<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, 1996 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 26, 1996, 7,298,040 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, 1996 (Unaudited) and June 30, 1995 1
Condensed Consolidated Statements of Income
Three and nine months ended March 31, 1996 and 1995 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Nine months ended March 31, 1996 and 1995 (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) 1996 1995
(Unaudited)
---------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,974 $ 12,615
Accounts receivable, less allowance
for doubtful accounts 46,935 41,706
Other current assets 2,732 2,493
------ ------
Total current assets 68,641 56,814
Property and equipment, net 5,470 5,020
Other assets 6,270 5,699
------ ------
$ 80,381 $ 67,533
-------- ------
-------- ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,452 $ 7,241
Salaries and vacations 7,057 6,653
Dividend payable 1,094 943
Income taxes payable 394 590
Other, primarily self-insured health care reserves 1,450 1,620
------ ------
Total current liabilities 23,447 17,047
Long-term liabilities 5,815 5,352
Shareholders' equity (Note 2) 51,119 45,134
------ ------
$ 80,381 $ 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
<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
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 85,976 $ 55,220 $ 237,833 $ 154,334
Expenses:
Salaries, contracted
services and direct charges 65,984 39,140 181,494 109,145
Selling, administrative and other
operating costs 14,709 11,572 42,168 32,680
--------- --------- --------- ---------
Total expenses 80,693 50,712 223,662 141,825
--------- --------- --------- ---------
Operating income 5,283 4,508 14,171 12,509
Other income 281 226 801 485
--------- --------- --------- ---------
Income before income taxes 5,564 4,734 14,972 12,994
Income taxes 2,226 1,867 5,943 5,087
--------- --------- --------- ---------
Net income $ 3,338 $ 2,867 $ 9,029 $ 7,907
--------- --------- --------- ---------
--------- --------- --------- ---------
PER COMMON SHARE:
Net income $ .45 $ .39 $ 1.22 $ 1.09
--------- --------- --------- ---------
--------- --------- --------- ---------
Dividends paid $ .15 $ .13 $ .43 $ .38
--------- --------- --------- ---------
--------- --------- --------- ---------
Average common and common
equivalent shares outstanding 7,410,000 7,297,000 7,394,000 7,249,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</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) 1996 1995
- ---------------------- ---- ----
<S> <C> <C>
Net cash provided by operating activities $11,600 $ 6,024
Cash flows from investing activities:
Property and equipment additions (2,062) (1,094)
Increase in annuities and cash surrender values (286) (197)
------- -------
Net cash used in investing activities (2,348) (1,291)
Cash flows from financing activities:
Cash dividends (3,129) (2,727)
Proceeds from exercise of stock options 236 859
------- -------
Net cash used in financing activities (2,893) (1,868)
------- -------
Net change in cash and equivalents 6,359 2,865
Cash and equivalents at beginning of period 12,615 10,700
------- -------
Cash and equivalents at end of period $18,974 $13,565
------- -------
------- -------
</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, 1996, the condensed
consolidated statements of income for the three month and nine month
periods ended March 31, 1996 and 1995 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, 1996 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
Nine Months Ended
March 31, 1996
------------------
(In thousands)
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)
February 15, 1996 at $.15 per share (1,097)
Proceeds upon exercise of stock options 236
Net income 9,029
-------
Balance at end of period $51,119
-------
-------
4
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended March 31, 1996 and 1995
CHANGES IN FINANCIAL CONDITION
Working capital at March 31, 1996 was $45.2 million, up 14% from the $39.8
million at June 30, 1995. This includes cash and cash equivalents of $19.0
million compared to $12.6 million at June 30, 1995 and accounts receivable of
$46.9 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 February 15, 1996 the Board of Directors declared a regular quarterly
dividend of $.15 per share payable May 15, 1996 to shareholders of record on
April 30, 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 nine months ended March 31, 1996 and for the quarter then ended
increased 54.1% and 55.7%, respectively, over the same periods a year ago.
For the nine month period and quarter ended March 31, 1996, approximately $42.1
million and $15.4 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 3,670 at March 31, 1996, compared to 2,950 at March 31, 1995,
an increase of 24.4%. 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 76.3% of revenues for the nine months
ended March 31, 1996 compared to 70.7% for the same period a year ago. These
costs for the quarters ended March 31, 1996 and 1995 were 76.7% and 70.9%,
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 71.9% and 72.3%, respectively, for the
nine months and quarter ended March 31, 1996 compared to 70.7% and 70.9%,
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 17.7 % of revenues for
the nine months ended March 31, 1996 compared to 21.2% for the same period a
year ago. For the quarter ended March 31, 1996 these costs were 17.1% compared
to 21.0% for the same quarter last year. Excluding the $42.1 million and $15.4
million, respectively, of revenue realized from the outsourcing contract
referred to above, for the nine months and quarter ended March 31, 1996, this
percentage would have been 21.5% and 20.9%, 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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Net Income Per Share.
Exhibit 27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed for the nine months ended
March 31, 1996.
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 10, 1996 By /s/ Gerald M. McGrath
-------------- -------------------------------------
Gerald M. McGrath
Treasurer and Chief Financial Officer
Date May 10 , 1996 By /s/ Marti R. Charpentier
--------------- ---------------------------------------
Marti R. Charpentier
Controller and Assistant
Treasurer (Chief Accounting Officer)
8
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit Page No.*
- -------------- ------- ---------
11 Computation of Net Income Per Share 13
27 Financial Data Schedule 15
* 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 Nine Months Ended
(IN THOUSANDS EXCEPT March 31 March 31
------------------- -------------------
PER SHARE AMOUNTS) 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average number of common
shares outstanding 7,292 7,228 7,276 7,174
Dilutive stock options after application
of treasury stock method 118 69 118 75
------ ----- ------ ------
Weighted average number of common and
common equivalent shares outstanding 7,410 7,297 7,394 7,249
------ ----- ------ ------
------ ----- ------ ------
Net income $ 3,338 $ 2,867 $ 9,029 $ 7,907
------ ----- ------ ------
------ ----- ------ ------
Per share amount $ .45 $ .39 $ 1.22 $ 1.09
------ ----- ------ ------
------ ----- ------ ------
FULLY DILUTED:
Weighted average number of common
shares outstanding 7,292 7,228 7,276 7,174
Dilutive stock options based on the treasury
stock method using the end of the period market
price, if higher than average market price 126 94 126 96
------ ----- ------ ------
Weighted average number of common and
common equivalent shares outstanding 7,418 7,322 7,402 7,270
------ ----- ------ ------
------ ----- ------ ------
Net income $ 3,338 $ 2,867 $ 9,029 $ 7,907
------ ----- ------ ------
------ ----- ------ ------
Per share amount $ .45 $ .39 $ 1.22 $ 1.09
------ ----- ------ ------
------ ----- ------ ------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 18,974
<SECURITIES> 0
<RECEIVABLES> 47,447
<ALLOWANCES> 512
<INVENTORY> 0
<CURRENT-ASSETS> 68,641
<PP&E> 14,850
<DEPRECIATION> 9,380
<TOTAL-ASSETS> 80,381
<CURRENT-LIABILITIES> 23,447
<BONDS> 5,815
0
0
<COMMON> 730
<OTHER-SE> 50,389
<TOTAL-LIABILITY-AND-EQUITY> 80,381
<SALES> 237,833
<TOTAL-REVENUES> 237,833
<CGS> 181,494
<TOTAL-COSTS> 181,494
<OTHER-EXPENSES> 42,168
<LOSS-PROVISION> 27
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,972
<INCOME-TAX> 5,943
<INCOME-CONTINUING> 9,029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,029
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
</TABLE>
