<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:
December 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 January 31, 1996, 7,293,779 shares of the Registrant's Common Stock were
outstanding.
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ANALYSTS INTERNATIONAL CORPORATION
INDEX
Page
NUMBER
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Balance Sheets
December 31 1995 (Unaudited) and June 30, 1995 1
Condensed Consolidated Statements of Income
Three and six months ended December 31, 1995 and 1994
(Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Six months ended December 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>
December 31, June 30,
(In thousands) 1995 1995
- -------------- ----------------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,188 $ 12,615
Accounts receivable, less allowance
for doubtful accounts 42,898 41,706
Other current assets 2,545 2,493
------ ------
Total current assets 58,631 56,814
Property and equipment, net 5,714 5,020
Other assets 6,011 5,699
------ ------
$ 70,356 $ 67,533
------ ------
------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,397 $ 7,241
Salaries and vacations 5,062 6,653
Dividend payable 1,091 943
Income taxes payable 90 590
Other, primarily self-insured health
care reserves 2,355 1,620
------ ------
Total current liabilities 15,995 17,047
Long-term liabilities 5,635 5,352
Shareholders' equity (Note 2) 48,726 45,134
------ ------
$ 70,356 $ 67,533
------ ------
------ ------
</TABLE>
Note: The balance sheet at June 30, 1995 has been taken from the audited
financial statements at that date, and condensed.
See notes to condensed consolidated financial statements.
1
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ANALYSTS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands Three Months Ended Six Months Ended
except per share amounts) December 31 December 31
- ------------------------- ------------------------------- ----------------------------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $78,786 $50,719 $151,857 $99,114
Expenses:
Salaries, contracted
services and direct charges 60,198 35,919 115,510 70,005
Selling, administrative and other
operating costs 14,086 10,670 27,459 21,108
------- ------- ------- -------
Total expenses 74,284 46,589 142,969 91,113
------- ------- ------- -------
Operating income 4,502 4,130 8,888 8,001
Other income 262 143 520 259
------- ------- ------- -------
Income before income taxes 4,764 4,273 9,408 8,260
Income taxes 1,882 1,665 3,717 3,220
------- ------- ------- -------
Net income $ 2,882 $ 2,608 $ 5,691 $ 5,040
------- ------- ------- -------
------- ------- ------- -------
PER COMMON SHARE:
Net income $ .39 $ .36 $ .77 $ .70
------- ------- ------- -------
------- ------- ------- -------
Dividends paid $ .15 $ .13 $ .28 $ .25
------- ------- ------- -------
------- ------- ------- -------
Average common and common
equivalent shares outstanding 7,392,000 7,258,000 7,386,000 7,225,000
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
2
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ANALYSTS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31
------------------------
(Dollars in thousands) 1995 1994
- ---------------------- ---- ----
<S> <C> <C>
Net cash provided by operating activities $ 4,383 $ 4,629
Cash flows from investing activities:
Property and equipment additions (1,715) (659)
Increase in annuities and cash surrender values (144) (138)
----- -----
Net cash used in investing activities (1,859) (797)
Cash flows from financing activities:
Cash dividends (2,035) (1,787)
Proceeds from exercise of stock options 84 485
----- -----
Net cash used in financing activities (1,951) (1,302)
----- -----
Net change in cash and equivalents 573 2,530
Cash and equivalents at beginning of period 12,615 10,700
------ ------
Cash and equivalents at end of period $ 13,188 $ 13,230
------- -------
------- -------
</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 December 31, 1995, the condensed consolidated
statements of income for the three month and six month periods ended
December 31, 1995 and 1994 and the condensed consolidated statements of
cash flows for the six 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
December 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, 1995 annual report to shareholders.
2. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1995
-----------------
(In thousands)
<S> <C>
Balance at beginning of period $ 45,134
Cash dividends declared:
August 17, 1995 at $.15 per share (1,091)
December 13, 1995 at $.15 per share (1,092)
Proceeds upon exercise of stock options 84
Net income 5,691
-------
Balance at end of period $ 48,726
-------
-------
</TABLE>
4
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Six Months Ended December 31, 1995 and 1994
CHANGES IN FINANCIAL CONDITION
Working capital at December 31, 1995 was $42.6 million, up 7.2% from the $39.8
million at June 30, 1995. This includes cash and cash equivalents of $13.2
million compared to $12.6 million at June 30, 1995 and accounts receivable of
$42.9 million compared to $41.7 million at June 30, 1995.
The Company's primary need for working capital is to support accounts receivable
resulting from the growth in its business and to fund the time lag between
payroll disbursement and receipt of fees billed to clients. Over the past
years, the Company has been able to support the growth in its business with
internally generated funds. The Company's outsourcing contracts with two major
customers are not expected to burden working capital, even though the ratio of
current assets to current liabilities is likely to decline. This is a
consequence of the Company's use of subcontractors to perform substantial
amounts of the work and that work not being paid for until after collection from
the client.
On December 13, 1995 the Board of Directors declared a regular quarterly
dividend of $.15 per share payable February 15, 1996 to shareholders of record
on January 31, 1996.
The Company believes funds generated from its business and current cash balances
are adequate to meet demands placed upon its resources by its operations and the
payment of quarterly dividends.
5
<PAGE>
RESULTS OF OPERATIONS
Revenues for the six months ended December 31, 1995 and for the quarter then
ended increased 53.2% and 55.3 %, respectively, over the same periods a year
ago. For the six month period and quarter ended December 31, 1995,
approximately $26.7 million and $14.3 million, respectively, of the increases
are attributable to a major outsourcing contract which became effective June 1,
1995. The remaining revenue increases resulted primarily from increases in
billable hours of service rendered to clients. Rate increases have not
contributed significantly to the revenue increase 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 3,550 at December 31, 1995, compared to 2,825 at December 31,
1995, an increase of 25.7%. 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 76.1% of revenues for the six months
ended December 31, 1995 compared to 70.6% for the same period a year ago.
These costs for the quarters ended December 31, 1995 and 1994 were 76.4% and
70.8%, respectively. This category of expense includes the fees for the
contracted services of subcontractors who are necessary to support the
Company with the major outsourcing contract referred to above. Excluding
both revenues and fees for the contracted services of subcontractors, this
category of expense as a percentage of revenue would be at 71.7% and 72.0%,
respectively, for the six months and quarter ended December 31, 1995 compared
to 70.6% and 70.8%, respectively, for the comparable periods in fiscal 1995.
While the Company has taken steps to control this category of expense, 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 18.1% of revenues for
the six months ended December 31, 1995 compared to 21.3% for the same period a
year ago. For the quarter ended December 31, 1995 these costs were 17.9%
compared to 21.0% for the same quarter last year. Excluding the $26.7 million
and $14.3 million, respectively, of revenue realized from the outsourcing
contract referred to above, for the six months and quarter ended December 31,
1995, this percentage would have been 21.9% and 21.8%, respectively. 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.
6
<PAGE>
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders held October 17, 1995, the following
action was taken:
(a) Election of directors.
The following nominees, all of whom were listed in the company's proxy
statement prepared in accordance with Regulation 14(a), were elected:
<TABLE>
<CAPTION>
Nominee Votes for Authority Withheld
------- --------- ------------------
<S> <C> <C>
V. C. Benda 6,782,148 15,470
W. K. Drake 6,779,611 18,008
F. W. Lang 6,781,287 16,332
M. A. Loftus 6,781,149 16,469
E. M. Mahoney 6,782,203 15,415
R. Prince 6,782,318 15,300
</TABLE>
(b) Ratification of auditors.
The shareholders voted their shares to ratify the appointment of
Deloitte & Touche LLP by the following vote:
In favor 6,721,440
Against 16,891
Abstain 25,431
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 six months ended
December 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 February 13, 1996 By /s/ Gerald M. McGrath
------------------- ------------------------------------
Gerald M. McGrath
Treasurer and Chief Financial Officer
Date February 13, 1996 By /s/ Marti R. Charpentier
------------------- ------------------------------------
Marti R. Charpentier
Controller and Assistant
Treasurer (Chief Accounting Officer)
8
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EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT PAGE NO.*
11 Computation of Net Income Per Share 13
* Page numbers in the sequential numbering system of the manually signed
original report.
<PAGE>
Exhibit No. 11
<PAGE>
Exhibit No. 11
Analysts International Corporation
Computation of Net Income per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(IN THOUSANDS EXCEPT December 31 December 31
------------------- -------------------
PER SHARE AMOUNTS) 1995 1994 1995 1994
---- ---- ---- ----
Primary:
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 7,274 7,174 7,269 7,147
Dilutive stock options after application
of treasury stock method 118 84 117 78
--- --- --- ---
Weighted average number of common and
common equivalent shares outstanding 7,392 7,258 7,386 7,225
----- ----- ----- -----
----- ----- ----- -----
Net income $ 2,882 $ 2,608 $ 5,691 $ 5,040
------ ------ ------ ------
------ ------ ------ ------
Per share amount $ .39 $ .36 $ .77 $ .70
------ ------ ------ ------
------ ------ ------ ------
Fully diluted:
Weighted average number of common
shares outstanding 7,274 7,174 7,269 7,147
Dilutive stock options based on the treasury
stock method using the end of the period market
price, if higher than average market price 118 97 126 97
--- --- --- ---
Weighted average number of common and
common equivalent shares outstanding 7,392 7,271 7,395 7,244
----- ----- ----- -----
----- ----- ----- -----
Net income $ 2,882 $ 2,608 $ 5,691 $ 5,040
------ ------ ------ ------
------ ------ ------ ------
Per share amount $ .39 $ .36 $ .77 $ .70
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
