<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14161
ANALYSIS & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Connecticut 95-2579365
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 2, North Stonington, Connecticut 06359
(Address of principal executive office)
(Zip Code)
(860) 599-3910
(Registrant's telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of the close of business February 11, 1997, the registrant had
outstanding 2,342,422 shares of Common Stock.
<PAGE> 2
CONTENTS
Page
----
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 5
Part II. OTHER INFORMATION REQUIRED IN REPORT
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of
Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
For the Quarters and Nine-Month Periods Ended December 31, 1996 and 1995
(Amounts in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
-------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue from continuing operations $ 35,653 $ 29,353 $ 103,648 $ 91,808
Costs & expenses 34,007 27,745 98,707 86,986
------ ------ ------- ------
Operating earnings from
continuing operations 1,646 1,608 4,941 4,822
----- ----- ----- -----
Other deductions (income):
Interest expense 129 175 303 546
Interest income (2) (55) (62) (59)
Equity in income of joint venture (101) (83) (123) (239)
Other, net 194 169 533 518
--- --- --- ---
220 206 651 766
--- --- --- ---
Earnings from continuing operations
before income taxes 1,426 1,402 4,290 4,056
Income taxes 558 582 1,780 1,295
--- --- ----- -----
Net earnings from
continuing operations 868 820 2,510 2,761
Discontinued Operations:
Loss from discontinued operations,
net of income tax benefit -- (53) -- (195)
Loss on the disposal of discontinued
operations, net of income tax benefit -- -- -- (1,316)
------
Net earnings $ 868 $ 767 $ 2,510 $ 1,250
========= ========= ========= =========
Primary earnings (loss) per common and common equivalent share:
Continuing operations $ 0.36 $ 0.33 $ 1.04 $ 1.11
Discontinued operations -- (0.02) -- (0.61)
--------- --------- --------- ---------
Net earnings $ 0.36 $ 0.31 $ 1.04 $ 0.50
========= ========= ========= =========
Fully diluted earnings (loss) per common and common equivalent share:
Continuing operations $ 0.36 $ 0.33 $ 1.03 $ 1.11
Discontinued operations -- (0.02) -- (0.61)
--------- --------- --------- ---------
Net earnings $ 0.36 $ 0.31 $ 1.03 $ 0.50
========= ========= ========= =========
Weighted average shares and common
equivalent shares outstanding
Primary 2,418 2,514 2,416 2,482
Fully Diluted 2,422 2,515 2,429 2,497
</TABLE>
See accompanying notes to the consolidated financial statements.
1
<PAGE> 4
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, 1996 (UNAUDITED) MARCH 31, 1996
------ ----------------------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ -- $ 4,179
Marketable equity securities 199 --
Contract receivables 28,008 24,250
Notes and other receivables 1,126 1,260
Prepaid expenses 2,020 1,543
----- -----
Total current assets 31,353 31,232
Property, buildings, and equipment, net 14,029 14,132
Other assets:
Goodwill, net of accumulated amortization 9,572 6,548
Product development costs, net
of accumulated amortization 484 362
Deposits and other 350 261
Deferred Compensation Plan investments 2,939 2,601
Investment in joint venture 1,424 1,301
----- -----
14,769 11,073
------ ------
TOTAL ASSETS $60,151 $56,437
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 217 $ 180
Accounts payable 2,023 1,779
Accrued expenses 7,200 7,648
Dividends payable -- 659
Deferred income taxes 1,701 1,176
----- -----
Total current liabilities 11,141 11,442
Long-term debt, excluding current installments 5,826 2,901
Deferred income taxes 18 114
Other long-term liabilities 2,959 2,701
----- -----
TOTAL LIABILITIES 19,944 17,158
------ ------
Shareholders' equity:
Common stock, $.125 stated value
Authorized 7,500,000 shares; issued and
outstanding, 2,318,914 shares at
December 31, 1996 and 2,440,303 at
March 31, 1996 290 305
Additional paid-in capital 8,368 9,964
Unrealized holding gains on marketable equity
securities 29 --
Retained earnings 31,520 29,010
------ ------
TOTAL SHAREHOLDERS' EQUITY 40,207 39,279
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $60,151 $56,437
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE> 5
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
NET EARNINGS $ 2,510 $ 1,250
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY CONTINUING OPERATIONS:
Loss associated with discontinued operations -- 1,511
Equity in income of joint venture (123) (239)
Depreciation and amortization of fixed assets 1,904 1,812
Amortization of goodwill 404 333
Amortization of product development costs 81 91
Provision for deferred income taxes 429 (253)
Loss on sale of equipment 200 413
Decrease (increase) in:
Contract receivables (623) 1,909
Notes and other receivables 140 65
Prepaid expenses (386) 466
Other assets (372) (96)
Increase (decrease) in:
Accounts payable and accrued expenses (1,677) (2,597)
Other long-term liabilities (571) 236
---- ---
NET CASH PROVIDED BY CONTINUING OPERATIONS 1,916 4,901
NET CASH USED BY DISCONTINUED OPERATIONS -- (3,345)
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,916 1,556
----- -----
INVESTING ACTIVITIES:
Proceeds from sale of discontinued operations -- 8,007
Additions to property, buildings, and equipment (1,719) (1,359)
Product development costs - continuing operations (204) (116)
Product development costs - discontinued operations -- (1,125)
Proceeds from the sale of equipment 18 6
Acquisition of business units (net of cash acquired) (4,883) (219)
------ ----
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (6,788) 5,194
------ -----
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 3,162 --
Repayments of long-term debt (199) (3,759)
Proceeds from sale of common stock 191 559
Repurchase of common stock (1,802) --
Dividends paid (659) (616)
---- ----
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 693 (3,816)
Increase (decrease) in cash and cash equivalents (4,179) 2,934
CASH AND CASH EQUIVALENTS:
Beginning of period 4,179 502
----- ---
End of period $ -- $ 3,436
======= =======
</TABLE>
During the nine-month period ended December 31, 1996 unrealized holding
gains on marketable equity securities resulted in increases to shareholders'
equity and to marketable equity securities of $29 thousand.
See accompanying notes to the consolidated financial statements.
3
<PAGE> 6
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. The information furnished in the accompanying unaudited Consolidated
Statements of Operations, Consolidated Balance Sheets, and Consolidated
Statements of Cash Flows reflect all adjustments (consisting only of items
of a normal recurring nature) which are, in the opinion of management,
necessary for a fair statement of the Company's results of operations and
financial position for the interim periods. These financial statements
should be read in conjunction with the audited consolidated financial
statements and notes included in the Company's Annual Report for the year
ended March 31, 1996.
2. On October 31, 1995, the Company sold the commercial business of its
Groton, Connecticut-based subsidiary, General Systems Solutions, Inc.
(GSS), to GE Capital Corporation. GSS's Navy business was transferred to
the Company prior to the sale and its commercial business was reclassified
retroactively as a discontinued operation.
3. On July 26, 1996, the Company acquired all of the stock of Vector Research
Company, Inc. ("Vector") of Rockville, Maryland, for approximately $6.0
million in cash plus related expenses and assumption of tax liabilities.
Vector provides engineering and technical services to U.S. Navy customers.
Goodwill totaling approximately $3.3 million was recorded in connection
with this acquisition.
4. During the second quarter of fiscal 1996, the Company analyzed research
expenditures incurred in prior years by the Company and its subsidiaries.
As a result of this analysis, the Company determined it was entitled to
certain federal and state research and development tax credits. The total
amount of such credits accrued in the quarter ended September 30, 1995 was
$400,000 and is presented as a reduction of income taxes on earnings from
continuing operations in the accompanying unaudited Consolidated Statements
of Operations for the nine-month period ended December 31, 1995.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
A summary of comparative results for the quarter and nine-month periods
ended December 31, 1996 and December 31, 1995 is as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS
ENDED DECEMBER 31, PERCENT
1996 1995 CHANGE
---- ---- ------
<S> <C> <C> <C>
Revenue from continuing operations $ 35,653 $ 29,353 21.5
Operating earnings from continuing operations 1,646 1,608 2.4
Earnings from continuing operations
before income taxes 1,426 1,402 1.7
Net earnings from continuing operations 868 820 5.9
Loss from discontinued operations,
net of income tax benefit -- (53) --
Net earnings 868 767 13.2
Primary earnings (loss) per common and common equivalent share:
Continuing operations 0.36 0.33 9.1
Discontinued operations -- (0.02) --
Net earnings per common share 0.36 0.31 16.1
Primary weighted average shares and common
equivalent shares outstanding 2,418 2,514 (3.8)
<CAPTION>
(UNAUDITED)
NINE MONTHS
ENDED DECEMBER 31, PERCENT
1996 1995 CHANGE
---- ---- ------
<S> <C> <C> <C>
Revenue from continuing operations $103,648 $ 91,808 12.9
Operating earnings from continuing operations 4,941 4,822 2.4
Earnings from continuing operations
before income taxes 4,290 4,056 5.8
Net earnings from continuing operations
Without R&D tax credit 2,510 2,361 6.3
Including R&D tax credit N/A 2,761 --
Loss from discontinued operations,
net of income tax benefit -- (195) --
Loss on the disposal of discontinued operations,
net of income tax benefit -- (1,316) --
Net earnings 2,510 1,250 --
Primary earnings (loss) per common and common equivalent share:
Continuing operations
Without R&D tax credit 1.04 0.95 9.5
Including R&D tax credit N/A 1.11 --
Discontinued operations -- (0.61) --
Net earnings per common share 1.04 0.50 --
Primary weighted average shares and common
equivalent shares outstanding 2,416 2,482 (2.7)
</TABLE>
5
<PAGE> 8
Revenue from continuing operations increased 21.5% to $35.7 million for the
three months ended December 31, 1996 from $29.4 million for the three months
ended December 31, 1995. For the nine-month period ended December 31, 1996 (the
first nine months of fiscal 1997), revenues increased 12.9% to $103.6 million
compared with $91.8 million in the first nine months of fiscal 1996. The
increase in revenue is attributable to growth in core defense business including
an increase in non-labor related revenue due to purchased materials and work
subcontracted to other companies, and to the purchase of Vector Research
Company, Inc. (Vector Research) on July 26, 1996. Non-labor related revenue
contributed $1.3 million and $4.0 million, and Vector Research added $3.6
million and $6.0 million for the quarter and nine-month period respectively.
For the quarter and nine-month period ended December 31, 1996, operating
earnings from continuing operations were $1.6 million and $4.9 million,
respectively, compared with $1.6 million and $4.8 million in the comparable
quarter and nine-month period ended December 31, 1995.
Operating margins for the quarter and nine-month period ended December 31,
1996 were 4.6% and 4.8% compared with 5.5% and 5.3% in the prior fiscal year
quarter and nine-month period. The decrease in operating margins was primarily
due to lower fees earned this year on fixed price contracts than in the
comparable quarter and nine-month period ended December 31, 1995. In addition,
operating margins were adversely affected by marketing and sales costs incurred
to expand the Company's commercial information technology and interactive
multimedia (IMM) training work.
Total other expenses as a percentage of revenue decreased to 0.6% for both
the current quarter and nine-month period as compared with 0.7% and 0.8% for the
quarter and nine-month period ended December 31, 1995. Interest expense
decreased for both the current quarter and nine-month period as a result of cash
generated by the sale of the commercial business of the Company's subsidiary,
General Systems Solutions (GSS) on October 31, 1995. Interest income decreased
in the current quarter as a result of the Company's acquisition of Vector
Research as discussed more fully below in "Liquidity and Capital Resources". The
Company's share of income in its joint venture, Automation Software,
Incorporated (ASI) for the nine-month period ended December 31, 1996 was
$123,000 compared with $239,000 in the nine-month period ended December 31,
1995. Earlier in the current fiscal year, ASI experienced a slowdown of sales
during the transition to a new Windows 95 compatible software product. However,
in the current quarter the Company's share of ASI's income was $101,000 compared
with $83,000 in the prior fiscal year third quarter.
Earnings from continuing operations before income taxes were $1.4 million
for both the third quarter of fiscal 1997 and the third quarter of fiscal 1996.
For the first nine months of fiscal 1997, earnings from continuing operations
before income taxes increased 5.8% to $4.3 million from $4.1 million for the
same period in the prior fiscal year.
The Company's effective tax rate on earnings from continuing operations was
39.2% for the third quarter and 41.5% for the first nine months of fiscal 1997
compared with 41.5% and 31.9% for the third quarter and first nine months of
fiscal 1996. The lower effective tax rate in the prior fiscal year's nine-month
period was mainly the result of the Company's one-time accrual of federal and
state research and development (R&D) tax credits totaling $400,000. The lower
effective tax rate for the current quarter was due, in part, to earnings in
Australia which are not taxed because they are offset against prior losses for
which no previous tax benefit had been recorded.
Net earnings from continuing operations for the third quarter of fiscal
1997 were $868,000, or $0.36 per share. This compares to net earnings from
continuing operations for the third quarter of fiscal 1996, of $820,000 or $0.33
per share. Upon the sale of GSS in October 1995, its commercial business was
reclassified retroactively as a discontinued operation. Net earnings for the
third quarter of fiscal 1996 included a loss of $53,000 from this discontinued
operation which resulted in a net earnings of $0.31 per share for the quarter.
For the first nine months of fiscal 1997, net earnings from continuing
operations were $2.5 million, or $1.04 per share. This compares to net earnings
from continuing operations for the first nine months of fiscal 1996, not
including the one-time R&D tax credit previously mentioned, of $2.4 million, or
$0.95 per share. Net earnings for the first nine months of fiscal 1996 included
the R&D tax credit of $400,000 and a loss from discontinued operations of $1.5
million which resulted in net earnings of $0.50 per share.
The weighted average number of common and common equivalent shares
outstanding decreased to 2.4 million in the third quarter and first nine months
of fiscal 1997 compared with 2.5 million in comparable periods
of fiscal
6
<PAGE> 9
1996. The decrease was due in part to the repurchase of the Company's common
shares as discussed more fully below in "Liquidity and Capital Resources".
LIQUIDITY & CAPITAL RESOURCES
For the nine-month period ended December 31, 1996, net cash provided by
operating activities totaled $1.9 million. The net cash increase resulted
primarily from earnings from continuing operations of $2.5 million offset in
part by an increase in contract receivables and a decrease in accounts payable
and accrued expenses. Contract receivables increased $623,000. Government delays
in approving the Vector Research novation agreement resulted in delayed payment
of invoices and added $3.5 million to contract receivables. This increase was
partially offset by the collection of receivables under firm fixed price
contracts. Contract receivables totaled $28.0 million at December 31, 1996,
$24.2 million at March 31, 1996, and $25.4 at December 31, 1995 and represented
47%, 43% and 46%, respectively of total assets at each of those dates. The
average period for payment to the Company was 72 days at December 31, 1996, 71
days at March 31, 1996 and 79 days at December 31, 1995.
Net cash used by investing activities for the nine-month period ended
December 31, 1996 was $6.8 million. The primary use of cash was for the
acquisition of Vector Research. On July 26, 1996, the Company purchased all of
the shares of Vector Research for approximately $6.0 million plus related
expenses and assumption of tax liabilities. The purchase was made from existing
cash and funds available under the Company's revolving credit agreement.
The primary use of cash from financing activities for the nine-month period
ended December 31, 1996 was the repurchase of the Company's common shares. On
March 25, 1996, the Company's Board of Directors announced that it had
authorized the repurchase of up to 200 thousand common shares over a one year
period. Through December 31, 1996 the Company had repurchased 140,700 shares
under the repurchase program at current market prices on the date of purchases.
Funds borrowed as a result of the Vector Research acquisition offset in part by
funds used for share repurchases resulted in net cash provided by financing
activities for the first nine months of fiscal 1997 of $693,000.
Any capital needs not satisfied by cash generated from operations, were,
and in the future will be, met with money borrowed by the Company under its
revolving credit agreement. The total funds available to the Company under this
agreement at December 31, 1996 were $20.0 million. The amount borrowed under the
Company's borrowing agreement was $3.2 million as of December 31, 1996. There
were no borrowings under the Company's revolving credit agreement at March 31,
1996 and December 31, 1995.
It is anticipated that the Company's existing cash, together with funds
generated from operations and borrowings under its revolving credit agreement,
will be sufficient to meet its normal working capital requirements for the
foreseeable future.
As of December 31, 1996, the Company does not have any other major capital
commitments.
The Company believes inflation has not had a material impact on its
business.
7
<PAGE> 10
Part II. OTHER INFORMATION REQUIRED IN REPORT
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
4 Third Amendment to Revolving Credit and Term Loan
Agreement and Revolving Credit Note dated
November 13, 1996
11 Earnings Per Share Calculation
27 Financial Data Schedule
b. Reports on Form 8-K
None.
8
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANALYSIS & TECHNOLOGY, INC.
Date: February 12, 1997 /s/Gary P. Bennett
- ------------------------ ---------------------------
Gary P. Bennett
President and CEO
Date: February 12, 1997 /s/David M. Nolf
- ------------------------ ---------------------------
David M. Nolf
Executive Vice President
9
<PAGE> 12
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
EXHIBITS
TO
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
------------------
FOR THE QUARTER ENDED: DECEMBER 31, 1996
COMMISSION FILE NUMBER: 0-14161
------------------
ANALYSIS & TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
===============================================================================
<PAGE> 13
Exhibit Index
Exhibit Number Description of Documents
- -------------- ------------------------
4 Third Amendment to Revolving Credit and Term Loan
Agreement and Revolving Credit Note Dated
November 13, 1996
11 Earnings Per Share Calculation
27 Financial Data Schedule
i
<PAGE> 1
Exhibit 4
THIRD AMENDMENT TO REVOLVING
CREDIT AND TERM LOAN AGREEMENT AND REVOLVING CREDIT NOTE
THIS AMENDMENT, dated as of November 13, 1996 (the
"Amendment") to the Amended and Restated Revolving Credit and Term Loan
Agreement and the Revolving Credit Note, both dated as of November 15, 1993 and
amended pursuant to a certain First Amendment to Revolving Credit and Term Loan
Agreement and Revolving Credit Note dated as of December 9, 1994 and a Second
Amendment to Revolving Credit and Term Loan Agreement dated as of November 29,
1995 (as so amended, the "Agreement" and the "Note" respectively), is entered
into by and between ANALYSIS & TECHNOLOGY, INC., a Connecticut corporation (the
"Company") and FLEET NATIONAL BANK, formerly known as Shawmut Bank Connecticut,
National Association, a national banking association (the "Bank").
W I T N E S S E T H
WHEREAS, pursuant to the Agreement, the Bank has made certain
advances to the Company and the Company has made certain covenants to the Bank;
and
WHEREAS, the Bank and the Company now desire to amend the
Agreement to provide for, among other things, a change in the net worth covenant
and an extension of the Termination Date.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged
<PAGE> 2
2
and pursuant to the requirements of the Agreement, the parties hereto hereby
agree as follows:
Section 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in, or by reference
in, the Agreement.
Section 2. Amendment to the Agreement.
(a) Section 1.1 of the Agreement is amended and restated to
read as follows:
Section 1.1 Amounts. Subject to the terms and conditions
contained in this Agreement, the Bank agrees to make loans
(the "Revolving Credit Loans" and individually, a "Revolving
Credit Loan") to the Company from time to time prior to
October 31, 1998 (the "Termination Date") in principal amounts
not exceeding at any one time outstanding the sum of
$20,000,000 (such amount, as it may be reduced from time to
time as hereinafter provided, is herein called the
"Commitment") less the face amount of all Letters of Credit
issued for the account of the Company or any other party
guaranteed by the Company (the "Letters of Credit" and each
individually a "Letter of Credit"). Each Revolving Credit Loan
shall be either a Domestic Loan, a CD Loan, or a Eurodollar
Loan as the Company may elect subject to the provisions of
this Agreement. Notwithstanding anything herein to the
contrary, during the term of this Agreement, the sum of (i)
the aggregate outstanding principal amount of Revolving Credit
Loans hereunder plus (ii) the aggregate available face amount
of all Letters of Credit, shall not at any time exceed the
Commitment.
<PAGE> 3
3
(b) Section 1.3 of the Agreement is amended to change the
maturity date of the Term Loan from November 1, 2002 to November 1, 2003, by
substituting the reference to "November 1, 2002" with "November 1, 2003."
(c) Section 7.15 of the Agreement is amended and restated to
read as follows:
Section 7.15. Tangible Net Worth. Permit consolidated
Tangible Net Worth to be less than $22,000,000 at any time as
determined in accordance with generally accepted accounting
principles applied on a consistent basis with that of the
period ending March 31, 1996.
(d) The definition of Intangible Assets set forth in Section
9.1(m) is amended and restated to read as follows:
(m) "Intangible Assets" shall mean capitalized merger
costs, capitalized product development costs (net of
accumulated amortization), copyrights, organization costs and
goodwill.
(e) The definition of Tangible Net Worth set forth in Section
9.1(z) is amended and restated to read as follows:
(z) "Tangible Net Worth" shall mean consolidated
shareholders' equity reduced by Intangible Assets.
(f) Exhibits C, D, E and F to the Agreement are each amended
and restated to read in the form of Exhibits C, D, E and F respectively,
attached hereto and made a part hereof as Exhibits C, D, E and F.
<PAGE> 4
4
Section 3. Conditions and Effectiveness. This Amendment shall
become effective when, and only when, the Bank and the Company have received
counterparts of this Amendment executed by the Bank and by the Company.
Section 4. Reference to and Effect on the Agreement.
(a) Upon the effectiveness of Section 2 hereof, on and after
the date hereof, (i) each reference in the Agreement to "this Agreement,"
"hereunder," "hereof," "herein," or words of like import, and each reference to
the Agreement in the Revolving Credit Note and any other document relating to
the Agreement, shall mean and be in reference to the Agreement as amended hereby
and (ii) each reference in the Revolving Credit Note to "this Note, "
"hereunder," "hereof," "herein," or words of similar import, and each reference
in the Agreement to "the Note" or "the Revolving Credit Note" shall mean and be
in reference to the Revolving Credit Note as amended hereby.
(b) Except as specifically amended herein, the Agreement and
the Note shall remain in full force and effect and are hereby ratified and
confirmed.
Section 5. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
Section 6. Execution and Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which when taken together
shall constitute one in the same instrument.
<PAGE> 5
5
Section 7. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of Connecticut.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the date first above written.
ANALYSIS & TECHNOLOGY, INC.
By: /s/ David M. Nolf
------------------------------
Name: David M. Nolf
Its: Executive Vice President
Chief Financial and
Administrative Officer
FLEET NATIONAL BANK
By: /s/ Matthew E. Hummel
-----------------------------
Name: Matthew E. Hummel
Its: Vice President
<PAGE> 7
7
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
EXHIBIT C
PERMITTED LIENS
---------------
I. REAL ESTATE
-----------
<TABLE>
<CAPTION>
Initial Present Balance
Mortgagor Description Amount*/ 9/30/96
--------- ----------- -------- -------
<S> <C> <C> <C>
Fleet Bank Mortgage loan dated May 30, 1986, as $1,345,000 $687,592
amended, secured by a mortgage on land
and buildings at Technology Park, North
Stonington, Connecticut.
Chelsea Groton Mortgage loan dated March 8, 1978, $522,800 $278,396
Savings Bank secured by a mortgage on land and
buildings at Technology Park, North
Stonington, Connecticut.
Fleet Bank Mortgage loan dated November 25, 1987, $2,300,000 $1,749,011
secured by a mortgage on land and buildings at
238-258 Bank Street, New London, Connecticut.
Connecticut Innovations, Rights in technology under an agreement $300,000 $100,000
Inc. (CII) dated October 19, 1994, to secure
royalties payable in conjunction with
grant for image processing business
development.
Connecticut Department Second mortgage on land and buildings at $450,000 $450,000
of Economic Development 238-258 Bank Street, New London,
(DED) Connecticut, to secure royalties payable
in connection with a grant for development of
IMM Connecticut based multimedia commercial
business.
</TABLE>
- -------------------------
*/ Initial amounts reflect amount borrowed or maximum amount of grant, as
applicable.
<PAGE> 8
8
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
EXHIBIT C (CONTINUED)
PERMITTED LIENS
---------------
II. LEASES
------
Nothing contained in the Amended and Restated Revolving Credit and Term
Loan Agreement shall be construed to limit the ability of the Company to
enter into leases of either real or personal property, including so called
"financing leases" of personal property.
<PAGE> 9
9
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
EXHIBIT D
PERMITTED INDEBTEDNESS
I. REAL ESTATE
<TABLE>
<CAPTION>
Initial Present Balance
Mortgagor Description Amount*/ 9/30/96
--------- ----------- -------- -------
<S> <C> <C> <C>
Fleet Bank Mortgage dated May 30, 1986, as amended, $1,345,000 $687,592
payable with interest at 7.97% with monthly
installments of $11,500 through September 1,
2001, secured by a mortgage on land and
buildings.
Chelsea Groton 9 1/4% mortgage note dated March 8, $522,800 $278,396
Savings Bank 1978, payable in monthly installments of
$4,477 including interest through February
2003, secured by a mortgage on land and
buildings.
Fleet Bank Mortgage note dated November 25, 1987, $2,300,000 $1,749,011
payable with interest at 6.98% in monthly
installments of $18,826 through November 1,
2002, secured by a mortgage on land and
building at 238-258 Bank Street, New London,
Connecticut.
</TABLE>
II. SUBSIDIARY INDEBTEDNESS
-----------------------
A. APPLIED SCIENCE ASSOCIATES, INC. (ASA)
--------------------------------------
<TABLE>
<S> <C> <C>
Small Business Administration Loan, with interest at 8.5%, due in monthly
installments of principal and interest of $4,923 through May 2001, secured
by an interest in the ASA headquarters
building. $500,000 $230,198
======== ========
</TABLE>
*/ Initial amounts reflect amount borrowed.
<PAGE> 10
10
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
EXHIBIT D (CONTINUED)
PERMITTED INDEBTEDNESS
----------------------
III. LEASES
Nothing contained in the Amended and Restated Revolving Credit and Term
Loan Agreement shall be construed to limit the ability of the Company to
enter into leases of either real or personal property, including so called
"financing leases" of personal property.
<PAGE> 11
11
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
EXHIBIT E
PERMITTED LOAN GUARANTEE
------------------------
I. APPLIED SCIENCE ASSOCIATES, INC. (ASA)
--------------------------------------
<TABLE>
<S> <C>
Small Business Administration Loan, with interest at 8.5% , due in monthly
installments of principal and interest of $4,923 through
May 2001, secured by an interest in the ASA building. $500,000
========
</TABLE>
*/ Initial amounts reflect amount borrowed.
<PAGE> 12
12
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
EXHIBIT F
PERMITTED INTER-COMPANY LOANS, ADVANCES AND INVESTMENTS
-------------------------------------------------------
I. OUTSTANDING LOANS, ADVANCES AND INVESTMENTS AS OF 09/30/96
----------------------------------------------------------
<TABLE>
<CAPTION>
Amount
------
<S> <C>
Applied Science Associates, Inc.
--------------------------------
Purchase investment $ 6,250,000
Other investment 2,637,067
-----------
$ 8,887,067
A&T Australia
-------------
Capital investment $ 100,000
Other investment 278,149
-----------
$ 378,149
A&T International
-----------------
Capital investment $ 52,174
Other investment 56,143
-----------
$ 108,317
Integrated Performance Decisions
--------------------------------
Capital investment $ 500,000
Other investment (213,916)
-----------
$ 286,084
II. ADDITIONAL LOANS, ADVANCES, AND INVESTMENTS
AUTHORIZED FOR EXPENDITURE AFTER 09/30/96
Applied Science Associates, Inc. $ 500,000
A&T International, Inc. 0
A&T Australia 0
Available for allocation by A&T among A&T subsidiaries $ 600,000
-----------
$ 1,100,000
-----------
Total $10,759,617
===========
</TABLE>
Revision Date: October 31, 1996
<PAGE> 1
Exhibit 11
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
FOR THE QUARTERS AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
Primary:
- --------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding 2,333,670 2,421,648 2,340,331 2,400,760
Net effect of dilutive stock
options based on the treasury
stock method using the
average market price 84,454 92,206 75,691 81,749
---------- ---------- ---------- ----------
Total 2,418,124 2,513,854 2,416,022 2,482,509
========== ========== ========== ==========
Net earnings $ 867,322 $ 767,401 $2,509,629 $1,250,356
========== ========== ========== ==========
Earnings per common and
common equivalent share $ 0.36 $ 0.31 $ 1.04 $ 0.50
========== ========== ========== ==========
Fully Diluted:
- --------------
Weighted average shares
outstanding 2,333,670 2,421,648 2,340,331 2,400,760
Net effect of dilutive stock
options based on the treasury
stock method using the
ending market price 88,438 93,664 88,601 96,067
---------- ---------- ---------- ----------
Total 2,422,108 2,515,312 2,428,932 2,496,827
========== ========== ========== ==========
Net earnings $ 867,322 $ 767,401 $2,509,629 $1,250,356
========== ========== ========== ==========
Earnings per common and
common equivalent share $ 0.36 $ 0.31 $ 1.03 $ 0.50
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 28,008
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,353
<PP&E> 33,125
<DEPRECIATION> 19,096
<TOTAL-ASSETS> 60,151
<CURRENT-LIABILITIES> 11,141
<BONDS> 0
0
0
<COMMON> 290
<OTHER-SE> 39,917
<TOTAL-LIABILITY-AND-EQUITY> 60,151
<SALES> 0
<TOTAL-REVENUES> 103,648
<CGS> 0
<TOTAL-COSTS> 98,707
<OTHER-EXPENSES> 410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241
<INCOME-PRETAX> 4,290
<INCOME-TAX> 1,780
<INCOME-CONTINUING> 2,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,510
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.03
</TABLE>
