<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1 TO FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported): July 29, 1996
ANALYSIS & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 0-14161 95-2579365
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
ROUTE 2, P.O. BOX 220
NORTH STONINGTON, CONNECTICUT 06359
(Address of Principal Executive Offices) (Zip Code)
(860) 599-3910
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE> 2
EXPLANATORY NOTE
This Amendment is being filed in accordance with and solely to provide
the financial information required by (a)(4) and (b)(2) of Item 7.
Item 7. Financial Statements and Exhibits.
(a) In accordance with Item 7(a)(4) of Form 8-K, and because it was
impracticable to provide the required financial statements for the acquired
business at the time the Company's Current Report on Form 8-K dated July 29,
1996 was filed, the Audited Financial Statements for Vector Research Company,
Inc. for the years ended October 31, 1995 and 1994 and Independent Auditors'
Report and the Unaudited Balance Sheet and Statement of Earnings for the eight
month period ended June 30, 1996 are being filed as part of this Amendment No.1
to Form 8-K on pages F-1 to F-12.
(b) In accordance with Item 7(b)(2) of Form 8-K, and because it was
impracticable to provide the required pro forma financial information relative
to the acquired business at the time the Company's Current Report on Form 8-K
dated July 29, 1996 was filed, the Unaudited Proforma Consolidated Statements of
Income, Proforma Consolidated Balance Sheet, and Notes to Unaudited Proforma
Consolidated Financial Statements are being filed as part of this Amendment No.1
to Form 8-K on pages F-13 to F-18.
(c) Exhibits.
Exhibit No. Document
2 Stock Purchase Agreement (incorporated by
reference to Exhibit 2 to the Registrant's Current
Report on Form 8-K dated July 29, 1996 (Commission
File No. 0-14161))
20 Press Release of the Company dated July 29, 1996
(incorporated by reference to Exhibit 20 to the
Registrant's Current Report on Form 8-K dated July
29, 1996 (Commission File No. 0-14161))
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this amendment to its report to be signed on its
behalf by the undersigned hereunto duly authorized.
ANALYSIS & TECHNOLOGY, INC.
Date: October 7, 1996 By: /s/ David M. Nolf
-----------------
David M. Nolf
Executive Vice President
<PAGE> 4
(a) Financial Statements of Business Acquired
[DELOITTE & TOUCHE LLP Letterhead]
PROPRIETARY
and
CONFIDENTIAL
VECTOR RESEARCH COMPANY, INC.
FINANCIAL STATEMENTS FOR THE YEARS ENDED
OCTOBER 31, 1995 AND 1994, AND
INDEPENDENT AUDITORS' REPORT
F-1
<PAGE> 5
VECTOR RESEARCH COMPANY, INC.
TABLE OF CONTENTS
PROPRIETARY
AND
CONFIDENTIAL
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED
OCTOBER 31, 1995 AND 1994:
Balance Sheets 2
Statements of Earnings 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-8
F-2
<PAGE> 6
[DELOITTE & TOUCHE LLP Letterhead]
PROPRIETARY
AND
CONFIDENTIAL
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Vector Research Company, Inc.:
Rockville, Maryland
We have audited the accompanying balance sheets of Vector Research Company,
Inc., as of October 31, 1995 and 1994, and the related statements of earnings,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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, such financial statements present fairly, in all material
respects, the financial position of Vector Research Company, Inc., as of October
31, 1995 and 1994, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
- ---------------------------
December 22, 1995
F-3
<PAGE> 7
VECTOR RESEARCH COMPANY, INC.
BALANCE SHEETS
OCTOBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1995 1994
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,528,172 $1,103,513
Accounts receivable 3,158,364 2,555,837
Refundable income taxes 3,356 1,743
Prepaid expenses 140,898 98,377
---------- ----------
Total current assets 4,830,790 3,759,470
PROPERTY AND EQUIPMENT 269,393 268,680
OTHER ASSETS 60,027 39,064
---------- ----------
TOTAL $5,160,210 $4,067,214
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 105,226 $ 184,751
Accrued salaries and related payroll taxes 1,288,021 737,494
Accrued pension and profit-sharing contributions 78,880 90,409
Income taxes payable 370 --
Deferred rent 109,641 24,352
Distributions payable 194,032 42,166
---------- ----------
Total current liabilities 1,776,170 1,079,172
DEFERRED RENT 727,220 836,861
---------- ----------
Total liabilities 2,503,390 1,916,033
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value - authorized,
1,000 shares; issued and outstanding, 500 shares 500 500
Additional paid-in capital 21,371 21,371
Retained earnings 2,634,949 2,129,310
---------- ----------
Total stockholders' equity 2,656,820 2,151,181
---------- ----------
TOTAL $5,160,210 $4,067,214
========== ==========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 8
VECTOR RESEARCH COMPANY, INC.
PROPRIETARY AND CONFIDENTIAL
STATEMENTS OF EARNINGS
YEARS ENDED OCTOBER 31, 1995 AND 1994
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
REVENUE:
Contracts $13,222,342 $10,148,184
Other 72,243 34,618
----------- -----------
13,294,585 10,182,802
----------- -----------
COSTS AND EXPENSES:
Cost of services provided 10,980,017 8,207,488
General and administrative 1,462,632 1,223,738
----------- -----------
12,442,649 9,431,226
EARNINGS BEFORE INCOME TAXES 851,936 751,576
PROVISION FOR INCOME TAXES 2,300 1,400
----------- -----------
NET EARNINGS $ 849,636 $ 750,176
=========== ===========
</TABLE>
See notes to financial statements
F-5
<PAGE> 9
VECTOR RESEARCH COMPANY, INC.
PROPRIETARY
AND
CONFIDENTIAL
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED OCTOBER 31, 1995 AND 1994
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
-----------------
Number Additional
of Paid-In Retained
Shares Amount Capital Earnings Total
------ ------ ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 1, 1993 500 $500 $21,371 $ 1,726,120 $ 1,747,991
Net earnings -- -- -- 750,176 750,176
Distributions paid and payable -- -- -- (346,986) (346,986)
--- ---- ------- ----------- -----------
BALANCE, OCTOBER 31, 1994 500 500 21,371 2,129,310 2,151,181
Net earnings -- -- -- 849,636 849,636
Distributions paid and payable -- -- -- (343,997) (343,997)
--- ---- ------- ----------- -----------
BALANCE, OCTOBER 31, 1995 500 $500 $21,371 $ 2,634,949 $ 2,656,820
=== ==== ======= =========== ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 10
VECTOR RESEARCH COMPANY, INC.
PROPRIETARY
AND
CONFIDENTIAL
STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 1995 AND 1994
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 849,636 $ 750,176
----------- -----------
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 129,002 131,931
Change in operating assets and liabilities:
Increase in accounts receivable (602,527) (473,083)
Increase in refundable income taxes (1,613) (1,443)
(Increase) decrease in prepaid expenses (42,521) 9,674
(Increase) decrease in other assets (20,963) 43,257
(Decrease) increase in accounts payable (79,525) 59,121
Increase in accrued salaries and related payroll taxes 550,527 160,668
(Decrease) increase in accrued pension and
profit-sharing contributions (11,529) 16,976
Increase (decrease) in income taxes payable 370 (1,587)
(Decrease) increase in deferred rent (24,352) 201,414
----------- -----------
Total adjustments (103,131) 146,928
----------- -----------
Net cash provided by operating activities 746,505 897,104
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES -
Capital expenditures (129,715) (88,428)
----------- -----------
CASH FLOWS USED IN FINANCING ACTIVITIES -
Distributions paid (192,131) (304,820)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 424,659 503,856
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,103,513 599,657
----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,528,172 $ 1,103,513
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 3,545 $ 4,478
=========== ===========
</TABLE>
See notes to financial statements.
F-7
<PAGE> 11
VECTOR RESEARCH COMPANY, INC.
PROPRIETARY
AND
CONFIDENTIAL
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - The Company's services are performed for the U.S.
Government under various cost-plus-fixed-fee, time-and-materials, and
fixed-price contracts. Revenues are recorded for cost-type and
time-and-materials contracts as costs are incurred, plus a proportionate
amount of the fee expected to be realized on the contract. Revenues on
fixed-price contracts are generally recognized on the basis of
percentage-of-completion of costs incurred in relation to total estimated
costs. Provisions for estimated losses on uncompleted contracts are
recorded in the period such losses are determined.
Depreciation and Amortization - Property and equipment are recorded at
cost. Depreciation and amortization are computed using the straight-line
method over the useful life of the related asset.
Income Taxes - The Company elected S Corporation status effective November
1, 1992. As a result, income tax liabilities are recorded only for certain
tax obligations (States of Connecticut and Pennsylvania, City of
Philadelphia, and the District of Columbia) in as much as the Federal
income tax and the majority of state income tax liabilities are the
responsibility of the shareholders. Also, the Company was approved by the
Internal Revenue Service to use the cash basis of accounting for income
tax purposes effective November 1, 1992.
2. CASH AND CASH EQUIVALENTS
The Company has a cash management system with its bank that provides for
the investment of excess cash balances in repurchase agreements. The
participating bank transfers the Company's excess cash daily to overnight
investments that are under the bank's control and redeposits the cash the
following day. At October 31, 1995 and 1994, $1,664,711 and $1,188,000,
respectively, were invested under the cash management system. The Company
considers its cash management system investments with initial maturities
of less than 90 days to be cash equivalents.
3. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Billed $ 1,833,090 $ 1,504,280
Unbilled - billable in succeeding month 958,820 952,775
Retainages and other 366,454 98,782
----------- -----------
$ 3,158,364 $ 2,555,837
=========== ===========
</TABLE>
Unbilled receivables represent billings in November 1995 and 1994 for
services performed in October 1995 and 1994.
F-8
<PAGE> 12
PROPRIETARY
AND
CONFIDENTIAL
Contract costs for services provided to the U.S. Government, including
indirect expenses, are subject to audit by the Defense Contract Audit
Agency (DCAA) and subsequent adjustment by negotiations between the
Company and government representatives. Contract revenues are recorded in
amounts that are expected to be realized upon final settlement. DCAA has
completed its audits through fiscal year 1993. In the opinion of
management, adequate provisions have been made for adjustments, if any,
that may result from government audits.
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Office furniture and equipment $ 1,071,899 $ 1,002,127
Leasehold improvements 31,453 22,953
----------- -----------
1,103,352 1,025,080
Less: Accumulated depreciation
and amortization (833,959) (756,400)
----------- -----------
$ 269,393 $ 268,680
=========== ===========
</TABLE>
5. PENSION AND PROFIT-SHARING PLANS
The Company has a defined-contribution pension plan covering substantially
all of its employees. The plan is funded by employer contributions at the
rate of 7.5 percent of employees' compensation. Pension expense for the
years ended October 31, 1995 and 1994, was $424,880 and $313,409,
respectively.
The Company has a profit-sharing plan covering substantially all of its
employees. Employer contributions to this plan are determined by the Board
of Directors and are based on the profits of the Company for each fiscal
year. The Company made no contribution for the year ended October 31, 1995
and contributed $50,000 for the year ended October 31, 1994.
6. STOCKHOLDER COMMITMENTS
The Board of Directors consists of two members who are also stockholders
of the Company. One of the directors is also President and Treasurer of
the Company.
The Board of Directors has authorized annual cash distributions to the
stockholders in an amount equal to sixty percent of the federal taxable
income passed through and taxed to the stockholders; amounts due to
stockholders are shown as distributions payable.
The Board of Directors has also authorized an annual bonus to the
president in an amount equal to ten percent of the Company's net income,
before the effect of income taxes, in excess of $100,000 per annum. For
the fiscal years ended October 31, 1995 and 1994, the amount of such bonus
was approximately $75,000 and $65,000, respectively.
The Board of Directors, effective November 1, 1995, has approved an annual
fee to be paid to the non-employee board member of $30,000.
F-9
<PAGE> 13
PROPRIETARY
AND
CONFIDENTIAL
7. INCOME TAXES
The provision for income taxes consists of the following (see Note 1):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current $2,300 $1,400
Deferred -- --
------ ------
Provision for income taxes $2,300 $1,400
====== ======
</TABLE>
8. LEASE COMMITMENTS
The Company leases office facilities under long-term operating lease
agreements. These leases contain provisions for renewal options and rent
escalations to provide for increases in operating costs.
The Company's lease for its main office facility will expire on December
31, 2001. The lease provides for a rental credit to be applied towards
rent or moving expenses, a construction credit, and increasing rental
payments ranging from $23.00 to $27.49 per square foot over the life of
the lease. The Company began recording rent expense for the lease
effective December 15, 1991, using the straight-line method of accounting
over the term of the agreement.
The aggregate future minimum lease payments as of October 31, 1995, for
all leases with remaining terms in excess of one year are as follows:
Year Ending
October 31,
<TABLE>
<S> <C>
1996 $ 598,413
1997 599,993
1998 605,138
1999 615,921
2000 626,920
2001 and years thereafter 714,565
Total minimum lease payments $3,760,950
</TABLE>
Rent expense for all leases for the years ended October 31, 1995 and 1994,
was $502,386 and $490,501, respectively.
* * * * * *
F-10
<PAGE> 14
VECTOR RESEARCH COMPANY, INC.
BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 578,588
Contract receivables 3,403,992
Notes and other receivables 27,022
Prepaid expenses 107,038
----------
Total current assets 4,116,640
Property, buildings and equipment, net 311,070
Other assets:
Deposits and other 233,042
----------
Total assets $4,660,752
==========
Current liabilities:
Accounts payable $ 163,441
Accrued expenses 1,104,975
----------
Total current liabilities 1,268,416
Other long-term liabilities 764,306
----------
Total liabilities 2,032,722
Shareholders' equity: ----------
Common stock 500
Additional paid-in capital 21,371
Retained earnings 2,606,159
----------
Total Shareholders' Equity 2,628,030
----------
Total Liabilities and Shareholders' Equity $4,660,752
==========
</TABLE>
F-11
<PAGE> 15
VECTOR RESEARCH COMPANY, INC.
STATEMENT OF EARNINGS
FOR THE EIGHT MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Revenue $ 8,884,385
Costs and expenses 8,460,525
-----------
Operating earnings 423,860
Other expense (income):
Interest expense 5,977
Interest income (33,403)
Other, net (103,106)
-----------
(130,532)
-----------
Earnings before income taxes 554,392
Income taxes 720
-----------
Net earnings $ 553,672
===========
</TABLE>
F-12
<PAGE> 16
(b) Pro Forma Financial Information
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF INCOME AND
PROFORMA CONSOLIDATED BALANCE SHEET
The following unaudited proforma consolidated financial statements
reflect the acquisition of Vector Research Company, Inc. ("Vector") by
Analysis & Technology, Inc. (the "Company," "A&T"), under the purchase method
of accounting. The unaudited proforma consolidated statements of income for
the year ended March 31, 1996 and for the three month period ended June 30,
1996 reflect the acquisition of Vector as though the Company purchased Vector
as of April 1, 1995. The unaudited proforma consolidated balance sheet as of
June 30, 1996 reflects the acquisition of Vector as though the Company
purchased Vector as of June 30, 1996. Proforma adjustments are described
in the accompanying notes.
The unaudited proforma consolidated statements of income and
consolidated balance sheet should be read in conjunction with the A&T
Consolidated Financial Statements and related notes included in the 1996
Annual Report to Shareholders. The information relating to Vector was
derived from unaudited financial statements which are not included herein.
The unaudited proforma consolidated statements of income and consolidated
balance sheet are provided for informational purposes only and are not
necessarily indicative of the Company's financial position or actual results
of operations that would have been reported, nor do they propose to indicate
the results of future operations of the Company. In the opinion of
management, all adjustments necessary to present fairly such unaudited
proforma consolidated statements of income and consolidated balance sheet
have been made.
F-13
<PAGE> 17
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
1. On July 26, 1996 the Company entered into a Stock Purchase Agreement
whereby it acquired all of the stock of Vector Research Company, Inc.,
("Vector") of Rockville, Maryland, for approximately $6.0 million in
cash plus associated expenses and assumption of tax liabilities. Vector
provides engineering and technical services to U.S. Navy customers.
Goodwill totaling approximately $3.9 million was recorded in connection
with this acquisition.
2. To record the accrual of Federal and State built in gains tax of
$275,000, due as a result of the acquisition, and to increase accrued
vacation to record the liability at its fair value.
3. To establish a liability for unfavorable lease terms. A portion of the
purchase price for Vector was assigned to an operating lease of Vector
that requires future rental payments deemed to be at above market
rates. The difference between the current market rental rates and the
contractual lease amounts was discounted to its present value to
estimate the additional liability. The Company has recently entered
into negotiations with the landlord to terminate the lease. The actual
outcome of the negotiations is not known at this time.
4. To record the amortization of goodwill associated with the purchase of
Vector for the period presented. Goodwill will be amortized on a
straight line basis over 20 years.
5.
a. To record interest expense at a rate of 8.5% (the Company's
average incremental borrowing rate) related to additional average
borrowings of $3,382,822 and $1,716,800 for the year ended March
31, 1996 and for the three month period ended June 30, 1996,
respectively, required to finance the acquisition of Vector.
b. To record a reduction in interest income at a rate of 4.5% to
reflect the use of the available average cash balance of
$2,757,800 and $4,423,822 for the year ended March 31, 1996 and
for the three month period ended June 30, 1996, respectively, for
the acquisition of Vector.
6. To record amortization of unfavorable lease liability over the
remaining term of the lease, 68 months.
7. To record the income tax effect of proforma adjustments and to record
income taxes on the earnings before income taxes of Vector, which was
previously accounted for as an S-Corporation and therefore did not have
a provision for income taxes. The effective rate used to record these
adjustments was 37.46%, which includes the federal statutory tax rate
of 34% plus the effect of the state statutory tax rates. In addition,
an adjustment has been recorded to reflect the difference in
amortization of goodwill on a tax basis (amortized over 15 years)
versus a book basis (amortized over 20 years). The effect of this
amortization adjustment is a reduction of income tax expense of $25,178
and $6,067 for the year ended March 31, 1996 and for the three month
period ended June 30, 1996, respectively.
8.
a. Cash Equivalents - For financial statement purposes, the Company
considers all cash investments with original maturities of three
months or less at the time of the purchase to be cash equivalents.
b. 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. Equipment acquired in the acquisition of Vector was
valued at fair value.
c. 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
F-14
<PAGE> 18
stock have been considered to be common stock equivalents.
Fully diluted earnings per share is not presented since the
dilution is not material.
d. 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.
F-15
<PAGE> 19
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Unaudited Proforma Consolidated Statements of Earnings
for the Year Ended March 31, 1996
<TABLE>
<CAPTION>
A&T Vector Total
------------- ------------ -------------
<S> <C> <C> <C>
Revenue from continuing operations $ 122,923,875 $ 12,933,805 $ 135,857,680
Costs and expenses 116,669,930 12,350,451 129,020,381
------------- ------------ -------------
Operating earnings from continuing operations 6,253,945 583,354 6,837,299
Other expense (income):
Interest expense 640,660 5,125 645,785
Interest income (129,105) 5,004 (124,101)
Equity in income of joint venture (345,842) -- (345,842)
Other, net 684,309 (114,708) 569,601
------------- ------------ -------------
850,022 (104,579) 745,443
------------- ------------ -------------
Earnings from continuing operations
before income taxes 5,403,923 687,933 6,091,856
Income taxes on earnings from continuing
operations 1,815,542 3,000 1,818,542
------------- ------------ -------------
Net earnings from continuing operations $ 3,588,381 $ 684,933 $ 4,273,314
------------- ------------ -------------
Discontinued Operations:
Loss on disposal of discontinued
operations, net of income tax benefit (1,316,030) -- (1,316,030)
Loss from discontinued operations, net
of income tax benefit (194,730) -- (194,730)
------------- ------------ -------------
Net earnings $ 2,077,621 $ 684,933 $ 2,762,554
============= ============ =============
Earnings (loss) per common and common equivalent share:
Continuing Operations $ 1.44 $ 0.27 $ 1.71
Discontinued Operations (0.61) -- (0.61)
------------- ------------ -------------
Net earnings $ 0.83 $ 0.27 $ 1.10
============= ============ =============
Weighted average shares and common
equivalent shares outstanding 2,493,751 2,493,751 2,493,751
============= ============ =============
<CAPTION>
Adjustments Proforma
----------- -------------
<S> <C> <C>
Revenue from continuing operations $ -- $ 135,857,680
Costs and expenses (13,147)(6) 129,007,234
----------- -------------
Operating earnings from continuing operations 13,147 6,850,446
Other expense (income):
Interest expense 287,540 (5a) 933,325
Interest income 124,101 (5b) --
Equity in income of joint venture -- (345,842)
Other, net 201,647 (4) 771,248
----------- -------------
613,288 1,358,731
----------- -------------
Earnings from continuing operations
before income taxes (600,141) 5,491,715
Income taxes on earnings from continuing
operations 7,708 (7) 1,826,250
----------- -------------
Net earnings from continuing operations $ (607,849) 3,665,465
----------- -------------
Discontinued Operations:
Loss on disposal of discontinued
operations, net of income tax benefit -- (1,316,030)
Loss from discontinued operations, net
of income tax benefit -- (194,730)
----------- -------------
Net earnings $ (607,849) $ 2,154,705
=========== =============
Earnings (loss) per common and common equivalent share:
Continuing Operations $ (0.24) $ 1.47
Discontinued Operations -- (0.61)
----------- -------------
Net earnings $ (0.24) $ 0.86
=========== =============
Weighted average shares and common
equivalent shares outstanding 2,493,751 2,493,751
=========== =============
</TABLE>
See Accompanying notes to the Proforma Consolidated Financial Statements
F-16
<PAGE> 20
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Unaudited Proforma Consolidated Statements of Earnings
for the Three Months Ended June 30, 1996
<TABLE>
<CAPTION>
A&T Vector Total
------------ ----------- ------------
<S> <C> <C> <C>
Revenue $ 32,488,302 $ 3,623,573 $ 36,111,875
Costs and expenses 30,991,479 3,506,019 34,497,498
------------ ----------- ------------
Operating earnings 1,496,823 117,554 1,614,377
Other expense (income):
Interest expense 75,649 850 76,499
Interest income (36,696) (13,072) (49,768)
Equity in income of joint venture (58,715) -- (58,715)
Other, net 161,514 9,080 170,594
------------ ----------- ------------
141,752 (3,142) 138,610
------------ ----------- ------------
Earnings
before income taxes 1,355,071 120,696 1,475,767
Income taxes 562,323 -- 562,323
------------ ----------- ------------
Net earnings $ 792,748 $ 120,696 $ 913,444
============ =========== ============
Earnings (loss) per common and
common equivalent share $ 0.33 $ 0.05 $ 0.38
============ =========== ============
Weighted average shares and common
equivalent shares outstanding 2,421,851 2,421,851 2,421,851
============ =========== ============
<CAPTION>
Adjustments Proforma
----------- ------------
<S> <C> <C>
Revenue $ -- $ 36,111,875
Costs and expenses (3,287)(6) 34,494,211
----------- ------------
Operating earnings 3,287 1,617,664
Other expense (income):
Interest expense 36,482 (5a) 112,981
Interest income 49,768 (5b) --
Equity in income of joint venture -- (58,715)
Other, net 48,587 (4) 219,181
----------- ------------
134,837 273,447
----------- ------------
Earnings
before income taxes (131,550) 1,344,217
Income taxes (10,133)(7) 552,190
----------- ------------
Net earnings $ (121,417) $ 792,027
=========== ============
Earnings (loss) per common and
common equivalent share $ (0.05) $ 0.33
=========== ============
Weighted average shares and common
equivalent shares outstanding 2,421,851 2,421,851
=========== ============
</TABLE>
See Accompanying notes to the Proforma Consolidated Financial Statements
F-17
<PAGE> 21
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Unaudited Proforma Consolidated Balance Sheets
June 30, 1996
<TABLE>
<CAPTION>
Assets A&T Vector Total
----------- ----------- -----------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,321,829 $ 578,588 $ 2,900,417
Contract receivables 23,208,253 3,403,992 26,612,245
Notes and other receivables 1,114,982 27,022 1,142,004
Prepaid expenses 1,311,656 107,038 1,418,694
----------- ----------- -----------
Total current assets 27,956,720 4,116,640 32,073,360
----------- ----------- -----------
Property, building, and equipment, net 14,163,842 311,070 14,474,912
Other assets:
Goodwill, net of accumulated amortization 6,442,793 -- 6,442,793
Product development costs, net of
accumulated amortization 362,715 -- 362,715
Deferred Compensation Plan investments 2,870,844 -- 2,870,844
Investment in joint venture 1,359,819 -- 1,359,819
Deposits and other 209,654 233,042 442,696
----------- ----------- -----------
11,245,825 233,042 11,478,867
----------- ----------- -----------
Total Assets $53,366,387 $ 4,660,752 $58,027,139
=========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 186,319 $ -- $ 186,319
Accounts payable 1,243,254 163,441 1,406,695
Accrued expenses 6,197,023 1,104,975 7,301,998
Deferred income taxes 1,075,161 -- 1,075,161
----------- ----------- -----------
Total Current Liabilities 8,701,757 1,268,416 9,970,173
Long-term debt, excluding current installments 2,836,077 -- 2,836,077
Deferred income taxes 85,009 -- 85,009
Other long-term liabilites 2,942,049 764,306 3,706,355
----------- ----------- -----------
Total Liabilities 14,564,892 2,032,722 16,597,614
----------- ----------- -----------
Shareholders' equity:
Common stock, $.125 stated value. Authorized
7,500,000 shares; issued and outstanding
2,341,615 shares as of June 30, 1996 and
2,440,303 shares as of March 31, 1996 292,702 500 293,202
Additional paid-in capital 8,705,905 21,371 8,727,276
Retained earnings 29,802,888 2,606,159 32,409,047
----------- ----------- -----------
Total Shareholders' Equity 38,801,495 2,628,030 41,429,525
----------- ----------- -----------
Total Liabilities and Shareholders'
Equity $53,366,387 $ 4,660,752 $58,027,139
=========== =========== ===========
<CAPTION>
Assets Adjustments Proforma
------------ -----------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ (2,900,417)(1) $ --
Contract receivables -- 26,612,245
Notes and other receivables -- 1,142,004
Prepaid expenses -- 1,418,694
------------ -----------
Total current assets (2,900,417) 29,172,943
------------ -----------
Property, building, and equipment, net (7,000)(8b) 14,467,912
Other assets:
Goodwill, net of accumulated amortization 3,886,965 (1) 10,329,758
Product development costs, net of
accumulated amortization -- 362,715
Deferred Compensation Plan investments -- 2,870,844
Investment in joint venture -- 1,359,819
Deposits and other -- 442,696
------------ -----------
3,886,965 15,365,832
------------ -----------
Total Assets $ 979,548 $59,006,687
============ ===========
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ -- $ 186,319
Accounts payable -- 1,406,695
Accrued expenses 292,875 (2) 7,594,873
Deferred income taxes -- 1,075,161
------------ -----------
Total Current Liabilities 292,875 10,263,048
Long-term debt, excluding current installments 3,240,205 (1) 6,076,282
Deferred income taxes -- 85,009
Other long-term liabilites 74,498 (3) 3,780,853
------------ -----------
Total Liabilities 3,607,578 20,205,192
------------ -----------
Shareholders' equity:
Common stock, $.125 stated value. Authorized
7,500,000 shares; issued and outstanding
2,341,615 shares as of June 30, 1996 and
2,440,303 shares as of March 31, 1996 (500)(1) 292,702
Additional paid-in capital (21,371)(1) 8,705,905
Retained earnings (2,606,159)(1) 29,802,888
------------ -----------
Total Shareholders' Equity (2,628,030) 38,801,495
------------ -----------
Total Liabilities and Shareholders'
Equity $ 979,548 $59,006,687
============ ===========
</TABLE>
See accompanying notes to the Proforma Consolidated Financial Statements.
F-18
