<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
___________
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
___________
For the quarter ended: Commission file number:
March 31, 1995 0-4090
___________
ANALYSTS INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Minnesota 41-0905408
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
7615 Metro Boulevard
Minneapolis, MN 55439
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Telephone Number: (612) 835-5900
___________
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ -----
___________
As of April 28, 1995, 7,243,700 shares of the Registrant's Common Stock were
outstanding.
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Balance Sheets
March 31, 1995 (Unaudited) and June 30, 1994 1
Condensed Consolidated Statements of Income
Three and nine months ended March 31, 1995 and
1994 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Nine months ended March 31, 1995 and 1994 (Unaudited) 3
Notes to Condensed Consolidated Financial
Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-6
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
(In thousands) 1995 1994
- -------------- --------- --------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,565 $ 10,700
Accounts receivable, less allowance
for doubtful accounts 32,946 28,293
Other current assets 2,346 2,326
-------- --------
Total currents assets 48,857 41,319
Property and equipment, net 4,692 4,912
Other assets 5,311 4,979
-------- --------
$ 58,860 $ 51,210
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,153 $ 1,691
Salaries and vacations 6,387 5,302
Income taxes payable 451 490
Other, primarily self-insured health care reserves 2,197 2,363
------- -------
Total current liabilities 11,188 9,846
Long-term liabilities 5,149 4,793
Shareholders' equity (Note 2) 42,523 36,571
------- -------
$58,860 $51,210
------- -------
------- -------
Note: The balance sheet at June 30, 1994 has been taken from the audited
financial statements at that date, and condensed.
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands Three Months Ended Nine Months Ended
except per share amounts) March 31 March 31
- ------------------------- ------------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 55,220 $ 45,052 $154,334 $129,648
Expenses:
Salaries, contracted
services and direct charges 39,140 32,543 109,145 92,058
Selling, administrative and other
operating costs 11,572 9,840 32,680 28,750
------- ------- -------- --------
50,712 42,383 141,825 120,808
------- ------- -------- --------
Operating income 4,508 2,669 12,509 8,840
Other income 226 95 485 271
------- ------- -------- --------
Income before income taxes 4,734 2,764 12,994 9,111
Income taxes (Note 3) 1,867 1,050 5,087 3,431
------- ------- -------- --------
Net income $ 2,867 $ 1,714 $ 7,907 $ 5,680
------- ------- -------- --------
------- ------- -------- --------
PER COMMON SHARE:
Net income $ .39 $ .24 $ 1.09 $ .79
------- ------- -------- --------
------- ------- -------- --------
Dividends paid $ .13 $ .12 $ .38 $ .34
------- ------- -------- --------
------- ------- -------- --------
Average common and common
equivalent shares outstanding 7,297,000 7,199,000 7,249,000 7,218,000
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-----------------
(Dollars in thousands) 1995 1994
- ---------------------- ---- ----
<S> <C> <C>
Net cash provided by operating activities $ 6,024 $ 4,217
Cash flows from investing activities:
Property and equipment additions (1,094) (976)
Increase in annuities and cash surrender values (197) (282)
-------- -------
Net cash used in investing activities (1,291) (1,258)
Cash flows from financing activities:
Cash dividends (2,727) (2,411)
Proceeds from exercise of stock options 859 318
-------- -------
Net cash used in financing activities (1,868) (2,093)
-------- -------
Net change in cash and equivalents 2,865 866
Cash and equivalents at beginning of period 10,700 9,914
-------- --------
Cash and equivalents at end of period $ 13,565 $ 10,780
-------- --------
-------- --------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Condensed Consolidated Financial Statements - The condensed
consolidated balance sheet as of March 31, 1995, the condensed
consolidated statements of income for the three month and nine month
periods ended March 31, 1995 and 1994 and the condensed consolidated
statements of cash flows for the nine month periods then ended have been
prepared by the Company, without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and the cash flows at March 31, 1995 and for the periods then
ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
these condensed consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's June 30, 1994 annual report to shareholders.
Effective July 1, 1994, the Company adopted Statements of Financial
Accounting Standards No. 112, "Employers Accounting for Postemployment
Benefits" and No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". The impact on the Company's financial position and
results of operations as a consequence of adopting these statements is
not significant.
2. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Nine Months Ended
March 31, 1995
-----------------
(In thousands)
<S> <C>
Balance at beginning of period $ 36,571
Cash dividends declared:
August 18, 1994 at $.13 per share (933)
December 15, 1994 at $.13 per share (935)
February 24, 1995 at $.13 per share (946)
Proceeds upon exercise of stock options 859
Net income 7,907
--------
Balance at end of period $ 42,523
--------
--------
</TABLE>
3. INCOME TAXES
Effective July 1, 1993 the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which
requires the asset and liability method of computing deferred taxes.
The impact on the Company's financial position and results of operations
as a consequence of adopting the new method was a reduction in income
taxes of approximately $110,000 in the nine month period ending
March 31, 1994.
4
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended March 31, 1995 and 1994
CHANGES IN FINANCIAL CONDITION
The increases in working capital and current ratios between June 30, 1994 and
March 31, 1995 has resulted from the Company's ability to maintain its base
of business and to finance its growth without the use of borrowed capital.
The increase in accounts receivable at March 31, 1995 compared to June 30,
1994 reflects the increase in revenue volume during that period.
On February 24, 1995 the Board of Directors declared a regular quarterly
dividend of $.13 per share payable May 15, 1995 to shareholders of record on
May 1, 1995.
The Company believes funds generated from its business and current cash
balances are adequate to meet demands placed upon its resources by the
Company's operations and the payment of regular quarterly dividends.
5
<PAGE>
RESULTS OF OPERATIONS
Revenues for the nine months ended March 31, 1995 and for the quarter then
ended increased 19.0% and 22.6% , respectively, over the same periods a
year ago. These revenue increases resulted almost entirely from increases in
billable hours of service rendered to clients. Rate increases have not
contributed significantly to the revenue increases because prevailing
competitive conditions in the industry have made it difficult for the Company
to increase the hourly rates it charges for services.
Personnel totalled 2,950 at March 31, 1995, compared to 2,550 at March 31,
1994 an increase of 15.7%. Substantially all of the increase consists of
billable technical staff.
Salaries, contracted services and direct charges, which represent primarily
the Company's direct labor cost, were 70.7% of revenues for the nine
months ended March 31, 1995 compared to 71.0% for the same period a year ago.
These costs for the quarters ended March 31, 1995 and 1994 were 70.9% and
72.2%, respectively. By comparison, this cost item was 71.7% of revenues
for the quarter ended June 30, 1994. Labor costs were higher as a
percentage of revenue during the last two quarters of fiscal 1994 primarily
because increased labor costs were not entirely passed on to customers and
the rates charged for certain services to the Company's major customer were
reduced effective January 1, 1994. The Company expects to encounter future
rate pressures from its major customer but cannot predict what impact, if
any, such pressures will have on operations or when such impact will be
felt. While the Company has succeeded in reducing labor costs as a
percentage of revenues for the most recent nine months to the levels
experienced prior to January 1, 1994, there can be no assurance the Company
will be able to maintain or improve this level because intense competition
for business can adversely affect rate increases and competition for
technical personnel makes it difficult to control labor costs.
Selling, administrative and other operating costs, which include commissions,
employee fringe benefits and location costs, represented 21.2% of revenues
for the nine months ended March 31, 1995 compared to 22.2% for the same
period a year ago. For the quarter ended March 31, 1995 these costs were
21.0% compared to 21.8% for the same quarter last year. These costs, as a
percentage of revenue, have decreased as a result of the Company's ability to
maintain its basic administrative structure and to control related costs.
While the Company has been successful in controlling selling, administrative
and other operating costs and is committed to careful cost management, there
can be no assurance the Company will be able to maintain these costs at their
current relationship to revenues.
The reduction of the effective tax rate for the nine months ended March 31,
1994 was caused by the adoption of SFAS No. 109 "Accounting for Income
Taxes". The adoption of the statement resulted in a one time reduction in
income taxes of approximately $110,000.
6
<PAGE>
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Net Income Per Share.
(b) There were no reports on Form 8-K filed for the nine months ended
March 31, 1995.
7
<PAGE>
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 there unto duly authorized.
ANALYSTS INTERNATIONAL CORPORATION
----------------------------------
(Registrant)
Date May 12, 1995 By /s/ Gerald M. McGrath
------------------- -------------------------------
Gerald M. McGrath
Vice President Finance and
Treasurer
Date May 12, 1995 By /s/ Marti R. Charpentier
------------------- -------------------------------
Marti R. Charpentier
Controller and Assistant
Treasurer (Chief Accounting Officer)
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit Page No.*
- -------------- ------- ---------
<S> <C> <C>
11 Computation of Net Income Per Share 13
* Page numbers in the sequential numbering system of the manually signed
original report.
</TABLE>
9
<PAGE>
EXHIBIT NO. 11
ANALYSTS INTERNATIONAL CORPORATION
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT Three Months Ended Nine Months Ended
PER SHARE AMOUNTS) March 31 March 31
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average number of common
shares outstanding 7,228 7,110 7,174 7,091
Dilutive stock options after application
of treasury stock method 69 89 75 127
------ ------ ------ ------
Weighted average number of common and
common equivalent shares outstanding 7,297 7,199 7,249 7,218
------ ------ ------ ------
------ ------ ------ ------
Net income $2,867 $1,714 $7,907 $5,680
------ ------ ------ ------
------ ------ ------ ------
Per share amount $ .39 $ .24 $ 1.09 $ .79
------ ------ ------ ------
------ ------ ------ ------
FULLY DILUTED:
Weighted average number of common
shares outstanding 7,228 7,110 7,174 7,091
Dilutive stock options based on the
treasury stock method using the end
of the period market price, if higher
than average market price 94 103 96 135
------ ------ ----- -----
Weighted average number of common and
common equivalent shares outstanding 7,322 7,213 7,270 7,226
------ ------ ------ ------
------ ------ ------ ------
Net income $2,867 $1,714 $7,907 $5,680
------ ------ ------ ------
------ ------ ------ ------
Per share amount $ .39 $ .24 $ 1.09 $ .79
------- ------ ------ ------
------- ------ ------ ------
</TABLE>
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 13,565
<SECURITIES> 0
<RECEIVABLES> 32,946
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 48,857
<PP&E> 5,311
<DEPRECIATION> 0
<TOTAL-ASSETS> 58,860
<CURRENT-LIABILITIES> 11,188
<BONDS> 5,149
<COMMON> 724
0
0
<OTHER-SE> 41,799
<TOTAL-LIABILITY-AND-EQUITY> 58,860
<SALES> 154,334
<TOTAL-REVENUES> 154,334
<CGS> 109,145
<TOTAL-COSTS> 109,145
<OTHER-EXPENSES> 32,680
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,994
<INCOME-TAX> 5,087
<INCOME-CONTINUING> 5,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,907
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
