanded its business to provide
engineering services, interactive multimedia training systems, and information
technology services for the military, civil government agencies, and private
industry. The Company typically performs its Department of Defense services
under cost reimbursement contracts whereby the U.S. Government reimburses the
Company for contracted costs and pays a fee. In fiscal 1996, 1995, and 1994, the
amount of the Company's non-defense revenue was $20.2 million, $19.5 million,
and $17.8 million, respectively.
The Company has during fiscal 1993, 1994, and 1995 both acquired and formed a
number of business units that operate as wholly-owned subsidiaries of the
Company as described below. The business acquisitions were accounted for as
purchases.
In fiscal 1993, the Company purchased all the shares of Continental Dynamics,
Inc. (CDI), which specializes in manpower development training, information
resource management, engineering management, program management, and engineering
consulting. During fiscal 1994, 1995, and 1996, the Company completed its
payment obligations under the terms of the purchase agreement for CDI by making
contingent payments of $100,000; $769,999; and 200,000, respectively, to the
former owners of CDI.
In fiscal 1994, the Company purchased all the shares of Prism-Dae, Inc., a
company with limited resources, but which holds a contract with the Federal
Office of Personnel Management for services in government training and
information resource management areas. In addition, in fiscal 1994 the Company
formed Integrated Performance Decisions, Inc. (IPD) to develop and implement
performance decision software products for Navy customers and for customers in
the natural gas industry.
In fiscal 1995, the Company acquired certain assets of Design Systems &
Services, Inc., a Delaware company, operating a technology-based engineering,
professional service and software business. In fiscal 1995, the Company also
purchased assigned contracts and related patents and trademarks of the "Raydist
Line" from Teledyne Industries. Both of these acquisitions were merged into
existing business units. In addition, in fiscal 1995 the Company formed a
Canadian subsidiary, Numerical Decisions Group, Inc., to develop and implement
software for the Canadian Navy.
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of the Company:
- - PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of A&T and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
- - CASH EQUIVALENTS - For financial statement purposes, the Company considers all
cash investments with original maturities of three months or less at the time
of purchase to be cash equivalents.
- - FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of the Company's
financial instruments including cash, accounts receivable, accounts payable,
accrued expenses and dividends payable approximate fair value due to the short
term nature of these instruments. The carrying value of notes and other
receivables and long term debt approximate fair value based on the
instruments' interest rate, terms, maturity date, and collateral, if any, in
comparison to the Company's incremental borrowing rate for similar financial
instruments.
- - DEPRECIATION AND AMORTIZATION - Property, buildings, and equipment are stated
at cost. Depreciation of buildings and equipment is provided over the
estimated useful lives of the respective assets using the straight-line
method. Leasehold improvements are amortized over the shorter of the term of
the lease or the life of the asset.
- - GOODWILL - Goodwill relating to the Company's acquisitions represents the
excess of cost over the fair value of net assets acquired and is amortized on
a straight-line basis over periods ranging from two to thirty years.
Determination of the straight-line period is dependent on the nature of the
operations acquired. The Company evaluates the recoverability of goodwill on a
periodic basis to assure that changes in facts and circumstances do not
suggest that recoverability has been impaired. This analysis relies on a
number of factors, including operating results, business plans, budgets,
economic projections, and changes in management's strategic direction or
market emphasis. The test of recoverability for goodwill is a comparison of
the unamortized balance to expected cumulative (undiscounted) operating income
of the acquired business or enterprise over the remaining portion of the
amortization period. If the book value of goodwill exceeds undiscounted future
operating income, the writedown is computed as the excess of the unamortized
balance of the asset over the present value of operating income discounted at
the Company's weighted average cost of capital over the remaining amortization
period.
- - PRODUCT DEVELOPMENT COSTS - Product development costs represent expenditures
for the development of transaction processing systems and other software
products that have been capitalized in accordance with Statement of Financial
Accounting Standards No. 86, Accounting for the Costs of Computer Software to
Be Sold, Leased, or Otherwise Marketed. Amortization is computed on an
individual product basis and is the greater of (a) the ratio of current gross
revenues for a product to the total of current and anticipated future gross
revenues for that product or (b) the amount computed using the straight-line
method over the remaining economic useful life of the product. The Company is
currently using economic lives ranging from two to five years for all
capitalized product development costs. Amortization of product development
costs begins when the software product is available for general release to
customers.
- - ACCOUNTING FOR INVESTMENT IN JOINT VENTURE - The Company's 50% investment in
its joint venture, Automation Software Incorporated, is accounted for using
the equity method of accounting.
- - ACCOUNTING FOR STOCK-BASED COMPENSATION - In October 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation. Statement 123
Analysis & Technology, Inc. and Subsidiaries
22
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
addresses the accounting for the cost of stock-based compensation, such as
stock options, and permits either expensing the cost of stock-based
compensation over the vesting period or disclosing in the financial statement
footnotes what this expense would have been. This cost would be measured at
the grant date based upon estimated fair values, using option pricing models.
The Company expects to adopt the disclosure alternative of Statement 123 in
fiscal 1997.
- - INCOME TAXES - Income taxes are accounted for under the asset and liability
method of Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. Under the asset and liability method of Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered and settled. Under Statement 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
- - REVENUE RECOGNITION - The revenue from contract services is earned under
cost-reimbursement, time-and-material, and fixed price contracts. Revenues
under such contracts, including applicable fees and estimated profits, are
recorded as costs are incurred on the percentage of completion basis. If
estimates indicate a probable ultimate loss on a contract, provision is made
immediately for the entire amount of the estimated future loss. Profit and
losses accrued include the cumulative effect of changes in prior periods'
price and cost estimates.
- - EARNINGS PER SHARE - Earnings per share have been computed on the basis of the
weighted average number of common and common equivalent shares outstanding
during the year. Options to purchase common stock have been considered to be
common stock equivalents. Fully diluted earnings per share is not presented
since the dilution is not material.
- - DEFERRED COMPENSATION PLAN - The Company maintains a deferred compensation
plan for certain officers, directors, and salaried employees. The plan is
funded primarily through employee pretax contributions. The Company has
recorded the assets and liabilities for the deferred compensation plan at the
lower of cost or market in the consolidated balance sheets. The participants
in the plan bear the risk of market value fluctuations of the underlying
assets.
- - USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from reported results
using those estimates.
[3] DISCONTINUED OPERATIONS
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 for $9.25 million in cash. Of the $9.25 million purchase
price, approximately $8.0 million was paid to A&T. The balance was paid to
minority shareholders. GSS provided On-Line Registration Systems (OLRS) and
related services to various state agencies. The OLRS enabled vehicle lease and
rental companies, as well as car dealers, to register vehicles from personal
computers networked to GSS. GSS's Navy business was transferred to the Company
prior to the sale and its commercial business has been reclassified
retroactively as a discontinued operation. The Company accrued the pretax loss
of $2.7 million associated with the sale ($1,316,000 after tax or $0.53 per
common share) during the second quarter of fiscal 1996.
The results of GSS's commercial business have been reported separately as
discontinued operations in the Consolidated Statements of Earnings. The
consolidated financial statements for the fiscal years ended March 31, 1995 and
1994 have been restated to present the GSS commercial results as discontinued
operations.
The assets and liabilities of the GSS commercial business as of March 31, 1995
have been reclassified in the Consolidated Balance Sheet from their previously
reported classifications and are shown as the net current liabilities and net
noncurrent assets of discontinued operations. A summary of these assets and
liabilities are as follows:
<TABLE>
<CAPTION>
1995
- -------------------------------------------------------------------------------
<S> <C>
Current assets:
Contract receivables $ 493,404
Notes and other receivables 4,228
Prepaid expenses 66,014
- -------------------------------------------------------------------------------
Total current assets 563,646
- -------------------------------------------------------------------------------
Non-current assets:
Property, buildings, and equipment, net 267,999
Product development costs, net of
accumulated amortization 8,331,046
- -------------------------------------------------------------------------------
Total non-current assets 8,599,045
- -------------------------------------------------------------------------------
Total assets $9,162,691
===============================================================================
Current liabilities:
Accounts payable $ 314,454
Accrued expenses 166,974
Deferred income taxes 151,223
- -------------------------------------------------------------------------------
Total current liabilities 632,651
- -------------------------------------------------------------------------------
Non-current liabilities:
Deferred income taxes 3,481,544
- -------------------------------------------------------------------------------
Total non-current liabilities 3,481,544
- -------------------------------------------------------------------------------
Total liabilities $4,114,195
===============================================================================
Net current liabilities $ (69,005)
===============================================================================
Net non-current assets $5,117,501
===============================================================================
</TABLE>
Analysis & Technology, Inc. and Subsidiaries
23
<PAGE> 13
In addition, as part of the sale of GSS, the Company canceled GSS's $1,500,000
bank line of credit agreement effective October 31, 1995.
In fiscal 1994, GSS received $600,000 under the terms of a development agreement
with a state-financed corporation, Connecticut Innovations, Inc. (CII), to
assist in funding the development of GSS's On-Line Registration Systems (OLRS).
The Company's liability for this agreement remained with GSS in conjunction with
the sale. In addition, GSS had negotiated agreements, each having a term of five
years with various trade organizations to promote the OLRS product within
certain states. These agreements were also transferred as part of the sale of
GSS.
At the time of the sale of GSS, GSS was in negotiations with the State of
Connecticut to determine the amount collectible from the State for expenditures
incurred under GSS's contract with the Department of Motor Vehicles to provide
insurance enforcement. Pursuant to the sales agreement, the Company committed to
reimburse GE Capital Corporation for half of the receivable relating to the
insurance enforcement program if it becomes uncollectible, up to a maximum of
$250,000. The Company has accrued for this amount in the accompanying
consolidated balance sheet.
[4] CONTRACT RECEIVABLES
Contract receivables are summarized as follows:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government:
Amounts due currently -
prime contractor $10,320,598 $15,101,053
Amounts due currently -
subcontractor 5,043,967 5,154,579
Retainage 1,326,541 2,051,455
- --------------------------------------------------------------------------------
16,691,106 22,307,087
- --------------------------------------------------------------------------------
Commercial customers:
Amounts due currently 3,277,693 2,266,323
- --------------------------------------------------------------------------------
Unbilled contracts in process:
Fixed-price contracts in
progress, net of progress
billings 3,064,979 2,036,906
Revenues recorded on work
performed pursuant to
customer authorization but
prior to execution of
contractual documents or
modifications 1,216,046 712,060
- --------------------------------------------------------------------------------
4,281,025 2,748,966
- --------------------------------------------------------------------------------
$24,249,824 $27,322,376
================================================================================
</TABLE>
The Government retains a portion of the fee earned by the Company (retainage)
until contract completion and final audit by the Defense Contract Audit Agency
(DCAA). It is estimated that approximately $910,522 of retainage at March 31,
1996 will be collected within one year; the remainder will be collected in later
years as DCAA completes its audits.
All unbilled contract receivables, net of retainage, are expected to be billed
and collected within one year.
[5] NON-CURRENT ASSETS
A summary of property, buildings, and equipment follows:
<TABLE>
<CAPTION>
Useful Life 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Land -- $ 376,839 $ 376,839
Buildings 31 years 11,045,198 10,424,706
Equipment 3 - 8 years 18,469,896 19,376,548
Leasehold
improvements 1 - 5 years 1,550,088 1,391,094
- --------------------------------------------------------------------------------
31,442,021 31,569,187
Less accumulated
depreciation and
amortization (17,309,913) (16,233,323)
- --------------------------------------------------------------------------------
$ 14,132,108 $ 15,335,864
================================================================================
</TABLE>
Goodwill as of March 31, 1996 and 1995 was $6,547,854 and $6,783,335, net of
accumulated amortization of $2,004,218 and $1,551,378, respectively. The amount
of goodwill added in fiscal 1996 and 1995 was $217,359 and $899,192,
respectively. Amortization expense was $452,840 in fiscal 1996; $429,727 in
fiscal 1995; and $320,184 in fiscal 1994.
Product development costs at March 31, 1996 and 1995 were $361,744 and $200,603,
net of accumulated amortization of $185,464 and $69,322, respectively. The
amount of product development costs capitalized was $277,283 in fiscal 1996, and
$220,414 in fiscal 1995. Amortization expense was $116,142 in fiscal 1996, and
$69,322 in fiscal 1995.
Analysis & Technology, Inc. and Subsidiaries
24
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[6] LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit and term loan
agreement $ -- $3,530,000
Mortgage payable to Fleet Bank bearing
interest at 10.75%, due in monthly
installments of principal and interest
of $15,497 through May 1, 1996 with a
balloon payment of $729,873 due on
June 1, 1996, secured by certain land
and buildings with a depreciated cost
of $3,171,174 740,666 839,773
Mortgage payable to Fleet Bank bearing
interest at 6.98%, due in monthly
installments of principal and interest
of $18,826 through November 1, 2002,
secured by certain land and buildings
with a depreciated cost of $2,991,862 1,798,539 1,893,123
Mortgage payable to Chelsea Groton
Bank bearing interest at 9.25%, due in
monthly installments of principal and
interest of $4,477 through March 2004,
secured by certain land and buildings 292,013 317,452
Small Business Administration loan
bearing interest at 8.5%, due in monthly
installments of principal and interest
of $4,923 through May 2001 249,475 285,665
Note payable to former officer of ASA
bearing interest at 10%, due in monthly
installments of principal and interest
of $7,438 -- 376,419
- --------------------------------------------------------------------------------
Total long-term debt 3,080,693 7,242,432
Less current installments of
long-term debt 179,906 309,258
- --------------------------------------------------------------------------------
Total long-term debt, excluding
current installments $2,900,787 $6,933,174
================================================================================
</TABLE>
A&T has a $20,000,000 revolving credit and term loan agreement that expires on
October 31, 1997. Amounts drawn against the line of credit may be converted into
a term loan at A&T's discretion at any time prior to the expiration of the loan
agreement. If converted, the term loan would be payable in 20 substantially
equal quarterly installments. The alternate rates of interest for the term loan
from which A&T can choose are the bank's base rate, the bank's certificate of
deposit rate plus 1%, or LIBOR plus 3/4%. There is a commitment fee of 1/2% per
annum on the average daily balance of the unused portion of the first $5,000,000
of the commitment and 1/4% per annum on the remaining unused portion of the
commitment, payable quarterly.
The revolving credit and term loan agreement places certain restrictions on
encumbering A&T assets, incurring additional debt, and disposing of any
significant assets. It also requires that A&T maintain at least $10,000,000 in
working capital (excluding deferred income taxes), a net worth of at least
$18,000,000, a debt-to-net-worth ratio of less than 2.5 to 1.0, an interest
coverage ratio of not less than two times interest paid or accrued, and a debt
service ratio of not less than 1.2 to 1.0. As of March 31, 1996, A&T was in
compliance with these covenants.
Under current agreements, principal payments due on long-term debt during each
of the five fiscal years subsequent to March 31, 1996 are as follows: $179,906
in 1997 (excluding $729,873 balloon payment due on June 1, 1996, which the
Company plans to refinance at current rates); $182,731 in 1998; $197,459 in
1999; $213,128 in 2000; and $230,609 in 2001.
The Company paid $640,660; $564,862; and $607,373 in interest on all debts in
fiscal 1996, 1995, and 1994, respectively.
[7] INCOME TAXES
Total income tax expense for the years ended March 31, 1996, 1995, and 1994
consisted of the following:
<TABLE>
<CAPTION>
Current Deferred Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1996:
Federal $ 1,195,813 $ 35,232 $ 1,231,045
State 586,361 (1,864) 584,497
- --------------------------------------------------------------------------------
Continuing
operations 1,782,174 33,368 1,815,542
Discontinued
operations 2,104,716 (3,632,767) (1,528,051)
- --------------------------------------------------------------------------------
Total $ 3,886,890 $(3,599,399) $ 287,491
================================================================================
1995:
Federal $ 1,687,995 $ 103,484 $ 1,791,479
State 1,007,190 (627,638) 379,552
- --------------------------------------------------------------------------------
Continuing
operations 2,695,185 (524,154) 2,171,031
Discontinued
operations (1,630,548) 1,493,616 (136,932)
- --------------------------------------------------------------------------------
Total $ 1,064,637 $ 969,462 $ 2,034,099
================================================================================
1994:
Federal $ 1,878,772 $ (383,880) $ 1,494,892
State 568,502 (207,095) 361,407
- --------------------------------------------------------------------------------
Continuing
operations 2,447,274 (590,975) 1,856,299
Discontinued
operations (1,102,372) 1,090,581 (11,791)
- --------------------------------------------------------------------------------
Total $ 1,344,902 $ 499,606 $ 1,844,508
================================================================================
</TABLE>
Analysis & Technology, Inc. and Subsidiaries
25
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income tax expense from continuing operations differed from the amount computed
by applying the U.S. federal income tax rate of 34% to earnings before income
taxes as a result of the following:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected tax
expense from
continuing operations $ 1,837,333 $ 1,748,016 $ 1,486,427
Increase (decrease) in
income taxes resulting
from:
Amortization of goodwill 153,966 145,451 108,863
Equity in joint venture (117,586) (109,226) (58,287)
State income taxes
(net of valuation
allowance and federal
income tax benefit) 385,768 250,505 238,529
Research and
development credits (400,000) -- --
Other (net) (43,939) 136,285 80,767
- --------------------------------------------------------------------------------
$ 1,815,542 $ 2,171,031 $ 1,856,299
================================================================================
</TABLE>
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 tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities as
of March 31, 1996 and 1995 are presented below:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Uncollected receivables that are not
yet deductible for tax purposes $ 11,701 $ 363,782
Compensated absences, principally
due to accrual for financial
reporting purposes 844,578 1,063,684
Deferred compensation 1,006,708 876,323
Net operating loss carryforwards 275,918 358,769
Other -- 138,657
- --------------------------------------------------------------------------------
Total gross deferred tax assets 2,138,905 2,801,215
Less valuation allowance 153,470 183,300
- --------------------------------------------------------------------------------
Net deferred tax assets 1,985,435 2,617,915
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Tax depreciation in excess
of financial statement depreciation (1,095,109) (1,292,702)
Capitalized software
product development costs (127,555) (48,422)
Unbilled contract revenue (2,028,039) (2,509,820)
Other (24,591) (23,462)
- --------------------------------------------------------------------------------
Total gross deferred
tax liabilities (3,275,294) (3,874,406)
- --------------------------------------------------------------------------------
Net deferred tax liability $(1,289,859) $(1,256,491)
================================================================================
</TABLE>
At March 31, 1996 and March 31, 1995, the Company had net operating loss
carryforwards of approximately $1,650,000 and $3,550,000, respectively. Such
carryforwards have various expiration dates and begin to expire in the year
ended March 31, 1999. For financial purposes, a valuation allowance of $153,470
and $183,300 has been recognized to offset the deferred tax asset related to the
portion of these net operating losses which the Company believes will more
likely than not expire unutilized.
Management has evaluated the remaining temporary differences and concluded that
it is more likely than not that the Company will have sufficient taxable income
of an appropriate character within the carryback and carryforward period
permitted by current tax law to allow for the utilization of the deductible
amounts generating the deferred tax assets and, therefore, no valuation
allowance is required as of March 31, 1996 and 1995.
The Company made federal and state income tax payments of $4,357,117;
$1,335,533; and $1,416,541 during fiscal 1996, 1995, and 1994, respectively.
[8] STOCK OPTIONS
A&T has granted common stock options to certain key employees under its stock
option plans. All plans provide that the fair market value upon which option
exercise prices are based shall be the average of the high and low sale prices
of the Company's common stock as reported on the NASDAQ National Market on the
day the option is granted. Options awarded are vested at a rate of 20% annually,
commencing on the date of award.
The changes in the number of common shares under option are summarized as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at beginning
of year 574,207 564,946 720,177
Granted 146,410 134,600 67,000
Exercised (70,204) (59,161) (176,482)
Canceled or expired (51,200) (66,178) (45,749)
- -------------------------------------------------------------------------
Outstanding at end of year 599,213 574,207 564,946
=========================================================================
Price range per share of
options exercised $9.75-10.50 $9.07-16.63 $9.07-16.63
=========================================================================
Price range per share of
options outstanding $9.06-16.63 $9.06-16.63 $9.06-16.63
=========================================================================
Shares reserved for
stock options 669,788 642,547 619,161
=========================================================================
</TABLE>
Options for 379,595 shares were exercisable at March 31, 1996. The average price
per share of options exercised in fiscal 1996, 1995, and 1994 was $10.07;
$10.53; and $10.51, respectively.
In addition, the Company can grant stock options to certain key employees
totaling up to 19% of the authorized common stock of Integrated Performance
Decisions, Inc. (IPD), a subsidiary of the Company, to purchase IPD's stock. The
price of the options as of the date of award and subsequent valuation is based
on a calculation considering book value per share and an earnings factor.
Approximately 90% of the available options have been granted to date; none have
been exercised.
Analysis & Technology, Inc. and Subsidiaries
26
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[9] EMPLOYEE BENEFIT PLANS
The Company's Savings and Investment Plan is a discretionary contribution plan
as defined in the Internal Revenue Code, Section 401(a)(27). The plan covers
substantially all of the Company's full-time employees. The Company's
contributions are made at the discretion of the Board of Directors for any plan
year. For the plan years ended December 31, 1995, 1994, and 1993, the Company
matched up to 50% of a participant's contribution of up to a maximum of 6% of
the participant's compensation, depending on the business unit to which the
participant was assigned. The Company's matching contributions to this plan were
$1,039,829; $1,409,709; and $1,316,582 for the years ended March 31, 1996, 1995,
and 1994 respectively. The Company's matching contributions to this plan related
to GSS were $37,119; $62,232; and $49,174 for the years ended March 31, 1996,
1995, and 1994, respectively. One of the investment options available under the
Company's Savings and Investment Plan is the purchase of the Company's stock.
The Plan owned 72,692; 40,162; and 33,000 shares of common stock of the Company
at March 31, 1996, 1995, and 1994, respectively.
The A&T Employee Stock Ownership Plan (ESOP) covers substantially all full-time
employees. Contributions to the plan are made at the discretion of the Board of
Directors for any plan year. A&T's contributions to the plan amounted to
$100,000; $80,900; and $108,900 for fiscal 1996, 1995, and 1994, respectively.
The plan owned 423,768; 457,990; and 484,667 shares of common stock of the
Company at March 31, 1996, 1995, and 1994, respectively, and all shares are
allocated to the participants of the ESOP and are included in outstanding shares
of common stock.
A&T's liability to employees for deferred compensation of $2,601,020 and
$2,139,274 as of March 31, 1996 and 1995, respectively, is included in other
long-term liabilities on the accompanying consolidated balance sheets. The
corresponding invested assets are shown as deferred compensation plan
investments.
Applied Science Associates, Inc. (ASA) maintained a defined contribution
employee stock ownership and profit-sharing plan for substantially all of ASA's
full-time employees. On October 1, 1995, ASA's defined contribution employee
stock ownership and profit-sharing plan was merged into the Company's Savings
and Investment plan.
[10] ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Accrued vacation $3,492,434 $3,621,970
Accrued compensation and
related taxes 2,381,537 2,995,917
Accrued benefits 938,367 1,382,725
Other 835,685 539,885
- --------------------------------------------------------------------------------
$7,648,023 $8,540,497
================================================================================
</TABLE>
[11] COMMITMENTS AND CONTINGENCIES
The Company occupies certain office facilities and uses certain equipment under
lease agreements with terms that range from two to six years. Many of the leases
have renewal options with similar terms. All of these agreements are accounted
for as operating leases. Minimum lease payments for which the Company is
obligated are as follows (the amounts are net of certain maintenance expenses,
insurance, and taxes):
<TABLE>
<CAPTION>
Years ending March 31:
- --------------------------------------------------------------------------------
<S> <C>
1997 $ 4,300,823
1998 3,392,408
1999 1,607,049
2000 467,772
2001 88,200
- --------------------------------------------------------------------------------
Total minimum lease payments $ 9,856,252
================================================================================
</TABLE>
Lease expense amounted to approximately $4,258,000; $4,450,000; and $3,000,000
in fiscal 1996, 1995, and 1994, respectively.
Under the terms of the Design Systems & Services, Inc. purchase agreement, the
Company is committed to make contingent payments up to $400,000 to the former
owner of the company. Contingent payments are based on 15% of revenues derived
from sales of a ship design software product made between the purchase date and
April 30, 1999. The Company made contingent payments to the former owner
totaling $17,680 during fiscal 1996.
The U.S. Government has the right to audit and make retroactive adjustments
under certain contracts. Audits through March 31, 1994 have been completed. In
the opinion of management, adjustments, if any, resulting from audits for the
years ended March 31, 1995 and 1996 will not have a material effect on the
Company's consolidated financial statements.
In fiscal 1995 and 1996, the Company received $200,000 under the terms of a
development agreement with a state-financed corporation, Connecticut
Innovations, Inc. (CII), to assist in funding the development of commercial
imaging processing products and services. Under the terms of the agreement, the
Company is required to remit quarterly royalty payments of up to 5% of the gross
sales of imaging products and services and 25% of the aggregate amount of
one-time license fees received through September 30, 1999. After September 1999,
royalty payments shall be made at the greater of the amount stated above or 2%
of the commercial sales of the Company's Engineering Technology Center (ETC)
Business Unit, until cumulative royalty payments to CII reach $200,000. Royalty
payments will be deemed to be paid in full if at any time after October 1996,
CII has received a 25% annual compounded rate of return on all funds advanced to
the Company.
The Company is in final negotiations with the Connecticut Department of Economic
Development to receive $450,000 to fund interactive multimedia development.
Under the terms of the negotiation, the Company will be required to pay
royalties equal to 3% of gross sales of interactive multimedia products
initiated in Connecticut. Royalty payments will be deemed to be paid in full
when royalty payments are equal to a return on investment of 15% and the Company
has maintained a Connecticut presence. The terms of the agreement are expected
to be finalized in fiscal 1997.
The Company may from time to time be involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's consolidated financial position or results of
operations.
Analysis & Technology, Inc. and Subsidiaries
27
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[12] QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following summarizes quarterly results of operations for the years ended
March 31, 1996 and 1995:
<TABLE>
<CAPTION>
Dollars in thousands except per share amounts
Quarter ended June 30 September 30 December 31 March 31 Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996:
Revenue from continuing operations $ 31,335 $ 31,120 $ 29,353 $31,116 $ 122,924
Operating earnings from continuing operations 1,630 1,584 1,608 1,432 6,254
Net earnings from continuing operations 760 1,181 820 827 3,588
Loss from discontinued operations,
net of income tax benefit (46) (96) (53) -- (195)
Loss on the disposal of discontinued operations,
net of income tax benefit -- (1,316) -- -- (1,316)
Net earnings (loss) 714 (231) 767 827 2,077
Earnings (loss) per share:
Continuing operations 0.31 0.47 0.33 0.33 1.44
Discontinued operations (0.02) (0.56) (0.02) -- (0.61)
Net earnings (loss) 0.29 (0.09) 0.31 0.33 0.83
1995:
Revenue from continuing operations $ 31,058 $ 32,442 $ 32,454 $35,220 $ 131,174
Operating earnings from continuing operations 1,390 1,518 1,532 1,512 5,952
Net earnings from continuing operations 749 733 770 718 2,970
Earnings (loss) from discontinued operations,
net of income tax benefit (67) (101) (63) 34 (197)
Net earnings 682 632 707 752 2,773
Earnings (loss) per share:
Continuing operations 0.31 0.30 0.31 0.29 1.20
Discontinued operations (0.03) (0.04) (0.03) 0.01 (0.08)
Net earnings 0.28 0.26 0.28 0.30 1.12
</TABLE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Analysis & Technology, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Analysis &
Technology, Inc. and Subsidiaries as of March 31, 1996 and 1995, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the years in the three-year period ended March 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Analysis &
Technology, Inc. and Subsidiaries as of March 31, 1996 and 1995 and the results
of their operations and their cash flows for each of the years in the three-year
period ended March 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Hartford, Connecticut
May 3, 1996
Analysis & Technology, Inc. and Subsidiaries
28
<PAGE> 18
CORPORATE INFORMATION
TRANSFER AGENT AND REGISTRAR
Chemical Mellon Shareholder Services
111 Founders Plaza, 11th Floor
East Hartford, Connecticut 06108-3212
1-800-288-9541
AUDITORS
KPMG Peat Marwick LLP, Hartford, Connecticut
COUNSEL
Cummings & Lockwood, Hartford, Connecticut
FORM 10-K
Copies of the Company's fiscal 1996 Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission, may be obtained at no charge by writing
to:
Elaine G. Beckwith
Corporate Communications Manager
Analysis & Technology, Inc.
Route 2, P.O. Box 220
North Stonington, CT 06359-0220
E-mail address: [email protected]
ANNUAL MEETING
Analysis & Technology, Inc.'s annual meeting of shareholders will be held on
Tuesday, August 13, 1996 at 10:00 a.m. at The Mystic Hilton, 20 Coogan
Boulevard, Mystic, Connecticut.
MARKET AND DIVIDEND INFORMATION
Analysis & Technology, Inc.'s common stock is currently traded on the NASDAQ
National Market under the symbol AATI. The high and low sale prices of the
Company's common stock from April 1, 1994 through March 31, 1996 by quarter have
been as follows:
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
- ---------------------------------------------
<S> <C> <C>
1994: June 30 15.75 14.50
September 30 15.75 13.75
December 31 15.75 14.50
1995: March 31 16.50 12.50
June 30 14.00 12.00
September 30 15.00 13.00
December 31 16.00 13.25
1996: MARCH 31 14.25 12.25
</TABLE>
The Company declared an annual dividend of $.27 per share, payable on April 19,
1996 to shareholders of record on March 29, 1996. The annual dividend for the
fiscal year ended March 31, 1995 was $.26 per share.
On May 21, 1996, there were approximately 318 shareholders of record and
2,452,203 shares of common stock outstanding.
OFFICE LOCATIONS
ANALYSIS & TECHNOLOGY, INC.
CORPORATE OFFICE
Route 2, P.O. Box 220
North Stonington, CT 06359-0220
(860) 599-3910
CALIFORNIA
A&T Monterey
A&T San Diego
Integrated Performance Decisions, Inc. (IPD)
Monterey
CONNECTICUT
A&T North Stonington
A & T International Corporation (ATIC)
North Stonington
IPD North Stonington
A&T New London
Fleet Support Center (FSC) New London
Engineering Technology Center (ETC) Mystic
FLORIDA
A&T Orlando
A&T Panama City
Government Systems Segment (GSS)
Panama City Beach
MARYLAND
A&T Burtonsville
ETC Proteus Engineering Stevensville
MICHIGAN
Automation Software Incorporated (ASI)
Farmington Hills
MISSISSIPPI
A&T Bay St. Louis
NEW JERSEY
A&T Mt. Laurel
OKLAHOMA
A&T Oklahoma City
PENNSYLVANIA
Applied Science Associates, Inc. (ASA) Butler
RHODE ISLAND
A&T Newport
IPD Newport
ASI North Kingstown
SOUTH CAROLINA
FSC North Charleston
VIRGINIA
A&T Arlington
IPD Arlington
ETC Arlington
A&T Chesapeake
FSC Chesapeake
A&T Dahlgren
A&T Herndon
A&T McLean
Prism-Dae, Inc. McLean
AUSTRALIA
A&T Fyshwick
CANADA
IPD Victoria
Analysis & Technology, Inc. is an Affirmative Action/
Equal Opportunity Employer.
<PAGE> 19
[A&T LOGO]
http://www.aati.com
Analysis & Technology, Inc.
Route 2
P.O. Box 220
North Stonington, CT 06359-0220
(860) 599-3910
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF ANALYSIS & TECHNOLOGY, INC.
<TABLE>
<CAPTION>
NAMES UNDER WHICH JURISDICTION OF
NAME DOING BUSINESS INCORPORATION
- ---- ----------------- ---------------
<S> <C> <C>
Applied Science Associates, Inc. ----- Pennsylvania
Analysis & Technology
Australia Pty Limited ----- Australia
Continental Dynamics, Inc. ----- Virginia
Analysis & Technology
International Corporation ----- Delaware
Integrated Performance Decisions, Inc. ----- Delaware
Numerical Decisions Group, Inc. ----- Canada
Prism-Dae, Inc. ----- Delaware
</TABLE>
JOINT VENTURES WITH ANALYSIS & TECHNOLOGY, INC.
<TABLE>
<S> <C> <C>
Automation Software Incorporated ----- Delaware
</TABLE>
<PAGE> 1
Exhibit 23
[KPMG Peat Marwick LLP LOGO]
CityPlace II
Hartford, CT 06103-4103
ACCOUNTANTS' CONSENT
The Board of Directors
Analysis & Technology, Inc.
We consent to incorporation by reference in the registration statements (Nos.
333-04265 and 333-05267) on Form S-8 of Analysis & Technology, Inc. of our
report dated May 3, 1996, relating to the consolidated balance sheets of
Analysis & Technology, Inc. and subsidiaries as of March 31, 1996 and 1995, and
the related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended March 31, 1996,
which report appears in the March 31, 1996 annual report on Form 10-K of
Analysis & Technology, Inc.
In addition, we consent to incorporation by reference in the registration
statements (Nos. 333-04265 and 333-05267) on Form S-8 of Analysis & Technology,
Inc. of our report dated May 10, 1996, relating to the statements of net assets
available for plan benefits of the Analysis & Technology, Inc. Savings and
Investment Plan as of December 31, 1995 and 1994, and the related statements of
changes in net assets available for plan benefits for the years then ended, and
the related supplementary schedules, which report appears in the December 31,
1995 annual report on Form 11-K of the Analysis & Technology, Inc. Savings and
Investment Plan.
/s/ KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP
Hartford, Connecticut
June 21, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000310876
<NAME> ANALYSIS & TECHNOLOGY, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,179
<SECURITIES> 0
<RECEIVABLES> 24,250
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,232
<PP&E> 31,442
<DEPRECIATION> 17,310
<TOTAL-ASSETS> 56,437
<CURRENT-LIABILITIES> 11,443
<BONDS> 0
0
0
<COMMON> 305
<OTHER-SE> 38,974
<TOTAL-LIABILITY-AND-EQUITY> 56,437
<SALES> 0
<TOTAL-REVENUES> 122,924
<CGS> 0
<TOTAL-COSTS> 116,670
<OTHER-EXPENSES> 338
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 512
<INCOME-PRETAX> 5,404
<INCOME-TAX> 1,816
<INCOME-CONTINUING> 3,588
<DISCONTINUED> (1,511)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,077
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0
</TABLE>
