<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 SEPTEMBER 30, 1998
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 95-579365
(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 on November 10, 1998, the registrant had
outstanding 3,627,384 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 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 10
PART II. OTHER INFORMATION REQUIRED IN REPORT
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 11-12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
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 SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 41,132 $ 38,157 $ 82,452 $ 75,607
Costs & expenses 38,730 36,709 77,581 72,316
-------- -------- -------- --------
Operating earnings 2,402 1,448 4,871 3,291
-------- -------- -------- --------
Other deductions (income):
Interest expense 126 72 210 103
Interest income (58) (43) (72) (61)
Gain on sale of joint venture -- (1,591) -- (1,591)
Equity in income of
joint venture -- (17) -- (5)
Other, net 258 198 570 404
-------- -------- -------- --------
326 (1,381) 708 (1,150)
-------- -------- -------- --------
Earnings before income taxes 2,076 2,829 4,163 4,441
Income taxes 918 1,745 1,837 2,441
-------- -------- -------- --------
Net earnings $ 1,158 $ 1,084 $ 2,326 $ 2,000
======== ======== ======== ========
Basic earnings per common share $ 0.32 $ 0.31 $ 0.64 $ 0.58
-------- -------- -------- --------
Diluted earnings per common share $ 0.29 $ 0.28 $ 0.57 $ 0.54
======== ======== ======== ========
Weighted average shares outstanding
Basic 3,616 3,513 3,620 3,479
Diluted 3,999 3,766 4,038 3,660
</TABLE>
See accompanying notes to the consolidated financial statements.
1
<PAGE> 4
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1998 (UNAUDITED) MARCH 31, 1998
------ ------------------------------ --------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ -- $ 954
Contract receivables 26,906 25,637
Notes and other receivables 1,239 665
Prepaid expenses 3,740 832
------- -------
Total current assets 31,885 28,088
Property, buildings, and equipment, net 14,978 14,886
Other assets:
Goodwill, net of accumulated amortization 15,745 15,402
Product development costs, net
of accumulated amortization 424 302
Deferred Compensation Plan investments 3,794 3,467
Notes receivable 452 539
Deposits and other 466 505
Deferred income taxes -- 420
------- -------
20,881 20,635
------- -------
TOTAL ASSETS $67,744 $63,609
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 337 $ 329
Accounts payable 584 439
Accrued expenses 11,356 11,350
Dividends payable -- 766
Deferred income taxes 792 749
------- -------
Total current liabilities 13,069 13,633
Long-term debt, excluding current installments 3,941 2,161
Deferred income taxes 767 --
Other long-term liabilities 3,814 3,468
------- -------
TOTAL LIABILITIES 21,591 19,262
------- -------
Shareholders' equity:
Common stock, $.083 stated value
Authorized 11,250,000 shares; issued
and outstanding, 3,623,784 shares at
September 30, 1998 and 3,614,537
shares at March 31, 1998 302 301
Additional paid-in capital 8,407 8,928
Retained earnings 37,444 35,118
------- -------
TOTAL SHAREHOLDERS' EQUITY 46,153 44,347
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $67,744 $63,609
======= =======
</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 SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 2,326 $ 2,000
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY OPERATIONS:
Gain on sale of joint venture -- (1,591)
Equity in income of joint venture -- (17)
New product development write-off -- 281
Depreciation and amortization of property,
buildings and equipment 1,192 1,181
Amortization of goodwill 460 291
Amortization of product development costs 88 74
Provision for deferred income taxes 1,230 (369)
Loss on sale of equipment 12 92
Decrease (increase) in:
Contract receivables (1,269) (2,079)
Notes and other receivables (487) 105
Prepaid expenses (2,908) (275)
Other assets (288) (245)
Increase (decrease) in:
Accounts payable and accrued expenses 151 837
Other long-term liabilities 346 230
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 853 515
------- -------
INVESTING ACTIVITIES:
Additions to property, buildings, and equipment (1,299) (1,102)
Product development costs (210) (33)
Proceeds from the sale of equipment 3 4
Proceeds from sale of joint venture -- 3,000
Acquisition of business units (net of cash acquired) (803) (423)
------- -------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (2,309) 1,446
------- -------
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 1,950 --
Repayments of long-term debt (162) (153)
Proceeds from sale of common stock 26 966
Repurchase of common stock (546) (442)
Dividends paid (766) (693)
------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 502 (322)
------- -------
Increase (Decrease) in cash and cash equivalents (954) 1,639
CASH AND CASH EQUIVALENTS:
Beginning of period 954 2,977
------- -------
End of period $ -- $ 4,616
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE> 6
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
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, 1998.
2. In the third quarter of fiscal 1998, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 128, Earnings Per
Share, for calculating earnings per share (EPS). Statement 128 requires
the disclosure of basic EPS, which is computed by dividing income
available to common shareholders by the weighted average number of
common shares outstanding at the end of the period. Diluted EPS, which
gives effect to all dilutive potential common shares outstanding, is
also required. The Company has restated EPS data for the quarter and
six-month periods ended September 30, 1997 as required by Statement
128. Options to purchase 16,500 and 1,750 shares of common stock as of
September 30, 1998 and March 31, 1998, respectively, were not included
in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of common
shares.
3. On December 19, 1997, the Company's Board of Directors authorized a
three-for-two stock split in the form of a stock dividend distributed
on January 29, 1998 to shareholders of record as of the close of
business on January 2, 1998. All references in the financial statements
and schedules to average number of shares outstanding and per share
amounts have been restated to reflect the stock split.
4. Statement of Financial Accounting Standards SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information, establishes
standards for the way that public business enterprises report
information and operating segments in annual financial statements and
requires reporting of selected information in interim financial
reports. This statement is effective for fiscal years beginning after
December 15, 1997. The Company has elected to apply the provisions of
SFAS No. 131 beginning in the quarter ended June 30, 1998. The required
disclosures for interim financial statements are presented below.
The Company operates principally in two segments, Engineering and
Information Technologies (Engineering/IT), and technology-based
training, which it develops through its wholly owned subsidiary,
Interactive Media Corp. (Interactive Media). The Engineering/IT segment
serves primarily the needs of the Department of Defense while the
Interactive Media segment targets both government and commercial
customers. Total revenue by segment includes both sales to unaffiliated
customers, as reported in the Company's consolidated statements of
earnings, and intersegment sales.
4
<PAGE> 7
The following tables present information about the Company's segments for
the quarters and six-month periods ended September 30, 1998 and September
30, 1997.
<TABLE>
<CAPTION>
(Unaudited)
Quarter ended
September 30, 1998
(amounts in thousands) Engineering/IT Interactive Media Eliminations Consolidated
---------------------- -------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 34,945 $ 6,187 $ -- $ 41,132
Intersegment sales 521 48 (569) --
-------- -------- -------- --------
$ 35,466 $ 6,235 $ (569) $ 41,132
-------- -------- -------- --------
-------- -------- -------- --------
Operating earnings $ 2,230 $ 172 -- $ 2,402
-------- -------- -------- --------
Interest expense 126
Interest income (58)
Other, net 258
-------- -------- -------- --------
326
-------- -------- -------- --------
Earnings before income
taxes $ 2,076
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
September 30, 1998
(amounts in thousands) Engineering/IT Interactive Media Eliminations Consolidated
---------------------- -------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 69,584 $ 12,868 $ -- $ 82,452
Intersegment sales 747 81 (828) --
-------- -------- -------- --------
$ 70,331 $ 12,949 $ (828) $ 82,452
-------- -------- -------- --------
-------- -------- -------- --------
Operating earnings $ 4,364 $ 507 $ -- $ 4,871
-------- -------- -------- --------
Interest expense 210
Interest income (72)
Other, net 570
-------- -------- -------- --------
708
-------- -------- -------- --------
Earnings before income
taxes $ 4,163
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
(Unaudited)
Quarter ended
September 30, 1997
(amounts in thousands) Engineering/IT Interactive Media Eliminations Consolidated
---------------------- -------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 34,471 $ 3,686 $ -- $ 38,157
Intersegment sales 199 9 (208) --
-------- -------- -------- --------
$ 34,670 $ 3,695 $ (208) $ 38,157
-------- -------- -------- --------
-------- -------- -------- --------
Operating earnings $ 1,370 $ 78 $ -- $ 1,448
-------- -------- -------- --------
Interest expense 72
Interest income (43)
Gain on sale of joint (1,591)
venture
Equity in income of joint (17)
venture
Other, net 198
-------- -------- -------- --------
(1,381)
-------- -------- -------- --------
Earnings before income
taxes $ 2,829
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
September 30, 1997
(amounts in thousands) Engineering/IT Interactive Media Eliminations Consolidated
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 67,751 $ 7,856 $ -- $ 75,607
Intersegment sales 199 22 (221) --
-------- -------- -------- --------
$ 67,950 $ 7,878 $ (221) $ 75,607
-------- -------- -------- --------
-------- -------- -------- --------
Operating earnings $ 3,050 $ 241 $ -- $ 3,291
-------- -------- -------- --------
Interest expense 103
Interest income (61)
Gain on sale of joint
venture (1,591)
Equity in income of joint
venture (5)
Other, net 404
-------- -------- -------- --------
(1,150)
-------- -------- -------- --------
Earnings before income
taxes $ 4,441
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
A summary of comparative results for the quarter and six-month periods
ended September 30, 1998 and September 30, 1997 is provided below. Results for
the prior year periods include a one-time after tax gain of $405,000 related to
the sale of the Company's interest in Automation Software, Inc. (ASI) in July
1997, and a one-time after tax charge of $318,000 for the write-off of
capitalized software development and related costs. The net effect of the ASI
gain and the software charges was an after tax gain of $87,000. The comparisons
in this discussion and analysis exclude these non-recurring items.
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(EXCLUDING NON-
(INCLUDING NON- (EXCLUDING NON- RECURRING ITEMS)
RECURRING ITEMS) RECURRING ITEMS) PERCENT
1998 1997 1997 CHANGE
---- ---- ---- ------
<S> <C> <C> <C> <C>
Revenue
Engineering/IT $34,945 $34,471 $34,471 1.4%
Interactive Media 6,187 3,686 3,686 67.9%
------- ------- -------
Total 41,132 38,157 38,157 7.8%
Operating earnings
Engineering/IT 2,230 1,370 1,900 17.4%
Interactive Media 172 78 78 120.5
------- ------- -------
Total 2,402 1,448 1,978 21.4%
Earnings before income taxes 2,076 2,829 1,768 17.4%
Net earnings 1,158 1,084 997 16.1%
Basic earnings per common share 0.32 0.31 0.29 10.3%
Diluted earnings per common share 0.29 0.28 0.26 11.5%
</TABLE>
(UNAUDITED)
SIX MONTHS ENDED SEPTEMBER 30
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(EXCLUDING NON-
(INCLUDING NON- (EXCLUDING NON- RECURRING ITEMS)
RECURRING ITEMS) RECURRING ITEMS) PERCENT
1998 1997 1997 CHANGE
---- ---- ---- ------
<S> <C> <C> <C> <C>
Revenue
Engineering/IT $69,584 $67,751 $67,751 2.7%
Interactive Media 12,868 7,856 7,856 63.8%
------- ------- -------
Total 82,452 75,607 75,607 9.1%
Operating earnings
Engineering/IT 4,364 3,050 3,580 21.9%
Interactive Media 507 241 241 110.4%
------ ------- -------
Total 4,871 3,291 3,821 27.5%
Earnings before income taxes 4,163 4,441 3,380 23.2%
Net earnings 2,326 2,000 1,913 21.6%
Basic earnings per common share 0.64 0.58 0.55 16.4%
Diluted earnings per common share 0.57 0.54 0.52 9.6%
</TABLE>
7
<PAGE> 10
Revenue increased 7.8% to $41.1 million for the three months ended
September 30, 1998 from $38.2 million for the three months ended September 30,
1997. For the six-month period ended September 30, 1998 (the first six months of
fiscal 1999), revenue increased 9.1% to $82.5 million compared with $75.6
million in the first six months of fiscal 1998. Revenue for the Company's
Engineering/IT business grew 1.4% to $35.0 million for the second quarter of
fiscal 1999 from $34.5 million for the second quarter of fiscal 1998. For the
first six months of fiscal 1999, the Company's Engineering/IT business grew 2.7%
to $69.6 million from $67.8 million for the first six months of fiscal 1998.
Interactive Media's revenue increased 67.9% to $6.2 million for the second
quarter of fiscal 1999 from $3.7 million for the second quarter of fiscal 1998.
For the first six-months of fiscal 1999, Interactive Media's revenue increased
63.8% to $12.9 million from $7.9 million for the first six months of fiscal
1998. This revenue increase was due in part to the acquisition of UP, Inc. in
November 1997.
For the quarter and six-month period ended September 30, 1998, operating
earnings were $2.4 million and $4.9 million, respectively, compared with $2.0
million and $3.8 million, respectively, in the comparable quarter and six-month
period ended September 30,1997.
Operating earnings as a percentage of revenue (operating margin) increased
to 5.8% for the current quarter and 5.9% for the six-month period ended
September 30, 1998 compared with 5.2% and 5.1%, respectively, for the prior
quarter and six-month period ended September 30, 1997. Operating margin for
Engineering/IT increased to 6.4% in the second quarter of fiscal 1999 from 5.5%
in the second quarter of fiscal 1998. For the first six months of fiscal 1999,
operating margin for Engineering/IT increased to 6.3% from 5.3% for the first
six months of fiscal 1998. Improved cost controls and good performance on
contracts contributed to the Engineering/IT increase. Operating margin in the
current quarter for Interactive Media increased to 2.8% from 2.1% in the prior
year quarter. For the first six months of fiscal 1999 operating margin for
Interactive Media increased to 3.9% from 3.1% in the first six-month period of
fiscal 1998. The increase was due in part to higher fees earned on projects and
in part to a decrease in indirect expenses as a percentage of revenue due to the
revenue growth. While operating margins were higher for the current quarter and
six-month period, they were negatively affected by an increase in sales
expenses. During the first quarter of fiscal 1999, Interactive Media added two
sales people, increasing its sales staff to twelve people. The increase in sales
expenses will negatively affect margin until revenue increases, and indirect
expenses become a smaller percentage of revenue. In addition, during the quarter
a project startup was delayed due to a customer's labor strike, reducing revenue
and increasing indirect labor, and work on another project was extended,
increasing labor costs on that project.
Total other expenses as a percentage of revenue, was 0.8% for the current
quarter, compared to 0.6% for the prior year quarter. For the six-months ended
September 30, 1998, total other expenses as a percentage of revenue was 0.9%
compared with 0.6% for the six-month period ended September 30, 1997. For both
the current quarter and six-month period ended September 30, 1998, interest
expense increased as a result of increased borrowing under the Company's
revolving credit agreement due in part to the acquisitions the Company has made.
Other net expenses also increased in the second quarter and six-month period
ended September 30, 1998 primarily due to an increase in amortization of
goodwill associated with the Company's recent acquisitions.
Earnings before income taxes increased 17.4% to $2.1 million for the second
quarter of fiscal 1999 from $1.8 million in the second quarter of fiscal 1998.
For the first six months of fiscal 1999, earnings before income taxes increased
23.2% to $4.2 million from $3.4 million for the same period in the prior fiscal
year. The increases for the quarter and six-month periods were due largely to
higher revenue and improved margins.
The Company's effective tax rates on earnings were 44.2% for the second
quarter and 44.1% for the first six months of fiscal 1999 compared with 43.6%
and 43.4% for the second quarter and first six months of fiscal 1998. The higher
tax rate is primarily due to the increase in amortization of goodwill, most of
which is not deductible for tax purposes.
Net earnings for the second quarter of fiscal 1999 were $1.2 million,
compared with $1.0 million for the prior fiscal year quarter, an increase of
16.1%. For the first six months of fiscal 1999, net earnings were $2.3 million
compared to net earnings for the first six months of fiscal 1998 of $1.9
million, an increase of 21.6%.
8
<PAGE> 11
Basic earnings per share increased 10.3% to $0.32 for the second quarter of
fiscal 1999 compared with $0.29 for the second quarter of fiscal 1998. For the
six-month period ended September 30, 1998, basic earnings per common share
increased 16.4% to $0.64 compared with $0.55 for the prior year. Diluted
earnings per common share increased 11.5% to $0.29 for the current quarter
compared with $0.26 for the prior year quarter. For the six-month period ended
September 30, 1998, diluted earnings per share increased 9.6% to $0.57 compared
to $0.52 in the prior year.
The weighted average number of common shares used to compute basic earnings
per share increased to 3.6 million for the second quarter and first six months
of fiscal 1999 compared with 3.5 million in the second quarter and first six
months of fiscal 1998. The weighted average number of common shares used to
compute diluted earnings per share increased to 4.0 million for the current
quarter and six-month period compared with 3.8 million and 3.7 million for the
corresponding quarter and six-month period of fiscal 1998. The increase was due
primarily to the exercise of stock options, an increase in the number of stock
options outstanding, and a higher average stock price, offset in part by the
repurchase of the Company's shares as discussed more fully below in "Liquidity
and Capital Resources".
LIQUIDITY & CAPITAL RESOURCES
For the six-month period ended September 30, 1998, net cash provided by
operating activities totaled $853 thousand. Cash generated by net earnings,
after consideration of non-cash charges for depreciation, was offset in part by
an increase in prepaid expenses, primarily federal taxes, and by an increase in
contract receivables of $1.3 million.
Contract receivables totaled $26.9 million, $25.6 million and $26.8 million
as of September 30, 1998, March 31, 1998, and September 30, 1997 and represented
40% as of September 30, 1998 and March 31, 1998 and 44% as of September 30, 1997
of total assets at each of those dates. The average period for payment to the
Company was 60 days at September 30, 1998, 54 days at March 31, 1998 and 64 days
as of September 30, 1997. The collection period is in the normal range for the
Company.
Net cash used by investing activities for the six-months ended September
30, 1998 was $2.3 million. The primary use of this cash was for the purchase of
equipment and for acquisitions.
Net cash provided by financing activities for the first six months of
fiscal 1998 totaled $502 thousand. The primary source of cash from financing
activities was proceeds from long-term borrowing. Uses of cash included
repurchase of the Company's common shares. On May 31, 1997, the Company
announced that it had expanded its share repurchase program. The Company's Board
of Directors authorized the repurchase of an additional 450,000 shares or a
total of up to 750,000 shares in amounts and at times and prices to be
determined by the Company's management. Since the program was initiated in March
1996, the Company has repurchased 399,400 shares. Since March 31, 1998 the
Company has repurchased 42,900 shares under this repurchase program at current
market prices on the dates of purchase. There are approximately 3.6 million
shares outstanding.
Any capital needs not satisfied by cash generated from operations were, and
in the future are expected to be, met with money borrowed by the Company under
its revolving credit agreement. The total funds available to the Company under
this agreement at September 30, 1998 was $20.0 million. There was no borrowing
under the Company's revolving credit agreement at September 30, 1997 and March
31, 1998. Borrowing under the Company's revolving credit agreement was $2.0
million at September 30, 1998.
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.
The Company believes that inflation has not had a material effect on its
business.
9
<PAGE> 12
YEAR 2000
The Company has completed its assessment of its computer systems and has
identified the systems that will be affected by the "Year 2000" issue. The
Company has completed a plan for corrective action, including modification or
replacement of certain systems which should be completed by April 1, 1999. The
Company presently believes that, with modifications to existing software and
conversions to new software and the replacement of personal computers at the end
of their lease term in accordance with the Company's standard practice, the
"Year 2000" issue will not pose significant operational problems for the
Company's computer systems. The total cost of modification and replacement of
affected systems is not expected to have a material effect on the Company's
financial position or results of operations.
The "Year 2000" issue also creates risk for the Company from unforeseen
problems from third parties with whom the Company deals. The Company has
contacted its key suppliers, customers, and other third parties to determine the
possible impact on its business. While no significant issues were identified,
there can be no assurance that their "Year 2000" solutions will be successful.
If third parties do not convert their systems in a timely manner it could have a
material impact on the Company's ability to conduct its business.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, within the meaning of The
Private Securities Litigation Reform Act of 1995. These statements are based on
current expectations and are subject to a number of risks and uncertainties.
Statements relating to the Company's or management's intentions, hopes, beliefs,
expectations, or predictions of the future are forward-looking statements.
Forward looking statements set forth in the paragraphs above that discuss the
Company's liquidity and capital resources and "Year 2000" conversion. The
Company cautions readers that 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, 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 third party failures to complete the "Year 2000" conversions in
a timely manner and/or customers. A more complete discussion of business risk
factors is included in the Company's Form 10-K for the year ended March 31,
1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
10
<PAGE> 13
PART II. OTHER INFORMATION REQUIRED IN REPORT
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
a. NONE.
b. NONE.
c. ON AUGUST 21, 1998, THE COMPANY MERGED ITS
SUBSIDIARY, INTEGRATED PERFORMANCE DECISIONS, INC.
("IPD") INTO ITSELF. UPON CONSUMMATION OF THIS
MERGER, THE ONE PERSON OTHER THAN THE COMPANY WHO
OWNED IPD STOCK RECEIVED AN AGGREGATE OF 2,850 SHARES
OF THE COMPANY'S COMMON STOCK IN A TRANSACTION THAT
WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). NO UNDERWRITER WAS
USED IN CONNECTION WITH THIS TRANSACTION.
BASED ON THE FACT THAT ONLY ONE PERSON COULD AND DID
ACQUIRE COMMON STOCK OF THE COMPANY AND THAT SUCH
PERSON RECEIVED INFORMATION MEETING THE REQUIREMENTS
OF RULE 502(b) UNDER THE SECURITIES ACT, THE COMPANY
RELIED ON THE EXEMPTION FROM REGISTRATION CONTAINED
IN SECTION 4(2) OF THE SECURITIES ACT AND RULE 505
THEREUNDER.
d. NOT APPLICABLE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
THE 1998 ANNUAL MEETING OF SHAREHOLDERS WAS HELD ON AUGUST 11,
1998.
THE FOLLOWING MATTERS WERE VOTED UPON AT THE MEETING AND THE
VOTES CAST FOR, AGAINST OR WITHHELD, AS WELL AS THE NUMBER OF
ABSTENTIONS AND BROKER NON-VOTES AS TO EACH SUCH MATTER, ARE
AS FOLLOWS:
(1) ELECTION OF THE FOLLOWING INDIVIDUALS TO THE
BOARD OF DIRECTORS:
<TABLE>
<CAPTION>
TOTAL VOTES CAST FOR WITHHELD
<S> <C> <C> <C>
LARRY M. FOX 3,178,420 3,147,048 31,372
DAVID M. NOLF 3,178,420 3,145,617 32,803
DENNIS G. PUNCHES 3,178,420 3,140,988 37,432
</TABLE>
DIRECTORS WHOSE TERM OF OFFICE AS DIRECTOR CONTINUED AFTER
THE MEETING:
GARY P. BENNETT
JAMES B. FOX
NELDA S. NARDONE
THURMAN F. NAYLOR
(2) RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK AS INDEPENDENT AUDITORS OF THE
COMPANY FOR FISCAL YEAR 1999: 3,118,144 FOR;
51,583 AGAINST; AND 8,693 ABSTAINED.
(3) APPROVAL OF THE ANALYSIS & TECHNOLOGY, INC.
1998 STOCK OPTION PLAN: 2,831,408 FOR;
318,530 AGAINST; 22,907 ABSTAINED; AND 5,575
BROKER NON-VOTES.
11
<PAGE> 14
(4) APPROVAL OF THE AMENDMENTS TO THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BY-LAWS
REGARDING INDEMNIFICATION AND OTHER MATTERS
RELATING TO THE NEW CONNECTICUT BUSINESS
CORPORATION ACT: 3,146,773 FOR; 9,309
AGAINST; 16,763 ABSTAINED; AND 5,575 BROKER
NON-VOTES.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS
3(i) CERTIFICATE OF INCORPORATION OF THE COMPANY,
AS AMENDED TO AUGUST 12, 1998
3(ii) BY-LAWS OF THE COMPANY, AS AMENDED TO AUGUST
11, 1998
10 ANALYSIS & TECHNOLOGY, INC. 1998 STOCK
OPTION PLAN (INCORPORATED BY REFERENCE TO
EXHIBIT A TO THE COMPANY'S PROXY STATEMENT
DATED JULY 1, 1998 (COMMISSION FILE NO.
0-14161))
11 EARNINGS PER SHARE CALCULATION
27 FINANCIAL DATA SCHEDULES
- FOR NINE MONTHS ENDED 9/30/98
- RESTATED FOR NINE MONTHS ENDED
9/30/97
b. REPORTS ON FORM 8-K
NONE.
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANALYSIS & TECHNOLOGY, INC.
Date: November 12, 1998 /s/Gary P. Bennett
--------------------------- ---------------------------------------------
Gary P. Bennett
President and CEO
Date: November 12, 1998 /s/David M. Nolf
--------------------------- ---------------------------------------------
David M. Nolf
Executive Vice President/
Chief Financial and Administrative Officer
13
<PAGE> 16
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED: SEPTEMBER 30, 1998
COMMISSION FILE NUMBER: 0-14161
ANALYSIS & TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF DOCUMENTS
3(i) CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED TO
AUGUST 12, 1998
3(ii) BY-LAWS OF THE COMPANY, AS AMENDED TO AUGUST 11, 1998
10 ANALYSIS & TECHNOLOGY, INC. 1998 STOCK OPTION PLAN
(INCORPORATED BY REFERENCE TO EXHIBIT A TO THE COMPANY'S PROXY
STATEMENT DATED JULY 1, 1998 (COMMISSION FILE NO. 0-14161))
11 EARNINGS PER SHARE CALCULATION
27 FINANCIAL DATA SCHEDULES
- FOR NINE MONTHS ENDED 9/30/98
- RESTATED FOR NINE MONTHS ENDED 9/30/97
<PAGE> 1
\ CERTIFICATE OF AMENDMENT
STOCK CORPORATION
Office of the Secretary of the State
30 Trinity Street/P.O. Box 150470/Hartford, CT 06115-0470 rev/new/1-97
Space For Office Use Only
1. NAME OF CORPORATION:
ANALYSIS & TECHNOLOGY, INC.
2. THE CERTIFICATE OF INCORPORATION IS (check A., B. or C.)
A. AMENDED.
B. AMENDED AND RESTATED.
XX C. RESTATED.
3. TEXT OF EACH AMENDMENT/RESTATEMENT:
SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF.
(please reference an 8 1/2 X 11 attachment if additional space is needed)
<PAGE> 2
Space For Office Use Only
4. VOTE INFORMATION (check A., B. or C.)
x A. THE RESOLUTION WAS APPROVED BY SHAREHOLDERS AS FOLLOWS:
(set forth all voting information required by Conn. Gen. Stat. section 33-800 as
amended in the space provided below)
<TABLE>
<CAPTION>
CLASS NUMBER OF OUTSTANDING NUMBER OF SHARES VOTES CAST IN FAVOR
VOTING SHARE ENTITLED TO VOTE AMENDMENT
<S> <C> <C> <C>
COMMON 3,669,239 7,500,000 3,146,773
</TABLE>
XXX B. THE RESTATEMENT WAS ADOPTED BY THE BOARD OF DIRECTORS.
C. THE AMENDMENT WAS ADOPTED BY THE INCORPORATORS WITHOUT
SHAREHOLDER ACTION. NO SHAREHOLDER VOTE WAS REQUIRED FOR
ADOPTION.
5. EXECUTION
Dated this 11TH day of AUGUST, 1998
David M. Nolf Executive Vice President /s/ David M. Nolf
PRINT OR TYPE NAME OF SIGNATORY CAPACITY OF SIGNATORY SIGNATURE
<PAGE> 3
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
ANALYSIS & TECHNOLOGY, INC.
1. The name of the Corporation is Analysis & Technology, Inc.
2. The nature of the business to be transacted, or the purposes to be promoted
or carried out by the Corporation, are as follows:
To engage in any lawful act or activity for which corporations may be
formed under the Connecticut Business Corporation Act or any applicable
successor Act thereto, as the same may be amended from time to time.
3. The designation of each class of shares, the authorized number of shares of
each such class, and the par value (if any) of each share thereof, are as
follows:
Class Number of Shares Authorized Par Value
Common 7,500,000 No Par Value
4. No shareholder of the Corporation shall be entitled as a matter of right to
subscribe for, purchase or receive any shares of the Corporation (or any
obligation convertible into, or warrant or other instrument entitling the holder
to purchase, any shares of the Corporation) which the Corporation may issue or
sell, whether out of the number of shares now authorized or whenever authorized,
or out of shares of the Corporation acquired by it after issuance.
5. For the regulation and management of the affairs of the Corporation and for
defining and regulating the powers of the Corporation, its directors and
shareholders, it is further provided:
(a) Number, Election and Terms of Directors. The number of directors of
the Corporation shall be prescribed from time to time by or pursuant to the
By-laws of the Corporation by resolution of the shareholders, acting by the
affirmative vote of the holders of seventy percent (70%) of the voting power of
the shares entitled to vote thereon, or by the affirmative vote of a majority of
the directors prescribed, or if no number is prescribed, a
<PAGE> 4
majority of the directors in office at the time the meeting begins. The
directors shall be classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as possible, as shall
be provided in the manner specified in the By-laws of the Corporation. At each
annual meeting of the shareholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of shareholders held in the
third year following the year of their election.
(b) Shareholder Nomination of Director Candidates. Advance notice of
shareholder nominations for the election of directors shall be given in the
manner provided in the By-laws of the Corporation.
(b) Increases in the Number of Directors and Vacancies. Any vacancy on
the board of directors resulting from death, resignation, disqualification,
removal or other cause shall be filled by the affirmative vote of a majority of
the remaining directors then in office, even though less than a quorum of the
board of directors. If a vacancy is created by an increase in the number of
directors, it shall be filled for the unexpired term by action of shareholders,
acting by the affirmative vote of the holders of seventy percent (70%) of the
voting power of the shares entitled to vote thereon, or by the affirmative vote
of a majority of the directors prescribed, or if no number is prescribed, a
majority of the directors in office at the time the meeting begins. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new director
office was created or the vacancy occurred and until such director's successor
shall have been elected and qualified. No decrease in the number of directors
constituting the board of directors shall shorten the term of any incumbent
director.
(c) Removal of Directors. Any director may be removed from office
without cause only by the affirmative vote of the holders of seventy percent
(70%) of the voting power of the shares entitled to vote thereon. A director may
be removed from office for cause by the affirmative vote of the holders of a
majority of the voting power of the shares entitled to vote thereon.
(d) Shareholder Action. Any action required or permitted to be taken by
the shareholders of the Corporation must be effected at a duly called annual or
special meeting of such shareholders and may not be effected by any consent in
writing by such shareholders unless the consent sets forth the action so taken
or to be taken and is signed by all of the persons who would be entitled to vote
upon such action at a meeting, or by their duly authorized attorneys.
(e) By-law Amendments. The board of directors and the shareholders
shall have the power to make, amend and repeal the By-laws of the Corporation
(except so far as the By-laws adopted by the shareholders shall otherwise
provide). Any By-laws made by the directors under the powers conferred hereby
may be amended or repealed by the directors or by the shareholders; provided
however, that Section 2 of Article II of the By-laws relating to shareholder
action or Sections 2, 3, 4, 5 and 6 of Article III of the By-laws, relating to
the number of directors, terms of office and election of directors, notification
of nominations, removal of directors, and newly created directorships and
vacancies, shall not be amended or repealed, nor shall any provision
inconsistent therewith be adopted, other than by the affirmative vote of the
holders of seventy percent (70%) or more of the
<PAGE> 5
voting power of the shares entitled to vote thereon unless the following two
conditions are met, in which case the shareholder vote required to authorize
such change to the By-laws shall be reduced to a majority of the shares entitled
to vote thereon: (i) the board of directors, by the concurring vote of all of
the directors then in office, unanimously vote to recommend approval of such
action by the shareholders; and (ii) at the time the directors so vote, no
person or group (other than one or more employee benefit plans) is, or intends
to become, the beneficial owner of such portion of the Corporation's stock as
would allow the person or group to directly or indirectly control greater than
twenty percent of the voting power of the Corporation's stock entitled to vote
on the election of directors such that the person or group has been or is
required to report such status or intention to the Securities and Exchange
Commission under Sections 13 or 14 of the Securities Exchange Act of 1934 or the
rules and regulations promulgated pursuant thereto (as all were in effect on
July 15, 1985) or would be so required if the Corporation's common stock were
registered under said Act.
(f) Amendment, Repeal, Etc. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of seventy percent (70%) of the voting power of the shares entitled to
vote thereon shall be required to amend or repeal this Article 5 or any section
thereof or to adopt any provision inconsistent therewith unless the following
two conditions are met, in which case the shareholder vote required to authorize
such change to the Certificate shall be governed by the minimum requirements of
the Connecticut General Statutes: (i) the board of directors, by the concurring
vote of all of the directors then in office, unanimously vote to approve and
recommend approval of such action by the shareholders; and (ii) at the time the
directors so vote, no person or group (other than one or more employee benefit
plans) is, or intends to become, the beneficial owner of such portion of the
Corporation's stock as would allow the person or group to directly or indirectly
control greater than twenty percent of the voting power of the Corporation's
stock entitled to vote on the election of directors such that the person or
group has been or is required to report such status or intention to the
Securities and Exchange Commission under Sections 13 or 14 of the Securities
Exchange Act of 1934 or the rules and regulations promulgated pursuant thereto
(as all were in effect on July 15, 1985) or would be so required if the
Corporation's common stock were registered under said Act.
6. The personal liability to the Corporation or its shareholders of a person who
is or was a director of the Corporation for monetary damages for breach of duty
as a director shall be limited to the amount of the compensation received by the
director for serving the Corporation during the year of the violation if such
breach did not (a) involve a knowing and culpable violation of law by the
director, (b) enable the director or an associate, as defined in subdivision (3)
of Section 33-840 of the Connecticut Business Corporation Act as in effect on
the date hereof and as it may be amended from time to time, to receive an
improper personal economic gain, (c) show a lack of good faith and a conscious
disregard for the duty of the director to the Corporation under circumstances in
which the director was aware that his conduct or omission created an
unjustifiable risk of serious injury to the Corporation, (d) constitute a
sustained and unexcused pattern of inattention that amounted to an abdication of
the director's duty to the Corporation, or (e) create liability under Section
33-757 of the Connecticut Business Corporation Act as in effect on the effective
date hereof and as it may be amended from time to time. The personal liability
of a person who is or was a director to the Corporation or its shareholders for
breach of duty as a director shall further be limited to the full extent allowed
from time to time by Connecticut law. This Article 6 shall not limit or preclude
the liability of a person who is or was a director for any act or omission
occurring prior to the effective date hereof. Any lawful repeal or modification
of this Article 6 or the adoption of any provision
<PAGE> 6
inconsistent herewith by the Board of Directors and the shareholders of the
Corporation shall not, with respect to a person who is or was a director,
adversely affect any limitation of liability, right or protection of such person
existing at or prior to the effective date of such repeal, modification or
adoption of a provision inconsistent herewith.
7. Indemnification.
(a) The Corporation shall indemnify its directors for liability, as
defined in Section 33-770(5) of the Connecticut Business Corporation Act, to any
person for any action taken, or any failure to take any action, as a director,
except liability that: (a) involved a knowing and culpable violation of law by
the director; (b) enabled the director or an associate (as defined in Section
33-840 of the Connecticut Business Corporation Act) to receive an improper
personal gain; (c) showed a lack of good faith and conscious disregard for the
duty of the director to the Corporation under circumstances in which the
director was aware that his conduct or omission created an unjustifiable risk of
serious injury to the Corporation; (d) constituted a sustained and unexcused
pattern of inattention that amounted to an abdication of the director's duty to
the Corporation; or (e) created liability under Section 33-757 of the
Connecticut Business Corporation Act. Notwithstanding the preceding sentence,
the Corporation shall not be required to indemnify an indemnitee in connection
with a proceeding (or part thereof) commenced by the Corporation against the
indemnitee or commenced by the indemnitee against the Corporation. This Article
shall not affect the indemnification or advance of expenses to a director for
any liability stemming from acts or omissions occurring prior to the effective
date of this Article.
(b) The Corporation shall not be obligated by Section 33-776(d) of the
Connecticut General Statutes to indemnify, or advance expenses, to any current
or former officer, employee or agent of the Corporation who is not a director.
However, the Corporation may, at the discretion of the board of directors,
indemnify, or advance expenses to, any current or former officer, employee or
agent of the Corporation who is not a director to the fullest extent permitted
by law.
<PAGE> 1
ANALYSIS & TECHNOLOGY, INC.
CORPORATE BY-LAWS
AMENDED AND RESTATED AS OF AUGUST 11, 1998
BY-LAWS OF
ANALYSIS & TECHNOLOGY, INC.
ARTICLE I. GENERAL
Section 1. Purpose. These by-laws are intended to supplement and
implement applicable provisions of law and of the certificate of incorporation
of this Corporation with respect to the regulation of the affairs of this
Corporation.
Section 2. Principal Office of Corporation. The principal office of the
Corporation is at Technology Park, Route 2, North Stonington, Connecticut. The
board of directors shall have the power to change the location of the principal
office from time to time and to establish such additional offices as it shall
determine in its discretion.
ARTICLE II. MEETINGS OF SHAREHOLDERS
Section 1. Location. Shareholders' meetings shall be held at the
principal office of the Corporation, or at such other place, either within or
outside the State of Connecticut, as shall be designated by the board of
directors.
Section 2. Shareholder Action; How Taken. Any action required or
permitted to be taken by the shareholders of the Corporation must be effected at
a duly called annual or special meeting of such holders and may not be effected
by any consent in writing by such holders unless the consent sets forth the
action so taken or to be taken and is signed by all of the persons who would be
entitled to vote upon such action at a meeting, or by their duly authorized
attorneys.
Section 3. Annual Meeting. The annual meeting of shareholders of the
Corporation shall be held on such day in the month of August and at such hour as
the
<PAGE> 2
board of directors may prescribe. At each annual meeting of shareholders, the
shareholders shall elect directors and shall transact such other business as may
properly come before the meeting.
Section 4. Special Meeting. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the chairman of the board, the president or by the board of directors, and
shall be called by the president at the request of the holders of not less than
thirty-five percent (35%) of all of the votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting.
Section 5. Notice. Notice of the time, place and purpose of the annual
meeting or any special meeting of shareholders shall be given by mailing notice
of the same at least ten (10) days but not more than sixty (60) days prior to
the meeting to each shareholder of record of the Corporation entitled to vote at
such meeting. Notice of any shareholder's meeting may be waived in writing, by
any person or persons entitled to such notice, whether before or after the time
stated therein.
Section 6. Shareholders' Quorum and Voting Requirements. A majority of
the votes entitled to be cast on a matter constitutes a quorum for action on
that matter. Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
Section 7. Votes Required for Shareholders' Action. Unless the
Connecticut Business Corporation Act, or the certificate of incorporation
require a greater number of affirmative votes, actions to be voted upon by the
shareholders (other than the election of directors) at a meeting at which quorum
is present shall be approved if the votes cast by shares entitled to vote on
such action exceed the votes cast in opposition to such action.
Section 8. Votes Required for Election of Directors. Unless otherwise
provided in the certificate of incorporation, directors shall be elected by a
plurality of votes cast by shares entitled to vote for directors at a meeting at
which quorum is present.
Section 9. Adjournment of Meetings. The shareholders present, in person
or by proxy, at any special meeting of shareholders, may, by the affirmative
vote of a majority of voting power of the shares represented at such meeting and
entitled to vote thereat, adjourn from time to time as they see fit, whether or
not such number constitutes a quorum, and no notice of such adjournment need be
given.
-2-
<PAGE> 3
ARTICLE III. DIRECTORS
Section 1. Authority. The business, property and affairs of the
Corporation shall be managed by or under the direction of its board of
directors, which may exercise all such authority and powers of the Corporation
and do all such lawful acts and things as are not by statute or the certificate
of incorporation or by these by-laws directed or required to be exercised or
done by shareholders.
Section 2. Number. The Corporation shall have a minimum number of
directors of five (5) and a maximum number of fifteen (15). The number of
directors at any time within such minimum and maximum shall be the number fixed
by resolution of the shareholders, acting by the affirmative vote of the holders
of seventy percent (70%) of the voting power of the shares entitled to vote
thereon, or by the affirmative vote of a majority of the directors prescribed,
or if no number is prescribed, a majority of the directors in office at the time
the meeting begins.
Section 3. Terms of Office and Election. The directors shall be
classified, with respect to the duration of the term for which they severally
hold office, into three classes as nearly equal in number as possible. Such
classes shall originally consist of one class of two directors who shall be
elected for a term expiring at the annual meeting of shareholders to be held in
1986; a second class of three directors who shall be elected for a term expiring
at the annual meeting of shareholders to be held in 1987; and a third class of
three directors who shall be elected for a term expiring at the annual meeting
of shareholders to be held in 1988. The board of directors shall increase or
decrease the number of directors in one or more classes as may be appropriate
whenever there has been an increase or decrease in the number of directors
pursuant to Section 2 of this Article III in order to ensure that the three
classes shall be as nearly equal in number as possible. At each annual meeting
of shareholders beginning in 1986, the successors of the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of shareholders held in the third year following
the year of their election.
Section 4. Notification of Nominations. Nominations for the election of
directors may be made by the board of directors or a nominating committee
appointed by the board of directors or by any shareholder entitled to vote in
the election of directors generally. However, any shareholder entitled to vote
in the election of directors generally may nominate one or more persons for
election as directors at a meeting only if written notice of such shareholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the
-3-
<PAGE> 4
secretary of the Corporation not later than (i) with respect to an election to
be held at an annual meeting of shareholders, ninety (90) days in advance of
such meeting, and (ii) with respect to an election to be held at a special
meeting of shareholders for the election of directors, the close of business on
the seventh day following the date on which notice of such meeting is first
given to shareholders. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the shareholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (d) such other information
regarding each nominee proposed by such shareholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or intended
to be nominated, by the board of directors; and (e) the consent of each nominee
to serve as a director of the Corporation if so elected. The chairman of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
Section 5. Removal. Any director may be removed from office, without
cause only by the affirmative vote of the holders of seventy percent (70%) of
the voting power of the shares entitled to vote thereon. A director may be
removed from office for cause by the affirmative vote of the holders of a
majority of the voting power of the shares entitled to vote thereon.
Section 6. Increases in the Number of Directors and Vacancies. Any
vacancy on the board of directors resulting from death, resignation,
disqualification, removal or other cause shall be filled solely by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the board of directors. If a vacancy is created by
an increase in the number of directorships, it shall be filled for the unexpired
term by action of shareholders, acting by the affirmative vote of the holders of
seventy percent (70%) of the voting power of the shares entitled to vote
thereon, or by the affirmative vote of a majority of the directors prescribed,
or if no number is prescribed, a majority of the directors in office at the time
the meeting begins. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created for the vacancy occurred and
until such director's successor shall have been elected and qualified. No
decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director.
-4-
<PAGE> 5
Section 7. Committees. The board of directors, by resolution adopted by
the affirmative vote of directors holding a majority of the directorships, at a
meeting at which a quorum is present, may designate two or more directors to
constitute an executive committee or other committees, and may designate or
provide for the designation of one or more directors as alternate members of any
such committee, who may replace any absent or disqualified member at any meeting
of the committee. Any such committee shall have and may exercise all authority
of the board of directors as shall be provided by resolution of the board of
directors, except that such committee shall not have authority to: (1) authorize
distributions; (2) approve or propose to shareholders actions that are required
to be approved by shareholders; (3) fill vacancies on the board of directors or
on any of its committees; (4) amend the certificate of incorporation pursuant to
section 33-796 of the Act; (5) adopt, amend or repeal bylaws; (6) approve a plan
of merger not requiring shareholder approval; (7) authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the board of directors; or (8) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
board of directors may authorize a committee or a senior executive officer of
the Corporation to do so within limits specifically prescribed by the board of
directors. All committees shall keep records of their acts and proceedings and
report the same to the board of directors as and when required. Any director may
be removed from a committee with or without cause by the affirmative vote of a
majority of the entire board of directors.
Section 8. Compensation. Directors who are not salaried officers or
salaried employees of the Corporation or any of its subsidiaries may be paid
such compensation for their services and may be reimbursed for such expenses in
connection with attendance at board of directors or committee meetings as the
board of directors shall determine from time to time.
ARTICLE IV. MEETINGS OF DIRECTORS
Section 1. Annual Meeting. A regular meeting of the board of directors
shall be held without notice immediately after the annual shareholders' meeting
or as soon thereafter as convenient.
Section 2. Other Regular Meetings. All other regular meetings of the
board of directors may be held at such time and place as the board of directors
may determine and fix by resolution.
Section 3. Special Meetings. Special meetings of the board of directors
may be held at any place upon call of the chairman of the board, the president,
or in the event of their absence or inability to act, upon call of any two or
more directors, provided two days' notice oral or written is given to each
director.
-5-
<PAGE> 6
Section 4. Special Meeting Notices. Neither the business to be
transacted at, nor the purpose of, any special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting. Notice of
any special meeting may be waived in writing by the person or persons entitled
to notice. The attendance of any director at a meeting, without protesting the
lack of proper notice prior to or at the commencement of the meeting, shall be
deemed to be a waiver of notice of such meeting by such director.
Section 5. Quorum and Voting. (a) A quorum for a meeting of the board
of directors consists of a majority of the number prescribed, or if no number is
prescribed, a majority of the directors in office at the time the meeting
begins.
(b) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(c) A director who is present at a meeting of the board of directors or
a committee of the board of directors when corporate action is taken is deemed
to have assented to the action taken unless: (1) such director objects at the
beginning of the meeting, or promptly upon arrival, to holding or transacting
business at the meeting; (2) the director's dissent or abstention from the
action taken is entered in the minutes of the meetings; or (3) the director
delivers written notice of dissent or abstention to the presiding officer of the
meeting before its adjournment or to the Corporation immediately after
adjournment of the meeting. The right of dissent or abstention is not available
to a director who votes in favor of the action taken.
Section 6. Action Without Meeting. Any corporate action which can be
authorized at a meeting of the board of directors, or a committee thereof, may
be authorized without such a meeting, provided that all of the directors or all
of the members of a committee thereof, as the case may be, consent in writing to
such action before or
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<PAGE> 7
after the time such action is taken and the number of such directors or members
constitutes a quorum for such action. The secretary of the Corporation shall
file such consents with the minutes of the meetings of the board of directors.
ARTICLE V. OFFICERS
Section 1. Manner of Election and Delegation. The board of directors
shall have the power to choose, appoint and employ such officers, employees and
agents as it may deem the interest of the Corporation requires and to fix the
compensation and define the powers and duties of all such officers, employees
and agents. All such officers, employees and agents shall be subject to the
order of the board of directors, shall hold their offices at the pleasure of the
board of directors, and may be removed at any time by the board of directors at
its discretion. The board of directors may delegate such of the power and
authority conferred upon it under Sections 1, 3, 4, 5 and 11 of this Article V.
to the president as it may approve, from time to time, pursuant to a validly
adopted corporate resolution, duly approved by the affirmative vote of the
directors holding a majority of the directorships of the Company.
Section 2. Titles. The officers of the Corporation shall consist of a
chairman of the board, a president, one or more vice-presidents (including
executive and senior vice-presidents), a secretary and such other officers as
the board of directors may from time to time elect or appoint. Any two or more
offices may be held by the same person.
Section 3. Election and Term of Office. The officers of the Corporation
shall be elected by the board of directors annually at the regular meeting of
the board of directors held after each annual meeting of the shareholders and,
in addition, at such other times as the board of directors deems it to be in the
best interests of the Corporation, except to the extent that authority to do so
has been delegated by the board of directors to the president. Each officer
shall hold office until his successor shall have been duly elected or appointed
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
Section 4. Removal. Any agent, employee or officer of the Corporation
may be removed by the board of directors and may be removed by a committee of
the board of directors to the extent that authority to do so has been delegated
by the board of directors. Any such removal may be made with or without cause
whenever in the judgment of the board of directors or the president, as the case
may be, the best interests of the Corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
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<PAGE> 8
Section 5. Vacancies. A vacancy in any office, because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term and may be filled by the
president to the extent that authority to do so has been delegated by the board
of directors.
Section 6. Chairman of the Board. The chairman of the board shall, when
present, preside at all meetings of the board of directors and shall perform
such other duties as may be prescribed by the board of directors from time to
time.
Section 7. President. The president shall be the chief executive
officer of the Corporation and shall generally supervise and control all the
business and affairs of the Corporation subject to the control of the board of
directors. The president shall, when present, preside at all meetings of the
shareholders, and in the absence of the chairman of the board, the president
shall preside at meetings of the board of directors. The president shall perform
all duties incident to the office of the president and such other duties as may
be prescribed by the board of directors from time to time.
Section 8. Vice-Presidents. The vice-presidents, including executive
and senior vice-presidents, if any, shall perform and have such duties and
powers on behalf of the Corporation as may be assigned to them from time to time
by the president.
Section 9. Secretary. The secretary shall keep the minutes of the
shareholders' and of the directors' meetings in one or more books provided for
that purpose, see that all notices are duly given in accordance with the
provisions of these by-laws or as required, be custodian of the corporate
records and of the seal of the corporation and keep a register of the post
office address of each shareholder which shall be furnished to the secretary by
such shareholder, have general charge of the stock transfer books of the
Corporation, execute certificates as to any action taken by the shareholders,
directors, any officer or any representative of the Corporation, which
certificates constituting, as to all persons who rely thereon in good faith,
conclusive evidence of such action, and in general perform all duties incident
to the office of the secretary and such other duties as from time to time may be
assigned to him by the president or by the directors.
Section 10. Additional Powers and Duties. In addition to such powers
and duties as specified in these by-laws and as the board of directors or the
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<PAGE> 9
president, as applicable, may prescribe from time to time, and except as
otherwise provided by the board of directors, each officer shall also generally
have the powers and be required to perform the duties which by law and general
usage pertain to the particular office.
Section 11. Compensation. The salaries of all officers of the
Corporation shall be fixed from time to time by the board of directors except to
the extent that authority to do so has been delegated by the board of directors
to the president. No officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the Corporation.
ARTICLE VI. SHARES
Section 1. Certificates. Each shareholder shall be entitled to a
certificate evidencing the shares of the Corporation owned by such shareholder.
Certificates representing shares of the Corporation shall be in such form as
shall be determined by the board of directors. Such certificates shall be signed
by either the chairman of the board or the president and by the secretary or by
such other officers authorized by law and by the board of directors. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the shareholders, the number of shares and date of
issue, shall be entered on the share transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled, and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled.
Section 2. Transfers. Shares of stock may be transferred on the books
of the Corporation by the surrender to the Corporation or its transfer agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary stamps
affixed, and with such proof of the authenticity of signature as the Corporation
or its transfer agent may reasonably require. Upon such surrender to the
Corporation or the transfer agent of the Corporation, the Corporation shall
issue a new certificate to the person entitled thereto, and cancel the old
certificate; every such transfer shall be entered on the transfer book of the
Corporation which shall be kept at its principal office.
Section 3. Record Date.
(a) The board of directors, by resolution, may fix a record date for
determining the shareholders entitled to notice of a shareholders' meeting, to
demand a special meeting, to vote, to receive payment of dividends or to take
any other action; provided that such record date shall not be more than seventy
(70) days before the meeting
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<PAGE> 10
or action requiring a determination of shareholders. In the absence of the board
of directors' fixing a record date, the record date for any action shall be the
last business day before notice is given to the shareholders with respect to
such action.
(b) A determination of the shareholders entitled to receive notice of
meeting shall be effective for any adjournment of the meeting unless the board
of directors fixes a new record date, provided that any meeting of the
shareholders adjourned to a date more than one hundred twenty (120) days after
the date fixed for the original meeting will require that a new record date be
fixed.
ARTICLE VII. MISCELLANEOUS
Section 1. Fiscal Year. The fiscal year of the Corporation shall begin
on the first day of April and end on the last day of March in each year.
Section 2. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the state of incorporation and the words "Corporate
Seal".
ARTICLE VIII. AMENDMENT
Subject to the provisions of the laws of the State of Connecticut, the
certificate of incorporation and these by-laws, by-laws may be adopted, amended
or repealed at any regular meeting of the shareholders (or at any special
meeting thereof duly called for that purpose) by a majority of the voting power
of the shares entitled to vote thereon, provided that in the call for such
special meeting notice of such purpose shall be given. Subject to the laws of
the State of Connecticut, the certificate of incorporation and these by-laws,
by-laws may be adopted, amended or repealed at any meeting of the board of
directors by the affirmative vote of directors holding a majority of the
directorships.
ARTICLE IX. INDEMNIFICATION
Section 1. Indemnification. To the fullest extent permitted by law, the
Corporation shall indemnify any current or former director or officer of the
Corporation and may, at the discretion of the board of directors, indemnify any
current or former employee or agent of the Corporation against all liabilities,
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such individual in connection with any threatened,
pending or completed action, suit or proceeding brought
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<PAGE> 11
by or in the right of the Corporation or otherwise, to which such individual was
or is a party or is threatened to be made a party by reason of such individual's
current or former position with the Corporation or by reason of the fact that
such individual is or was serving, at the request of the Corporation, as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other entity.
Notwithstanding the preceding sentence, the Corporation shall not be required to
indemnify an indemnitee in connection with a proceeding (or part thereof)
commenced by the Corporation against the indemnitee or commenced by the
indemnitee against the Corporation.
Section 2. Advance of Expenses. The Corporation shall advance funds to
pay for or reimburse the reasonable expenses incurred by a current or former
director who is or was a party to a proceeding because he is or was a director
or officer if he delivers to the Corporation: (i) a written affirmation of his
good faith belief that he has met the relevant standard of conduct or that the
proceeding involves conduct for which liability has been eliminated under a
provision of the Corporation's certificate of incorporation; and (ii) his
written undertaking to repay any funds advanced if he is not entitled to
mandatory indemnification under the Connecticut Business Corporation Act and it
is ultimately determined that he has not met the relevant standard of conduct
required by the Corporation's certificate of incorporation or by of the
Connecticut Business Corporation Act. The Corporation, in its discretion, may
advance funds to any current or former officer, employee or agent of the
Corporation upon such terms and conditions as the board of directors deems
appropriate.
END OF BY-LAWS
-11-
<PAGE> 1
Exhibit 11
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
FOR THE QUARTERS AND SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic:
Weighted average shares
outstanding 3,616,412 3,512,772 3,619,961 3,479,132
Net earnings $ 1,158,199 $ 1,084,119 $ 2,326,324 $ 2,000,259
Basic earnings per common share $ 0.32 $ 0.31 $ 0.64 $ 0.58
=========== =========== =========== ===========
Diluted:
Weighted average shares
outstanding 3,616,412 3,512,772 3,619,961 3,479,132
Net effect of dilutive stock
options based on the treasury
stock method using the
average market price 382,181 253,293 418,336 181,116
----------- ----------- ----------- -----------
Total 3,998,593 3,766,065 4,038,297 3,660,248
=========== =========== =========== ===========
Net earnings $ 1,158,199 $ 1,084,119 $ 2,326,324 $ 2,000,259
Net effect of earnings attributable
to subsidiary stock options (11,547) (23,098) (38,940) (40,800)
----------- ----------- ----------- -----------
Net earnings 1,146,651 1,061,021 2,287,384 1,959,459
=========== =========== =========== ===========
Diluted earnings per common share $ 0.29 $ 0.28 $ 0.57 $ 0.54
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 26,906
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,885
<PP&E> 37,369
<DEPRECIATION> 22,391
<TOTAL-ASSETS> 67,744
<CURRENT-LIABILITIES> 13,069
<BONDS> 0
0
0
<COMMON> 302
<OTHER-SE> 45,153
<TOTAL-LIABILITY-AND-EQUITY> 67,744
<SALES> 0
<TOTAL-REVENUES> 82,452
<CGS> 0
<TOTAL-COSTS> 77,581
<OTHER-EXPENSES> 570
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138
<INCOME-PRETAX> 4,163
<INCOME-TAX> 1,837
<INCOME-CONTINUING> 2,326
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,326
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.57
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 4,616
<SECURITIES> 0
<RECEIVABLES> 26,772
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,759
<PP&E> 33,874
<DEPRECIATION> 20,061
<TOTAL-ASSETS> 60,366
<CURRENT-LIABILITIES> 12,251
<BONDS> 0
0
0
<COMMON> 296
<OTHER-SE> 42,217
<TOTAL-LIABILITY-AND-EQUITY> 42,513
<SALES> 0
<TOTAL-REVENUES> 75,607
<CGS> 0
<TOTAL-COSTS> 72,316
<OTHER-EXPENSES> (1,192)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 4,441
<INCOME-TAX> 2,441
<INCOME-CONTINUING> 2,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,000
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.54
</TABLE>
