<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) Annual Report Pursuant to Section 13 or 15 (d) of
the Securities and Exchange Act of 1934
For the Fiscal Year Ended June 30, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Commission file number 0-4090
ANALYSTS INTERNATIONAL CORPORATION
Minnesota 41-0905408
(State of Incorporation) (IRS Identification
No.)
7615 Metro Boulevard, Minneapolis, Minnesota 55439
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: 612/835-5900
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: Common Stock, par
value $.10 per
share Common Share
Purchase Rights
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No
----- ------
The aggregate market value of the voting stock (Common Stock) held by non-
affiliates of the registrant as of August 29, 1997 was $459,847,000 based upon
the closing price as reported by Nasdaq.
As of August 29, 1997 there were 14,884,132 shares of the registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated by reference are (i) portions of the annual report to shareholders
for the year ended June 30, 1997 (Parts I and II) and (ii) proxy statement dated
September 8, 1997 (Part III).
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PART I
ITEM 1. BUSINESS
Analysts International Corporation ("AiC") provides a full range of computer
software services to computer users, computer manufacturers and software
developers throughout the United States and in Canada and the United Kingdom.
Over 85% of the Company's revenues are from services provided to its existing
customer base, which consists primarily of Fortune 500 companies. This high
percentage of repeat business reflects AiC's emphasis on customer satisfaction
and development of long term relationships with customers who have an ongoing
need for the services which the Company provides.
AiC offers its clients a full range of software service offerings, sometime
referred to by others in the industry as "solutions," including custom software
development under AiC project management, Year 2000 assessment and remediation
services, supplemental IT and Software Engineering staffing, maintenance of
legacy systems, help desk services and single source staffing of programmers and
other software professionals through the Company's TechWest Division. The
Company's projects involve nearly every type and manufacture of computers and
all of the major operating systems. Examples of the types of projects in which
the Company was involved in during the fiscal year include: assisting the
Goodyear Tire and Rubber Company in its move into an advanced computer-assisted
design (CAD) environment; assisting Brooklyn Union in the determination of the
scope and complexity of its Year 2000 exposure; and enhancing and supporting two
specific operations systems for Lucent Technologies, Inc. These and other
customer projects are highlighted in detail in AiC's 1997 Annual Report.
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AiC's largest customer is U S West Inc., which is headquartered in Denver
and provides telecommunication services to over 25 million customers in 14
states as well as domestic and international cable and telephone, wireless
communications, directory and information services. The Company is U S West's
single source for supplemental staffing for U S West's IT/Software Engineering
needs. To meet these needs, and to facilitate its management of over 800
computer programmers and other technical personnel it has on assignment at U S
West, AiC established its TechWest Division, which fills requirements, manages
assigned personnel and provides time record keeping/billing services through AiC
proprietary software developed specifically for this engagement. AiC's three-
year contract expires May 31, 1998, and the Company believes it likely that the
contract will be renewed for an additional two years. Revenues from services
provided to U S West were about 22% of total revenues during the last two fiscal
years and are expected to be about that same percentage for fiscal 1998. Loss
of this business could have a material adverse effect on the Company, although
the Company believes that it could replace the business lost if the contract is
not renewed and that the replacement business would mitigate or offset the
profit lost from the loss of the U S West business.
The Company has expanded the TechWest service offering to other clients
during the last year. Chevron Information Technology Company, Chevron
Corporation's technology subsidiary, and Salt River Project, the nation's third
largest public power utility, became TechWest customers during fiscal 1997 and
now use AiC as their sole source for supplemental IT/Software Engineering
staffing.
3
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AiC provided services through 29 of its branch offices during the year to
various divisions of International Business Machines Corporation (IBM), its
second largest customer, as one of nine select national service providers under
IBM's National Procurement initiative. The Company's contract with IBM expires
October 31, 1997. The Company and IBM are currently negotiating a renewal
through December 31, 1998. IBM's National Procurement initiative requires AiC
and the eight other participating vendors to accept lower hourly rates in return
for the opportunity to do a greater volume of business with IBM. During fiscal
1997 the increased volume of business done with IBM more than offset the reduced
rate structure, and the Company believes it has performed satisfactorily under
its national contract with IBM. There can be no assurance, however, that volume
will continue to offset lower rates or that the national contract will be
renewed. IBM business under the national contract accounted for about 20% of
revenues in each of the last three fiscal years. Loss of this business could
therefore have a material adverse effect on the Company, although the Company
believes that prevailing high demand for the services it provides would permit
it to replace business lost as a result of non-renewal and at least mitigate, if
not offset, the profit lost if the IBM national contract is not renewed.
The registrant provides its services to a wide range of industries. Its
fiscal 1997 revenues were derived from services rendered to customers in the
following industry groups:
4
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Approximate Percent
Industry Group FY 1997 Revenues
-------------- ----------------
Telecommunications 27.7%
Electronics 24.4%
Services 10.2%
Manufacturing 9.8%
Oil and Chemical 4.1%
Financial 5.2%
Insurance/Health Care 3.4%
Merchandising 3.5%
Food 2.3%
Government 1.5%
Power and Utility 1.4%
Transportation 1.5%
Other 5.0%
AiC provided services to approximately 900 clients and was engaged in
approximately 6,500 different customer projects during the fiscal year.
Consistent with its practices in prior years, the Company rendered these
services almost exclusively on an hourly rate on a time and materials hourly
rate basis under which invoices for services rendered were submitted no less
frequently than monthly with payment due generally net 30 days.
ORGANIZATION AND MARKETING
AiC provides its software services through its branch and field offices,
assigned on a geographical basis to one of five regions. Each branch office is
staffed with technical personnel and is managed by a branch manager, who has
primary responsibility for the administration, personnel and recruiting,
customer relations and profitability of the branch. The branch manager has
broad authority to conduct the operation of the branch, subject to adherence to
corporate policies. In general, field offices are established to support
specific projects for one or more specific customers at locations not served by
a local branch office and are managed by a branch
5
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within the same geographical region. A field office may become a branch office
when the volume of business and the prospects for additional business justify
the additional location expenses associated with branch office status.
During the fiscal year, the Company maintained branch offices in the
following cities: Atlanta, Austin, Boca Raton, Chicago, Cincinnati,
Cleveland, Columbus (Ohio), Dallas, Danbury, Denver, Des Moines, Detroit,
Houston, Indianapolis, Kansas City, Iselin (New Jersey), Los Angeles, Lexington
(Kentucky), Minneapolis, New York City, Omaha, Phoenix, Raleigh/Durham,
Rochester (Minnesota), Rochester (New York), St. Louis, San Francisco,
San Jose, Seattle, Tampa, Tulsa and Toronto, Canada.
AiC utilizes its own direct sales force to sell its services. At the end of
the fiscal year, the Company's sales staff totaled 100 in number. The ability to
recruit and hire experienced technical personnel with backgrounds and experience
suitable for customer requirements is an important factor in AiC's business, and
each branch office employs at least one full time recruiter. At the end of the
fiscal year, the Company's recruiting staff totaled 115 in number.
COMPETITION
AiC competes with software consulting divisions of several large companies
(including DEC, Andersen Consulting and IBM) on a national basis. These
organizations and their software consulting divisions are substantially larger
than the Company in terms of sales volume and personnel and have substantially
greater financial resources.
AiC also competes with other national software services companies such as
Computer Task Group, CGA, Keane Inc., and Computer Horizons.
6
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The Company's branches compete in their local market areas with numerous
locally based software services firms. Most of the locally based competitors
are approximately the same size as or smaller than the Company's local branch,
although in certain market areas they are larger than the Company's local
branch.
AiC believes its total staff and sales volume are larger than most of the
national and local software services companies, but in some market areas certain
of these competitors may be larger. Although there are no comprehensive
industry statistics available, AiC believes it is among the ten largest national
software services companies in the United States.
Principal competitive factors in the software services business include
technical expertise, responsiveness to customers' needs, reputation and
credibility, and hourly rates. AiC believes it is competitive in these
respects.
PERSONNEL
AiC has approximately 4,650 personnel. Of these, approximately 4,000 are
systems analysts, computer programmers and other technical personnel whose
services are billable to clients. Several years of programming experience is
generally a prerequisite to employment with the Company.
Maintaining the present volume of the Company's business and its continued
growth depend to a significant extent on its ability to attract and retain
qualified technical personnel. Such personnel are in great demand. Although
AiC has been able to attract and retain qualified technical personnel and
believes its personnel relations are satisfactory, there can be no assurance the
Company will be able to continue to attract and retain such personnel. Its
inability to do so
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would have a material adverse effect on the registrant's business.
OTHER MATTERS
AiC was incorporated under Minnesota law on March 29, 1966. Its principal
office is identified in response to Item 2 below. Raw materials, seasonality,
compliance with environmental protection laws, and patents, trademarks,
licenses, franchises or other concessions are not material to an understanding
of the Company's business. No portion of the Company's business is subject to
renegotiation of profits at the election of the government. Backlog is not
material because nearly all of the Company's contracts for services, including
contracts with the government (which are not material), are terminable by either
the customer or the Company on notice of 30 days or less.
CAUTIONING STATEMENT UNDER THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Statements included in this document may be "forward looking statement"
within the meaning of that term in Section 27A of the Securities Act of 1933, as
amended, and of Section 21F of the Securities Exchange Act of 1934, as amended.
Additional oral or written forward-looking statements may be made by the Company
from time to time, and such statements may be included in documents that are
filed with the Securities and Exchange Commission. Words such as "believes,"
"intends," "possible," "expects," "estimates," "anticipates," or "plans" and
similar expressions are intended to identify forward-looking statements.
Forward looking statements are based on expectations and assumptions, and
they involve
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risks and uncertainties which could cause results or outcomes to differ
materially from expectations. Among the risks and uncertainties important to
the Company's business are the continued need of current and prospective
customers for the Company's services, competition, the availability of qualified
professional staff, and the Company's ability to increase rates as labor and
operating costs increase. There may be other factors, such as general economic
conditions which affect businesses generally, which may cause results to vary
from expectations.
9
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ITEM 2. PROPERTIES
The principal executive office of the registrant is located at 7615 Metro
Boulevard, Minneapolis, Minnesota 55439, in a 20,000 square foot office building
which is owned by the registrant. All branch offices and field offices are held
under leases with varying expiration dates ranging from 30 days to 9 years. See
Note H of Notes to Consolidated Financial Statements at page 24 of the
registrant's 1997 Annual Report to Shareholders.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the registrant is a party to
or which any of its property is subject, other than ordinary routine litigation
incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the registrant's shareholders during
the fourth quarter of the registrant's 1997 fiscal year.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Title
- ---- --- -----
Frederick W. Lang 72 Chairman and Chief Executive Officer since
1989; President and Chief Executive Officer
from 1966-1989; Treasurer from 1987-1989.
Victor C. Benda 66 President and Chief Operating Officer since
1989, Executive Vice President from 1983 to
1989, Senior Vice President from 1980 to
1983, Vice President from 1967 to 1980.
Sarah P. Spiess 56 Executive Vice President since 1996, Senior
Vice President during 1996, Vice President
and General Manager of Southern Region from
1992 to 1996, Manager of Minneapolis Branch
1979 to 1992.
Thomas R. Mahler 51 Secretary since 1979; General Counsel since
1982.
Gerald M. McGrath 58 Chief Financial Officer since 1996,
Treasurer since 1989; Vice President, Finance
since 1988; Assistant Treasurer from 1976 to
1989; Controller from 1966 to 1989.
Terms of office expire October 16, 1997.
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PART II
The following portions of the registrant's annual report to shareholders
for the fiscal year ended June 30, 1997 are incorporated by reference in
response to Items 5, 6, 7 and 8 as follows:
Items in Form 10-K Caption or Section and Page in Annual Report
- ------------------ ----------------------------------------------------------
5 Market Price Ranges on Common Stock 25
6 Five Year Summary 26
7 Management's Discussion and Analysis 16-17
8 Financial Highlights and Statements Inside Front
Cover, 18-26
(See Index to Consolidated Financial Statements and Schedules set forth in Item
14 of this Form 10-K.)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with or changes in the registrant's
independent auditors within the past 24 months.
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PART III
The information regarding executive officers required by Item 10 is set
forth under the caption "Executive Officers of the Registrant" in Part I of this
Form 10-K. Other information called for in Part III, including information
regarding directors (Item 10), executive compensation (Item 11) and security
ownership of certain beneficial owners and management (Item 12), is set forth
in the registrant's definitive proxy statement for the annual meeting of
shareholders to be held October 16, 1997, filed pursuant to Regulation 14A, as
follows:
Items in Form 10-K Caption and Page in Definitive Proxy Statement
------------------ ----------------------------------------------
10 Election of Directors 2-3
11 Board Committees and Compensation and
Executive Compensation 3, 7-8
12 Election of Directors and Principal
Shareholders 2-3, 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1997:
a. No director, executive officer, nominee for election as a director, holder
of more than five percent of the registrant's common stock or members of the
immediate family of any of the foregoing persons had any direct or indirect
material interest in any transaction or series of transactions to which the
registrant was a party and in which the amount exceeded $60,000, nor is any
such transaction proposed;
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b. The registrant was not a party with any entity in which any of the
registrant's directors or nominees for election as directors was an
executive officer, held more than a 10% equity interest, was a member of or
of counsel to (in the case of a law firm) or was a partner or executive
officer (in the case of an investment banking firm), in any transaction
involving payments of more than five percent of the gross revenues of either
the registrant or such entity, nor is any such transaction proposed; and
c. No director, executive officer or nominee for election as a director or (i)
any member of the immediate family of any of the foregoing, (ii) any
corporation or beneficial holder of ten percent or more of any class of
equity securities, or (iii) any trust or other estate in which such person
served as a trustee or in a similar capacity was indebted to the registrant
in excess of $60,000.
Subparagraph d. of this Item is not applicable.
14
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PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
a.1 CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of Analysts International Corporation
and its subsidiary and the related independent auditors' report are included
on the following pages of its annual report to shareholders for the fiscal
year ended June 30, 1997:
Pages in Annual Report
----------------------
Consolidated Balance Sheets at June 30, 1997 and 1996 18
Consolidated Statements of Income for each of the
three years in the period ended June 30, 1997 19
Consolidated Statements of Cash Flows for each of the
three years in the period ended June 30, 1997 20
Consolidated Statements of Shareholders' Equity for
each of the three years in the period ended June 30, 1997 21
Notes to Consolidated Financial Statements 22-24
Independent Auditors' Report 25
a.2 CONSOLIDATED FINANCIAL STATEMENT SCHEDULES Page Herein
-----------
Independent Auditors' Report 18
Schedule II. Valuation and Qualifying Accounts 19
Other consolidated financial statement schedules are omitted because they
are not required or the information is presented in the consolidated financial
statements or notes thereto.
15
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a.3 EXHIBITS
Exhibit Number Exhibit Page
- -------------- ------------
3-a Articles of Incorporation, as amended (Exhibit 3-a
to Annual Report on Form 10-K for fiscal year 1988,
Commission File No. 0-4090, incorporated by
reference).
3-b Restated Bylaws (Exhibit 3-b to Annual Report on
Form 10-K for fiscal year 1988, Commission File
No. 0-4090, incorporated by reference).
3-c Amendment to Articles of Incorporation to increase
authorized shares to 40 million (Exhibit A to
Definitive Proxy Statement dated September 5, 1996,
Commission File No. 0-4090, incorporated by
reference).
4-a Specimen Common Stock Certificate for Non-Employee
Directors (Exhibit 4(a) to Annual Report on
Form 10-K for fiscal year 1989, Commission File
No. 0-4090, incorporated by reference).
4-b Rights Agreement dated as of June 16, 1989 between
Analysts International Corporation and Norwest Bank
Minnesota, N.A., as Rights Agent which includes the
form of Rights Certificate and Summary of Rights
(Exhibit A to the Registrant's Form 8-A dated
June 16, 1989, Commission File No. 0-4090,
incorporated by reference).
4-c First Amendment to Rights Agreement dated as of
May 8,1990 between Analysts International Corporation
and Norwest Bank Minnesota, N.A. as Rights Agent
(Exhibit 4(c) to Annual Report on Form 10-K for
fiscal year 1991, Commission File No. 0-4090,
incorporated by reference).
4-d Second Amendment to Rights Agreement dated as of
April 30, 1996 between Analysts International
Corporation and Norwest Bank Minnesota as Rights
Agent (Exhibit 4(d) to Annual Report on Form 10-K
for fiscal year 1996, Commission File No. 0-4090,
incorporated by reference).
10-a Senior Executive Retirement Plan (Exhibit 10-e to
Annual Report on Form 10-K for fiscal year 1984,
Commission File No. 0-4090, incorporated by reference).
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a.3 EXHIBITS (con't)
Exhibit Number Exhibit Page
10-b Deferred Compensation Plan (Exhibit 10-g to Annual
Report on Form 10-K for fiscal year 1984, Commission
File No. 0-4090, incorporated by reference).
10-c 1985 Incentive Stock Option Plan (Exhibit 10(d) to
Annual Report on Form 10-K for fiscal year 1991,
Commission File No. 0-4090, incorporated by reference).
10-d 1994 Stock Option Plan (Exhibit A to Definitive Proxy
Statement dated September 6, 1994 for registrant's 1994
Annual Meeting of Shareholders, Commission File
No. 0-4090, incorporated by reference).
10-e 1996 Stock Option Plan for Non-employee Directors
(Exhibit B to Definitive Proxy Statement dated
September 5, 1996, Commission File No. 0-4090,
incorporated by reference).
11 Calculations of Earnings Per Share.
13 1997 Annual Report to Shareholders.
21 Subsidiaries of Registrant.
23 Independent Auditors' Consent.
24 Powers of Attorney.
27 Financial Data Schedule
b. REPORTS ON FORM 8-K
There were no reports on Form 8-K for the three months ended June 30, 1997.
17
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INDEPENDENT AUDITORS' REPORT ON SCHEDULE
Shareholders and Board of Directors
Analysts International Corporation
Minneapolis, Minnesota
We have audited the consolidated financial statements of Analysts International
Corporation and its subsidiary as of June 30, 1997 and 1996, and for each of the
three years in the period ended June 30, 1997, and have issued our report
thereon dated August 18, 1997; such consolidated financial statements and report
are included in your 1997 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedule of Analysts International Corporation and subsidiary, listed
in Item 14 a.2. This consolidated financial statement schedule is the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, this consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
Minneapolis, Minnesota
August 18, 1997
18
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INDEPENDENT AUDITORS' REPORT ON SCHEDULE
Shareholders and Board of Directors
Analysts International Corporation
Minneapolis, Minnesota
We have audited the consolidated financial statements of Analysts International
Corporation and its subsidiary as of June 30, 1997 and 1996, and for each of the
three years in the period ended June 30, 1997, and have issued our report
thereon dated August 18, 1997; such consolidated financial statements and report
are included in your 1997 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedule of Analysts International Corporation and subsidiary, listed
in Item 14 a.2. This consolidated financial statement schedule is the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, this consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
August 18, 1997
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ANALYSTS INTERNATIONAL CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged to Deductions Balance
beginning costs and net of at end
of period expenses recoveries of period
--------- ---------- ---------- ---------
Description
- -----------
Allowance for doubtful
accounts:
Year ended June 30, 1997 $500,000 $322,000 $272,000 $550,000
Year ended June 30, 1996 550,000 108,000 158,000 500,000
Year ended June 30, 1995 600,000 171,000 221,000 550,000
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
ANALYSTS INTERNATIONAL CORPORATION
BY /s/ F.W. Lang
--------------------------
DATE September 25, 1997 F. W. Lang, Chairman
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
---------
/s/ F. W. Lang Chairman & Chief Executive
------------------- (Principal Executive Officer)
F.W. Lang Officer
/s/ G. M. McGrath Vice President, Finance and
------------------- Treasurer (Principal Finance and
G. M. McGrath Accounting Officer)
/s/ V. C. Benda President and Chief Operating
------------------- Officer
V. C. Benda*
September 25, 1997
/s/ W. K. Drake Director
------------------
W. K. Drake*
/s/ M. A. Loftus Director
------------------
M. A. Loftus*
/s/ E. M. Mahoney Director
-------------------
E. M. Mahoney*
/s/ R. L. Prince Director
-------------------
R. L. Prince*
*F.W. Lang, by signing his name hereto, hereby signs this form 10-K on behalf of
the persons indicated pursuant to powers of attorney filed herewith.
/s/ F. W. Lang
-------------------------
F. W. Lang, Chairman
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
ANALYSTS INTERNATIONAL CORPORATION
BY
--------------------------
DATE September 25, 1997 F. W. Lang, Chairman
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
---------
Chairman & Chief Executive
------------------- (Principal Executive Officer)
F.W. Lang Officer
Vice President, Finance and
------------------- Treasurer (Principal Finance and
G. M. McGrath Accounting Officer)
President and Chief Operating
------------------- Officer
V. C. Benda*
September 25, 1997
Director
------------------
W. K. Drake*
Director
------------------
M. A. Loftus*
Director
-------------------
E. M. Mahoney*
Director
-------------------
R. L. Prince*
*F.W. Lang, by signing his name hereto, hereby signs this form 10-K on behalf of
the persons indicated pursuant to powers of attorney filed herewith.
-------------------------
F. W. Lang, Chairman
20
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EXHIBIT INDEX
Exhibit Number Page No.*
- -------------- ---------
11 Calculations of Earnings Per Share.
13 1997 Annual Report to Shareholders.
21 Subsidiaries of Registrant.
23 Independent Auditors' Consent.
24 Powers of Attorney.
27 Financial Data Schedule
- ---------------------------
*Reference is to the page number in the sequential numbering system.
For a list of exhibits incorporated by reference and not filed with this Form
10-K, see Item 14 a.3 at pages 16-17 of this Form 10-K.
21
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EXHIBIT 11
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ANALYSTS INTERNATIONAL CORPORATION
EXHIBIT 11
(Page 1 of 2)
CALCULATION OF PRIMARY EARNINGS PER SHARE
Year Ended June 30
--------------------------------------
1995 1996 1997
---- ---- ----
Net earnings $11,256,000 $12,418,000 $16,381,000
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of
common shares outstanding 14,386,000 14,568,000 14,730,000
Dilutive effect of stock
options outstanding after
application of treasury
stock method 162,000 246,000 299,000
----------- ----------- -----------
14,548,000 14,814,000 15,029,000
----------- ----------- -----------
----------- ----------- -----------
Net earnings per common
and common equivalent
share, based upon weighted
average number of shares
outstanding $.77 $.84 $1.09
----------- ----------- -----------
----------- ----------- -----------
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ANALYSTS INTERNATIONAL CORPORATION
EXHIBIT 11
(Page 2 of 2)
CALCULATION OF FULLY DILUTED EARNINGS PER SHARE
Year Ended June 30
-----------------------------------
1995 1996 1997
---- ---- ----
Net earnings $11,256,000 $12,418,000 $16,381,000
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of
common shares outstanding 14,386,000 14,568,000 14,730,000
Dilutive effect of stock
options outstanding after
application of treasury
stock method 194,000 266,000 334,000
----------- ----------- -----------
14,580,000 14,834,000 15,064,000
----------- ----------- -----------
----------- ----------- -----------
Net earnings per common and
common equivalent share,based
upon weighted average number of
shares outstanding
$.77 $.84 $1.09
----------- ----------- -----------
No significant variation in primary versus fully diluted earnings per share
existed for the years 1995-1997.
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1997 ANNUAL REPORT
[LOGO]
ANALYSTS INTERNATIONAL CORPORATION
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ANALYSTS INTERNATIONAL CORPORATION
The Company offers a variety of computer software
services to a wide range of industries,
including consulting, project
management, systems analysis and design, programming,
Year 2000 software compliance, software maintenance and training.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 % INCREASE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1997 1996 (DECREASE)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional services revenues:
Provided directly . . . . . . . . . . . . . . . . . . . . $344,790 $267,317 29.0
Provided through sub-suppliers. . . . . . . . . . . . . . 94,756 62,227 52.3
-------- -------
Total revenues . . . . . . . . . . . . . . . . . . . . 439,546 329,544 33.4
Income before income taxes. . . . . . . . . . . . . . . . . 27,210 20,739 31.2
Net income. . . . . . . . . . . . . . . . . . . . . . . . . 16,381 12,418 31.9
Per share of common stock:
Net income. . . . . . . . . . . . . . . . . . . . . . . . $1.09 $.84 29.8
Shareholders' equity. . . . . . . . . . . . . . . . . . . 4.45 3.66 21.6
Dividends declared. . . . . . . . . . . . . . . . . . . . .36 .30 20.0
Average common and common equivalent shares outstanding . . 15,029,000 14,814,000 1.5
Number of personnel . . . . . . . . . . . . . . . . . . . . 4,650 3,770 23.3
Return on equity. . . . . . . . . . . . . . . . . . . . . . 27.3% 25.1% 8.8
Current ratio . . . . . . . . . . . . . . . . . . . . . . . 2.68 3.18 (15.7)
Working capital . . . . . . . . . . . . . . . . . . . . . . $ 55,009 $ 47,348 16.2
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 0 --
</TABLE>
ABOUT THE COVER:
THE EMBLEM PICTURED ON THE COVER IS AWARDED IN THE FORM OF A
MEDALLION TO AIC EMPLOYEES TO RECOGNIZE OUTSTANDING PERFORMANCE.
THE WORDS - "EXCELLENCE, INTEGRITY, INNOVATION" - ARE THE
PRINCIPLES THAT HAVE GUIDED THE COMPANY SINCE ITS FOUNDING.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
As a means of better explaining the Company's operations and results, the
following table illustrates the relationship between revenues and expense
categories for the three years ended June 30,
1997, 1996, and 1995.
<TABLE>
<CAPTION>
PERCENT OF REVENUES
YEAR ENDED JUNE 30, 1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional services revenues:
Provided directly . . . . . . . . . . . . . . . . . . . . 78.4% 81.1% 97.9%
Provided through sub-suppliers. . . . . . . . . . . . . . 21.6% 18.9% 2.1%
-------------------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
Salaries, contracted services and direct charges. . . . . . 77.4% 76.6% 71.3%
Selling, administrative and other operating costs . . . . . 16.6% 17.4% 20.6%
Non-operating income. . . . . . . . . . . . . . . . . . . . 0.2% 0.3% 0.4%
-------------------------------------
Income before income taxes. . . . . . . . . . . . . . . . . 6.2% 6.3% 8.5%
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . 2.5% 2.5% 3.3%
-------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . 3.7% 3.8% 5.2%
- ----------------------------------------------------------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Revenues provided directly increased approximately $67 million, or 29.0%, in
fiscal 1997 over 1996. Fiscal 1996 revenues provided directly increased 25.0%
over fiscal 1995. Supplemental revenues resulting from sub-supplier billings,
primarily with U S West and IBM, increased 52.3% in fiscal 1997 over 1996.
Fiscal 1995 revenues provided through sub-suppliers were minimal. All of these
increases resulted primarily from increases in billable hours of service
rendered to clients. Rate increases have contributed only slightly to the
revenue increases over this time period 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 4,650 at June 30, 1997, compared to 3,770 at June 30,
1996 and 3,170 at June 30, 1995. Substantially all of the increases consist of
billable technical staff.
Salaries, contracted services and direct charges, which represent primarily
the Company's direct labor costs, were 77.4% of revenues in fiscal 1997 compared
to 76.6% of revenues in fiscal 1996. The increase in this expense category as a
percentage of revenues is mostly a consequence of the increase in business done
through sub-suppliers. The fees which the Company pays to these sub-suppliers
are higher per hour than the labor costs for its own employees. Excluding both
sub-supplier revenues and labor costs associated with these contracts, this
category of expense was 71.3% of revenues in fiscal 1997, 71.2% in fiscal 1996
and 70.7% in fiscal 1995. The Company's efforts to control these costs involve
controlling labor costs, passing on labor cost increases through increased
billing rates where possible, and maintaining productivity levels of its
billable technical staff. Labor costs, however, are difficult to control because
the highly skilled technical personnel the Company seeks to hire and retain are
in great demand. Intense competition in the industry makes it difficult to pass
cost increases on to customers, and unfavorable economic conditions could
adversely affect productivity. While the Company has taken steps to control this
category of expense, there can be no assurance the Company will be able to
maintain gross margins at the levels experienced.
Selling, administrative and other operating costs include commissions paid
to sales representatives and recruiters, employee fringe benefits and location
costs. These costs, as a percentage of revenues, were 16.6% in fiscal 1997,
17.4% in 1996 and 20.6% in 1995. Excluding the sub-supplier revenues associated
with the contracts referred to above, this percentage would have been 21.1% for
fiscal 1997, 21.4% for fiscal 1996 and 21.0% for fiscal 1995. While the Company
is committed to careful management of these costs, there can be no assurance the
Company will be able to maintain these costs at their current relationship to
revenues.
Net income in fiscal 1997 increased 31.9% over fiscal 1996 and fiscal
1996's net income increased 10.3% over fiscal 1995. As a percentage of total
revenues, however, net income has declined from 5.2% in fiscal 1995 to 3.8% in
fiscal 1996 and 3.7% in fiscal 1997. The decrease in net income as a percentage
of revenues results from the lower
[CHART]
[CHART]
<PAGE>
margin realized on revenues from services provided through sub-suppliers. The
Company's net income as a percentage of revenues provided directly was 4.8%,
4.6% and 5.3% for fiscal years 1997, 1996 and 1995, respectively.
Inflation has not had a major impact on the Company's operations because
revenues are derived primarily from services billed at hourly rates, which are
generally subject to renegotiation on a semi-annual basis.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1997 was $55.0 million, up 16.3% from the $47.3
million at June 30, 1996 which was up 18.8% from the $39.8 million at June 30,
1995. This includes cash and cash equivalents of $17.9 million at June 30, 1997
compared to $17.0 million at June 30, 1996 and $12.6 million a year earlier and
accounts receivable of $67.0 million at June 30, 1997 compared to $49.5 million
at June 30, 1996 and $41.7 million a year earlier.
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 three years, the Company has been able to support the growth in its
business with internally generated funds. The Company's sub-supplier contracts
have not and are not expected to burden working capital, even though the ratio
of current assets to current liabilities has declined as a consequence of the
Company's use of sub-suppliers to perform substantial amounts of the work,
because the Company does not pay its sub-suppliers until after collection from
the client.
The Company's business is not capital intensive since the Company's
services are generally provided at the client site, where the client provides
the computer equipment, work space and other necessary facilities. In recent
years, however, the Company has established customer support facilities where it
performs software development work off the customer's premises. These facilities
are staffed by appropriate AiC management and technical personnel and include
computer equipment and telecommunications links with customer computers. Also,
in fiscal 1997 the Company made capital investments to enlarge certain branch
facilities as a result of the increased level of business. For fiscal 1997,
capital expenditures, primarily for computer equipment, furniture and leasehold
improvements, totalled $2,955,000. Capital expenditures for fiscal years 1996
and 1995 were $2,932,000 and $1,930,000, respectively. All of these capital
expenditures were funded through working capital. Fiscal 1998 capital spending
is expected to exceed fiscal 1997 as the Company continues to expand its
operations.
During fiscal 1997, the Company increased its regular quarterly cash
dividends to $.09 per share, up from $.075 declared during fiscal 1996 and the
$.065 declared during fiscal 1995. The amount of the quarterly dividend is based
on results of operations, available cash and anticipated cash requirements of
the business.
The Company adopted Statements of Financial Accounting Standards No. 112,
"Employers Accounting for Post Employment Benefits" and No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" in the first quarter of
fiscal 1995. The impact on the Company's financial position and results of
operations as a consequence of adopting these statements was not significant.
The Company also adopted Statements of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," and No. 123, "Accounting for Stock-Based
Compensation," in the first quarter of 1997. The adoption of these standards
also did not have a significant effect on the Company's financial position and
operating results.
On July 1, 1996, the Company acquired specific assets and assumed certain
liabilities of DPI, Inc. and DPI Services, Inc., a wholly owned subsidiary of
DPI, Inc., primarily engaged in the business of providing software services in
the San Jose, California market. The amount paid in connection with the purchase
was approximately $5.6 million which was paid entirely with internal funds.
The Company believes internally generated funds will be sufficient to meet
the cash requirements of its business for fiscal 1998.
[CHART]
[CHART]
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
JUNE 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT) 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 17,888 $17,018
Accounts receivable, less allowance for doubtful
accounts of $550 and $500, respectively. . . . . . . . . . . . . . 66,954 49,494
Prepaid expenses and other current assets . . . . . . . . . . . . . . 2,989 2,567
- ----------------------------------------------------------------------------------------------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . 87,831 69,079
Property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . 6,121 5,715
Intangible assets, net of accumulated amortization of $277. . . . . . . 3,874 --
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,544 6,651
- ----------------------------------------------------------------------------------------------------
$105,370 $81,445
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,131 $11,049
Dividend payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,336 1,099
Salaries and vacations. . . . . . . . . . . . . . . . . . . . . . . . 11,513 7,524
Other, primarily self-insured health care reserves. . . . . . . . . . 1,647 1,677
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . 195 382
- ----------------------------------------------------------------------------------------------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . 32,822 21,731
Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 6,444 5,996
Commitments (Note H). . . . . . . . . . . . . . . . . . . . . . . . . -- --
Shareholders' equity:
Common stock, par value $.10 a share; authorized
40,000,000 shares; issued and outstanding
14,849,849 and 14,649,350 shares, respectively . . . . . . . . . . 1,485 1,465
Additional capital. . . . . . . . . . . . . . . . . . . . . . . . . . 12,061 10,756
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 52,558 41,497
- ----------------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . 66,104 53,718
- ----------------------------------------------------------------------------------------------------
$105,370 $81,445
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional services revenues:
Provided directly . . . . . . . . . . . . . . . . . . . . $ 344,790 $ 267,317 $ 213,785
Provided through sub-suppliers. . . . . . . . . . . . . . 94,756 62,227 4,641
- ---------------------------------------------------------------------------------------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . 439,546 329,544 218,426
Expenses:
Salaries, contracted services and
direct charges . . . . . . . . . . . . . . . . . . . . 340,483 252,518 155,743
Selling, administrative and other
operating costs. . . . . . . . . . . . . . . . . . . . 72,898 57,314 44,913
- ---------------------------------------------------------------------------------------------------------
413,381 309,832 200,656
- ---------------------------------------------------------------------------------------------------------
Operating income. . . . . . . . . . . . . . . . . . . . . . 26,165 19,712 17,770
Non-operating income. . . . . . . . . . . . . . . . . . . . 1,045 1,027 760
- ---------------------------------------------------------------------------------------------------------
Income before income taxes. . . . . . . . . . . . . . . . . 27,210 20,739 18,530
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . 10,829 8,321 7,274
- ---------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $ 16,381 $ 12,418 $ 11,256
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Net income per common and
common equivalent share. . . . . . . . . . . . . . . . $ 1.09 $ .84 $ .77
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Average common and common
equivalent shares outstanding. . . . . . . . . . . . . 15,029,000 14,814,000 14,548,000
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
(IN THOUSANDS) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $16,381 $ 12,418 $ 11,256
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . 2,562 2,191 1,814
Amortization of Goodwill. . . . . . . . . . . . . . . . . 277 -- --
Loss on disposal of assets. . . . . . . . . . . . . . . . 4 25 5
Increase in deferred income tax benefit . . . . . . . . . (531) (469) (445)
Increase in accounts receivable . . . . . . . . . . . . . (15,915) (7,788) (13,413)
(Increase) decrease in prepaid expenses . . . . . . . . . (186) 21 (31)
Increase in accounts payable. . . . . . . . . . . . . . . 6,582 3,808 5,550
Increase in salaries and vacations. . . . . . . . . . . . 3,897 871 1,351
(Decrease) increase in other accrued expenses . . . . . . (30) 57 111
(Decrease) increase in income taxes payable. . . . . . . (187) (208) 100
Increase in long-term liabilities . . . . . . . . . . . . 448 644 559
- -------------------------------------------------------------------------------------------------------
Net cash provided by operating activities . . . . . . . . . 13,302 11,570 6,857
Cash flows from investing activities:
Property and equipment additions. . . . . . . . . . . . . (2,955) (2,932) (1,930)
Increase in annuities and cash surrender values . . . . . (598) (578) (411)
Payments for acquisitions . . . . . . . . . . . . . . . . (5,153) -- --
Proceeds from property and equipment sales. . . . . . . . 32 21 3
- -------------------------------------------------------------------------------------------------------
Net cash used in investing activities . . . . . . . . . . . (8,674) (3,489) (2,338)
Cash flows from financing activities:
Cash dividends. . . . . . . . . . . . . . . . . . . . . . (5,083) (4,223) (3,668)
Proceeds from exercise of stock options . . . . . . . . . 1,325 545 1,064
- -------------------------------------------------------------------------------------------------------
Net cash used in financing activities . . . . . . . . . . . (3,758) (3,678) (2,604)
- -------------------------------------------------------------------------------------------------------
Net increase in cash and equivalents. . . . . . . . . . . . 870 4,403 1,915
Cash and equivalents at beginning of year . . . . . . . . . 17,018 12,615 10,700
- -------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year . . . . . . . . . . . . $17,888 $ 17,018 $ 12,615
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the year for:
Income taxes. . . . . . . . . . . . . . . . . . . . . . $11,034 $ 8,998 $ 7,619
Interest. . . . . . . . . . . . . . . . . . . . . . . . -- -- --
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ANALYSTS INTERNATIONAL CORPORATION
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) STOCK CAPITAL EARNINGS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balances at June 30, 1994 as previously reported . . . . . . . . $ 712 $ 9,900 $25,959
Effect of stock split . . . . . . . . . . . . . . . . . . . . 712 (712)
- -----------------------------------------------------------------------------------------------------------
Balances at June 30, 1994 as restated. . . . . . . . . . . . . . 1,424 9,188 25,959
Common stock issued - 278,510 shares upon
exercise of stock options. . . . . . . . . . . . . . . . . 28 1,036
Cash dividends ($.26 per share) . . . . . . . . . . . . . . . (3,757)
- -----------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . 11,256
Balances at June 30, 1995. . . . . . . . . . . . . . . . . . . . 1,452 10,224 33,458
Common stock issued - 133,798 shares upon
exercise of stock options. . . . . . . . . . . . . . . . . 13 532
Cash dividends ($.30 per share) . . . . . . . . . . . . . . . (4,379)
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . 12,418
- -----------------------------------------------------------------------------------------------------------
Balances at June 30, 1996. . . . . . . . . . . . . . . . . . . . 1,465 10,756 41,497
Common stock issued - 198,543 shares upon
exercise of stock options. . . . . . . . . . . . . . . . . 20 792
Income tax benefit from stock option plans. . . . . . . . . . 481
Stock based compensation. . . . . . . . . . . . . . . . . . . 32
Cash dividends ($.36 per share) . . . . . . . . . . . . . . . (5,320)
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . 16,381
- -----------------------------------------------------------------------------------------------------------
Balances at June 30, 1997. . . . . . . . . . . . . . . . . . . . $1,485 $12,061 $52,558
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
ANNUAL REPORT 1997 #
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS - Analysts International Corporation furnishes
analytical and programming services. These services include consulting, systems
analysis, design, programming and instruction in the use of computer programs.
CONSOLIDATION - The consolidated financial statements include the accounts of
the Company and its subsidiary. All intercompany accounts and transactions have
been eliminated.
DEPRECIATION - Property and equipment is being depreciated using the
straight-line method over the estimated useful lives (3-40 years) of the assets
for financial statement purposes and accelerated methods for income tax
purposes.
REVENUES - The Company grants credit without collateral to customers, a
significant portion of whom are engaged in the electronics and
telecommunications industries. One customer and their various divisions and
operating units accounted for approximately 21%, 18% and 20% of revenues in
fiscal 1997, 1996 and 1995, respectively. Another customer accounted for 22%,
23% and 6% of revenues in fiscal 1997, 1996 and 1995, respectively. Revenue is
recognized on contracts as services are performed.
INTANGIBLE ASSETS - Intangible assets consists of goodwill, the excess of the
purchase price over the appraised fair value of assets acquired in acquisitions.
Intangibles are amortized on a straight-line basis over 15 years. At the balance
sheet date, management assessed whether there has been a permanent impairment in
the value of goodwill and the amount of such impairment by comparing anticipated
undiscounted future operating income from the acquired business unit with the
carrying value of the related goodwill. The factors considered by management in
performing this assessment include current operating results, trends and
prospects, as well as the effects of demand, competition and other economic
factors.
NET INCOME PER SHARE - Net income per share is computed based on the weighted
average number of common and common equivalent shares outstanding, including the
dilutive effect of stock options. Fully diluted net income per share is
substantially the same.
CASH EQUIVALENTS - Temporary cash investments in money market accounts and
Treasury Bills are considered to be cash equivalents.
SHARES RESERVED - At June 30, 1997, there were approximately 17,153,000 shares
reserved for issuance under the stock option plans and the shareholders' rights
plan.
ESTIMATES - The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions affecting the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
these estimates.
FASB PRONOUNCEMENT - In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share". This statement specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) and is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. This statement replaces the presentation of primary EPS with a
presentation of basic EPS. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. If the Company had applied SFAS No.
128 to the computation of earnings per share for the year ended June 30, 1997,
the basic and diluted amounts would have been $1.11 and $1.09, respectively.
B. PROPERTY AND EQUIPMENT
JUNE 30
(In thousands) 1997 1996
- -----------------------------------------------------------------------
Cost:
Land . . . . . . . . . . . . . . .$ 74 $ 74
Building and improvements. . . . .1,931 1,773
Office furniture & equipment . . 15,672 13,709
- -----------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . 17,677 15,556
Accumulated depreciation . . . . . .(11,556) (9,841)
- -----------------------------------------------------------------------
$ 6,121 $ 5,715
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
C. DEFERRED COMPENSATION
The Company has a Deferred Compensation Plan for key management employees as
determined by the Board. Included in long-term liabilities at June 30, 1997 and
1996 is $6,444,000 and $5,996,000 respectively, representing the Company's
liability under the Plan. This liability is being funded by the purchase of life
insurance and annuity contracts. Included in other assets at June 30, 1997 and
1996 is $5,148,000 and $4,550,000, respectively, representing the carrying value
of annuities, which approximates market value, and insurance cash value.
Deferred compensation expense for the fiscal years 1997, 1996 and 1995 was
approximately $448,000, $718,000 and $708,000 respectively.
D. COMMON STOCK
In October 1996, the shareholders approved an amendment to the Company's
Articles of Incorporation increasing the number of shares of Common Stock
authorized for issuance to 40,000,000 shares. In September 1996, the Company
distributed a two-for-one stock split effected in the form of a stock dividend.
All share and per share data has been adjusted to reflect this stock split.
E. STOCK OPTION PLANS
The Company has three stock-based compensation plans, which are described below.
In October 1995, the FASB issued SFAS 123,
<PAGE>
"Accounting for Stock-Based Compensation." SFAS 123 is effective for periods
beginning after December 15, 1995. SFAS 123 requires companies to either
recognize compensation expense for grants of stock options and other equity
instruments based on fair value or to disclose pro forma net income and
earnings per share in the notes to the financial statements. The Company
adopted the disclosure provisions of SFAS 123 in 1997 and has continued to
apply APB Opinion 25 and related interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for two of its stock
option plans. The compensation that has been charged against income for its
non-employee directors plan was $32,000 in fiscal 1997, the first year of the
plan. Had compensation cost for the Company's stock-based compensation plans
been determined based on the fair value at the grant dates as calculated in
accordance with SFAS 123, the Company's net income and earnings per share for
the years ended June 30, 1997 and 1996 would have been reduced to the pro
forma amounts indicated below:
1997 1996
NET INCOME EARNINGS NET INCOME EARNINGS
($1,000) PER SHARE ($1,000) PER SHARE
As reported. . . . . . . $16,381 $1.09 $12,418 $0.84
Pro forma. . . . . . . . $15,400 $1.02 $12,246 $0.83
The effects of applying SFAS 123 in this pro forma disclosure are not
likely to be representative of the effects on reported net income in future
years. SFAS 123 does not apply to awards prior to 1996 and additional awards in
future years are anticipated.
The fair market value of each stock option is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: an expected life of 5 years, expected volatility
of 44%, a dividend yield of 1.0% and a risk-free interest rate of 7.5%
The Company has three option plans. Under the 1985 Incentive Stock Option
Plan, the company could grant options to its employees for up to 1,875,000
shares of common stock. This Plan expired June 20, 1995. Under the 1994 Stock
Option Plan, the Company may grant options to its employees for up to 800,000
shares of common stock. Under the 1996 Stock Option Plan for Non-employee
Directors, the Company may grant options to its non-employee directors, for up
to 160,000 shares of common stock. Under the 1996 Non-employee Directors Plan,
options to purchase 4,000 shares are automatically granted on January 3 of each
year to each eligible non-employee director. Under all plans, the exercise price
of each option equals the market price of the Company's stock on the date of
grant and an option's maximum term is generally 10 years. Options are
exercisable 25% annually beginning one year after date of grant.
A summary of the status of the Company's stock option plans as of June 30,
1997, 1996 and 1995, and changes during the years ending on those dates follows:
<TABLE>
<CAPTION>
1997 1996 1995
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning
of year. . . . . . . . 788,620 $13.47 638,758 $ 9.08 676,600 $ 6.22
Granted. . . . . . . . . 117,737 29.38 336,850 18.60 258,716 11.05
Exercised. . . . . . . . (247,321) 8.87 (182,988) 7.67 (296,558) 6.51
Expired. . . . . . . . . (5,000) 17.03 (4,000) 9.63 -- --
------- -------- -------
Outstanding at
end of year. . . . . . 654,036 $18.05 788,620 $13.47 638,758 $ 9.08
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes information about stock options outstanding
at June 30, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
NUMBER WEIGHTED-AVERAGE WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 6/30/97 CONTRACTUAL LIFE EXERCISE PRICE AT 6/30/97 EXERCISE PRICE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 8.00-$10.25 125,250 2.07 YEARS $ 9.33 52,862 $8.88
12.97- 19.13 391,223 3.65 17.24 101,599 16.81
20.38- 29.00 104,929 6.78 26.27 5,030 21.32
34.25- 35.75 32,634 9.92 34.71 -- --
$8.00-$35.75 654,036 4.16 $18.05 159,491 $14.33
- ------------------------------------------------------------------------------------------------------------
</TABLE>
F. SHAREHOLDERS' RIGHTS PLAN
On June 15, 1989 the Board of Directors adopted a common stock shareholders'
rights plan. Under this plan, the Board of Directors declared a dividend of one
common share purchase right for each outstanding share of common stock and stock
options granted and available for grant. On April 29, 1996 the Board of
Directors amended the plan. The rights, which expire on April 29, 2006, are
exercisable only under certain conditions, and when exercisable the holder will
be entitled to purchase from the Company one share of common stock at a price of
$80.00, subject to certain adjustments. The rights will become exercisable after
a person or group acquires beneficial ownership of 15 percent or more (or as low
as 10 percent as the Board of Directors may determine) of the Company's common
stock or after a person or group announces an offer, the consummation of which
would result in such person or group owning 15 percent or more of the common
stock.
If the Company is acquired at any time after the rights become exercisable,
the rights will be adjusted so as to entitle a holder to purchase a number of
shares of common stock of the acquiring company at one-half of their market
value. If any person or group acquires beneficial ownership of 15 percent or
more of the Company's shares, the rights will be adjusted so as to entitle a
holder (other than such person or group whose rights become void) to purchase a
number of shares of common stock of Analysts International Corporation at
one-half of their market value or the Board of Directors may exchange the
rights, in whole or in part, at an exchange ratio of one common share per right
(subject to adjustment).
<PAGE>
At any time prior to an acquisition by a person or group of beneficial
ownership of 15 percent or more of the Company's shares, the Board of Directors
may redeem the rights at $.01 per right.
G. INCOME TAXES
The provision for income taxes charged was as follows:
YEAR ENDED JUNE 30
(IN THOUSANDS) 1997 1996 1995
Currently payable:
Federal. . . . . . . . . . . . $9,486 $7,399 $6,477
State. . . . . . . . . . . . . 1,874 1,391 1,242
- --------------------------------------------------------------------------------
11,360 8,790 7,719
Deferred:
Federal. . . . . . . . . . . (439) (408) (377)
State. . . . . . . . . . . . (92) (61) (68)
(531) (469) (445)
- --------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . $10,829 $8,321 $7,274
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net deferred tax assets are comprised of the following:
JUNE 30
(IN THOUSANDS) 1997 1996
- --------------------------------------------------------------------------------
Deferred compensation. . . . . . . . . . . . $2,565 $2,406
Accrued vacation and
compensatory time. . . . . . . . . . . . 1,262 1,095
Self-insured health
care reserves. . . . . . . . . . . . . . 597 584
Allowance for doubtful accounts. . . . . . . 219 201
Other. . . . . . . . . . . . . . . . . . . . 236 221
Deferred tax assets. . . . . . . . . . . 4,879 4,507
Depreciation . . . . . . . . . . . . . . (182) (304)
Other. . . . . . . . . . . . . . . . . . . . (126) (163)
Deferred tax liabilities . . . . . . . . (308) (467)
- --------------------------------------------------------------------------------
Net deferred tax assets. . . . . . . . . . . $4,571 $4,040
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Whereof:
Current. . . . . . . . . . . . . . . . . $2,175 $1,939
Noncurrent . . . . . . . . . . . . . . . 2,396 2,101
$4,571 $4,040
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The provision for income taxes differs from the amount of income tax
determined by applying the federal statutory income tax rates to pretax income
as a result of the following differences:
YEAR ENDED JUNE 30
1997 1996 1995
- --------------------------------------------------------------------------------
Statutory federal income tax rates . . . . . 35.0% 35.0% 35.0%
State and local taxes, net of
federal benefit. . . . . . . . . . . . . 4.3 4.2 4.2
Other. . . . . . . . . . . . . . . . . . . . 0.5 0.9 0.1
- --------------------------------------------------------------------------------
Effective tax rates. . . . . . . . . . . . . 39.8% 40.1% 39.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H. COMMITMENTS
At June 30, 1997 aggregate net minimum rental commitments under noncancelable
operating leases having an initial or remaining term of more than one year are
payable as follows:
(IN THOUSANDS)
Year ending June 30, 1998 . . . . . . . . . . . . . . . . . . . $ 4,583
1999 . . . . . . . . . . . . . . . . . . . 4,493
2000 . . . . . . . . . . . . . . . . . . . 4,151
2001 . . . . . . . . . . . . . . . . . . . 2,924
2002 . . . . . . . . . . . . . . . . . . . 1,236
Later. . . . . . . . . . . . . . . . . . . 2,056
- --------------------------------------------------------------------------------
Total minimum obligation . . . . . . . . . . . . . . . . . . . . $19,443
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rent expense, primarily for office facilities, for the years ended June 30,
1997, 1996 and 1995 was $3,812,000, $2,841,000 and $2,167,000, respectively.
The Company has compensation arrangements with all of its senior executives
and certain other employees which provide for certain payments in event of a
change of control of the Company.
The Company also sponsors a 401(k) plan. Substantially all employees are
eligible to participate and may contribute up to 15% of their pretax earnings,
subject to IRS maximum contribution amounts. The Company makes matching
contributions to the plan up to a specified percentage. The Company's
contributions vest after the employee has completed seven years of service and
for 1997, 1996 and 1995 amounted to approximately $792,000, $611,000 and
$581,000, respectively.
I. BUSINESS ACQUISITION
On July 1, 1996, the Company acquired specific assets and assumed certain
liabilities of DPI, Inc. and DPI Services, Inc., a wholly owned subsidiary of
DPI, Inc., primarily engaged in the business of providing software services in
the San Jose, California market. The amount paid in connection with the purchase
was approximately $5.6 million which was paid with internal funds. This
acquisition was accounted for by the purchase method of accounting. Accordingly,
the assets acquired, including primarily accounts receivable and property and
equipment, were recorded at their estimated fair values as of the date of
acquisition. The excess of the purchase price over the estimated fair value of
the assets acquired was recorded as goodwill and is being amortized on a
straight-line basis over a 15-year period.
<PAGE>
INDEPENDENT AUDITORS' REPORT
SHAREHOLDERS AND BOARD OF DIRECTORS
ANALYSTS INTERNATIONAL CORPORATION
MINNEAPOLIS, MINNESOTA
We have audited the accompanying consolidated balance sheets of Analysts
International Corporation and its subsidiary (the Company) as of June 30, 1997
and 1996 and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended June 30, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a reasonable
basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company as of
June 30, 1997 and 1996, and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 1997, in conformity
with generally accepted accounting principles.
MINNEAPOLIS, MINNESOTA /s/ DELOITTE & TOUCHE LLP
AUGUST 18, 1997
STOCK DATA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRAILING
MARKET RANGE DIVIDEND 12-MONTH
FISCAL 1997 HIGH LOW CLOSE DECLARED P/E RATIO
- --------------------------------------------------------------------------------
Fourth Quarter $36.75 $21.25 $33.50 $.09 31
Third Quarter 29.50 22.00 22.00 .09 21
Second Quarter 30.50 23.00 28.25 .09 29
First Quarter 23.25 17.50 23.00 .09 25
FISCAL 1996
- --------------------------------------------------------------------------------
Fourth Quarter $217/8 $161/2 $21.00 $.075 25
Third Quarter 187/8 135/8 17.00 .075 20
Second Quarter 161/2 141/2 15.00 .075 19
First Quarter 161/2 123/4 16.00 .075 20
Common shares are traded in the Nasdaq National Market under the symbol ANLY. As
of August 15, 1997, there were approximately ,500 shareholders of record and
approximately 8,000 shareholders for whom securities firms act as nominees. The
above table sets forth for the periods indicated the market prices for the
Company's Common Stock as reported by Nasdaq, dividends declared and the
trailing 12-months closing price/earnings ratio for each quarterly period.
The Board of Directors has adopted a policy of declaring regular quarterly
dividends subject to favorable earnings and cash flow. Accordingly, the Company
declared quarterly dividends of $.09 a share in fiscal 1997 and $.075 a share in
fiscal 1996.
On August 21, 1997, the Board of Directors increased the quarterly cash
dividend to $.11 a share.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25
<PAGE>
QUARTERLY REVENUES AND INCOME
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) QUARTER QUARTER QUARTER QUARTER ANNUAL
- ---------------------------------------------------------------------------------------------------------------
Fiscal 1997
<S> <C> <C> <C> <C> <C>
Total revenues . . . . . . . . . . . . . . . . $98,022 $101,847 $113,693 $125,984 $439,546
Income before income taxes . . . . . . . . . . 6,503 6,526 6,936 7,245 27,210
Income taxes . . . . . . . . . . . . . . . . . 2,635 2,621 2,775 2,798 10,829
Net income . . . . . . . . . . . . . . . . . . 3,868 3,905 4,161 4,447 16,381
Net income per share . . . . . . . . . . . . . .26 .26 .28 .29 1.09
Fiscal 1996
Total revenues . . . . . . . . . . . . . . . . $73,071 $78,786 $85,976 $91,711 $329,544
Income before income taxes . . . . . . . . . . 4,644 4,764 5,564 5,767 20,739
Income taxes . . . . . . . . . . . . . . . . . 1,835 1,882 2,226 2,378 8,321
Net income . . . . . . . . . . . . . . . . . . 2,809 2,882 3,338 3,389 12,418
Net income per share . . . . . . . . . . . . . .19 .19 .23 .23 .84
</TABLE>
Per share amounts were restated for the effect of the 2 for 1 common stock split
in the form of a 100% stock dividend paid
September 30, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIVE YEAR FINANCIAL SUMMARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Professional services revenues:
Provided directly. . . . . . . . . . . . . . $344,790 $267,317 $213,785 $175,982 $159,703
Provided through sub-suppliers . . . . . . . 94,756 62,227 4,641 -- --
- ---------------------------------------------------------------------------------------------------------------
Total revenues. . . . . . . . . . . . . . 439,546 329,544 218,426 175,982 159,703
Salaries, contracted services
and direct charges . . . . . . . . . . . . . 340,483 252,518 155,743 125,285 112,644
Non-operating income . . . . . . . . . . . . . 1,045 1,027 760 241 462
Income before income taxes . . . . . . . . . . 27,210 20,739 18,530 12,775 13,501
Income taxes . . . . . . . . . . . . . . . . . 10,829 8,321 7,274 4,824 5,235
- ---------------------------------------------------------------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . 16,381 12,418 11,256 7,951 8,266
Total assets . . . . . . . . . . . . . . . . . 105,370 81,445 67,533 51,210 44,907
Long-term liabilities. . . . . . . . . . . . . 6,444 5,996 5,352 4,793 4,316
Shareholders' equity . . . . . . . . . . . . . 66,104 53,718 45,134 36,571 31,673
Per share data:
net income . . . . . . . . . . . . . . . . . 1.09 .84 .77 .55 .57
cash dividends . . . . . . . . . . . . . . . .36 .30 .26 .24 .20
shareholders' equity . . . . . . . . . . . . 4.45 3.66 3.11 2.57 2.24
Average common and common
equivalent shares outstanding. . . . . . . . 15,029,000 14,814,000 14,548,000 14,424,000 14,340,000
Number of personnel. . . . . . . . . . . . . . 4,650 3,770 3,170 2,600 2,270
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Per share data and average shares outstanding were restated for the effect of
the 2 for 1 common stock split in the form of a 100% stock dividend paid
September 30, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[PHOTO]
BOARD OF DIRECTORS: PRINCE, DRAKE, BENDA, LANG, MAHONEY, LOFTUS.
BOARD OF DIRECTORS
FREDERICK W. LANG
Chairman and Chief Executive Officer
VICTOR C. BENDA
President and Chief Operating Officer
WILLIS K. DRAKE
Retired Chairman of the Board
Data Card Corporation
MARGARET A. LOFTUS
Principal
Loftus Brown-Wescott, Inc.
EDWARD M. MAHONEY
Retired Chairman and Chief Executive Officer
Fortis Investors, Inc.
and Fortis Advisers, Inc.
ROBB L. PRINCE
Retired Vice President and Treasurer
Josten's, Inc.
DIRECTOR EMERITUS
JAMES E. THORNTON
Retired Chairman of the Board
Network Systems Corporation
OFFICERS
FREDERICK W. LANG
Chairman and Chief Executive Officer
VICTOR C. BENDA
President and Chief Operating Officer
SARAH P. SPIESS
Executive Vice President
GERALD M. MCGRATH
Vice President, Treasurer and
Chief Financial Officer
THOMAS R. MAHLER
Secretary and General Counsel
RICHARD J. CHIAPPETTA
Vice President, Central Region
PHILIP P. COLLIGAN
Vice President, Eastern Region
MICHAEL J. LAVELLE
Vice President, Southern Region
ROBERT J. PUGH
Vice President, Midwest Region
ROMAN E. ROWAN
Vice President, Western Region
RICHARD A. FERRERA
Vice President, Program Management
GEORGE R. ZAK
Vice President, Investor Relations
MARTI R. CHARPENTIER
Controller and Assistant Treasurer
COLLEEN M. DAVENPORT
Associate General Counsel and
Assistant Secretary
<PAGE>
REGIONAL, BRANCH AND FIELD OFFICES
[MAP]
CORPORATE HEADQUARTERS
7615 Metro Boulevard
Minneapolis, Minnesota 55439-3050
Tele: (612) 835-5900
Tele: (800) 800-5044
Fax: (612) 897-4555
REGIONAL OFFICES
CENTRAL
5750 Castle Creek Parkway N, Suite 259
Indianapolis, Indiana 46250-4335
Tele: (317) 577-3569
Fax: (317) 577-3573
EASTERN
One Penn Plaza, Suite 2228
New York, New York 10119-0002
Tele: (212) 465-1660
Fax: (212) 465-1724
MIDWEST
600 Emerson Road, Suite 200
St. Louis, Missouri 63141-6708
Tele: (314) 997-1746
Fax: (314) 997-4234
SOUTHERN
Perimeter 400 Center, Suite 850
1100 Johnson Ferry Road NE
Atlanta, Georgia 30342-1746
Tele: (404) 256-5190
Fax: (404) 252-4732
WESTERN
44 Montgomery Street, Suite 2365
San Francisco, California 94104-4710
Tele: (415) 352-0760
Fax: (612) 897-4669
DIVISIONS
AiC TECHWEST
7800 E Union Avenue, Suite 630
Denver, Colorado 80237-2755
Tele: (303) 721-0341
Tele: (800) 721-0772
Fax: (612) 897-4669
AiC NATIONAL PROJECTS OFFICE
621 NW 53rd Street, Suite 140
Boca Raton, Florida 33487-8211
Tele: (561) 241-5912
Fax: (404) 252-4732
AiC IBM PROJECT SUPPORT OFFICE (POST)
600 N Westshore Boulevard, Suite 304
Tampa, Florida 33609-1145
Tele: (813) 288-0058
Fax: (813) 289-9475
BRANCH OFFICES
ATLANTA
Perimeter 400 Center, Suite 850
1100 Johnson Ferry Road NE
Atlanta, Georgia 30342-1746
Tele: (404) 256-5190
Fax: (404) 252-4732
AUSTIN
LaCosta Green
1033 LaPosada Drive, Suite 300
Austin, Texas 78752-3824
Tele: (512) 206-2700
Fax: (512) 206-2720
BOCA RATON
621 NW 53rd Street, Suite 140
Boca Raton, Florida 33487-8211
Tele: (561) 241-5912
Fax: (561) 241-6705
CHICAGO
1101 Perimeter Drive, Suite 500
Schaumburg, Illinois 60173-5060
Tele: (847) 619-4673
Fax: (847) 605-9489
CINCINNATI/DAYTON
Governor's Pointe
4770 Duke Drive, Suite 207
Mason, Ohio 45040-9374
Tele: (513) 398-7811
Fax: (513) 398-7894
CLEVELAND
Corporate Plaza I, Suite 350
6450 Rockside Woods Boulevard, South
Cleveland, Ohio 44131-2230
Tele: (216) 524-8990
Fax: (216) 524-9535
COLUMBUS
471 E Broad Street, Suite 2001
Columbus, Ohio 43215-3861
Tele: (614) 224-6790
Fax: (614) 224-1935
DALLAS
3030 LBJ Freeway, Suite 820, LB52
Dallas, Texas 75234-7703
Tele: (972) 243-2001
Fax: (972) 243-7468
DANBURY
100 Mill Plain Road, 2nd Floor
Danbury, Connecticut 06811-5188
Tele: (203) 825-3940
Fax: (203) 825-3950
DENVER
7800 E Union Avenue, Suite 600
Denver, Colorado 80237-2755
Tele: (303) 721-6200
Fax: (303) 721-6403
DES MOINES
1200 Valley West Drive, Suite 704
West Des Moines, Iowa 50266-1908
Tele: (515) 221-9822
Fax: (515) 221-0173
DETROIT
3000 Town Center, Suite 570
Southfield, Michigan 48075-1297
Tele: (248) 353-7230
Fax: (248) 353-5139
<PAGE>
CORPORATE INFORMATION
HOUSTON
1415 N Loop West, Suite 300
Houston, Texas 77008-1645
Tele: (713) 869-3420
Fax: (713) 861-7933
INDIANAPOLIS
5750 Castle Creek Parkway N, Suite 259
Indianapolis, Indiana 46250-4335
Tele: (317) 842-1100
Fax: (317) 842-1157
KANSAS CITY
Broadway Summit
3101 Broadway, Suite 101
Kansas City, Missouri 64111-2416
Tele: (816) 531-5050
Fax: (816) 531-5636
LEXINGTON
2365 Harrodsburg Road, Suite B450
Lexington, Kentucky 40504-3342
Tele: (606) 223-0001
Fax: (606) 224-4389
LOS ANGELES
7700 Irvine Center Drive, Suite 280
Irvine, California 92618-2924
Tele: (714) 450-8930
Fax: (714) 450-8940
MINNEAPOLIS
8200 Normandale Boulevard, Suite 400
Minneapolis, Minnesota 55437-1074
Tele: (612) 897-4590
Fax: (612) 897-4551
NEW JERSEY METRO
111 Wood Avenue S
Iselin, New Jersey 08830-2703
Tele: (732) 906-0100
Fax: (732) 906-8808
NEW YORK CITY
One Penn Plaza, Suite 2228
New York, New York 10119-0002
Tele: (212) 465-1660
Fax: (212) 465-0724
OMAHA
6910 Pacific Street, Suite 204
Omaha, Nebraska 68106-1045
Tele: (402) 558-2800
Fax: (402) 558-5544
PHOENIX
11024 N 28th Drive, Suite 240
Phoenix, Arizona 85029-4379
Tele: (602) 789-7200
Fax: (602) 789-6077
RALEIGH/DURHAM
Gateway Centre Park, Suite 600
2700 Gateway Centre Boulevard,
Morrisville, North Carolina 27560-9137
Tele: (919) 460-6141
Fax: (919) 460-6433
ROCHESTER, MINNESOTA
1530 Greenview Drive SW, Suite 205
Rochester, Minnesota 55902-1080
Tele: (507) 280-6663
Fax: (507) 280-9213
ROCHESTER, NEW YORK
16 W Main Street, Suite 200
Rochester, New York 14614-1601
Tele: (716) 325-6640
Fax: (716) 325-6273
ST. LOUIS
600 Emerson Road, Suite 200
St. Louis, Missouri 63141-6708
Tele: (314) 997-1746
Fax: (314) 997-4929
SAN FRANCISCO-EAST BAY
1850 Gateway Boulevard, Suite 120
Concord, California 94520-3299
Tele: (510) 687-5522
Fax: (510) 687-5552
SEATTLE
10655 NE 4th Street, Suite 804
Bellevue, Washington 98004-5022
Tele: (425) 454-2500
Fax: (425) 454-4288
SILICON VALLEY
151 Martinvale Lane
San Jose, California 95119-1319
Tele: (408) 629-9300
Fax: (408) 629-0141
TAMPA
600 N Westshore Boulevard, Suite 304
Tampa, Florida 33609-1145
Tele: (813) 281-0458
Fax: (813) 289-9475
TORONTO
118 Eglinton Avenue W, Suite 500
Toronto, Canada M4R 1G4
Tele: (416) 322-3822
Fax: (416) 322-7989
TULSA
Corporate Place, Suite 1100
5800 E Skelly Drive
Tulsa, Oklahoma 74135-6448
Tele: (918) 663-0030
Fax: (918) 663-1812
FIELD OFFICES
Akron/Canton, Ohio (330) 644-1166
Boulder, Colorado (303) 442-7338
Charlotte, North Carolina (704) 594-6087
Las Vegas, Nevada (702) 221-1914
Little Rock, Arkansas (501) 372-0338
Miami, Florida (800) 597-5912
Philadelphia, Pennsylvania (610) 941-2979
Portland, Oregon (503) 292-5161
Sacramento, California (916) 565-7458
San Francisco, California (415) 352-0760
Washington, D.C. (703) 573-4400
AiC Analysts Limited
Cambridge, England (44) 1223 500055
CORPORATE HEADQUARTERS
7615 Metro Boulevard
Minneapolis, Minnesota 55439-3050
Tele: (612) 835-5900
Tele: (800) 800-5044
Fax: (612) 897-4555
10-K AVAILABLE
A copy of the Company's 1997 Annual Report on Form 10-K, filed with the
Securities and Exchange Commission, is available to AiC
security holders without charge upon request to the Treasurer, Analysts
International Corporation, 7615 Metro Boulevard, Minneapolis,
Minnesota 55439-3050.
STOCK TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
(800) 426-5523
http://www.equiserve2.com
EXPECTED DIVIDEND
PAYMENT DATES
November 14, 1997
February 13, 1998
May 15, 1998
August 15, 1998
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Minneapolis, Minnesota
ANNUAL MEETING
The 1997 Annual Meeting of Shareholders will be held on October 16, 1997 at
3 p.m. at the Edina Country Club, 5100 Wooddale Avenue, Edina, Minnesota.
QUARTERLY REPORTS
Analysts International Corporation sends quarterly earnings releases directly to
shareholders, instead of traditional printed quarterly reports. Many companies
now follow this approach, which gives shareholders pertinent information faster,
at lower cost to the Company.
WORLD WIDE WEB ADDRESS
http://www.analysts.com
<PAGE>
EXHIBIT 21
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
YEAR ENDED JUNE 30, 1997
State or Percentage
Jurisdiction of Voting
of Incorporation Securities Owned
Subsidiaries
- ------------ ----------------- ----------------
AiC Analysts Limited United Kingdom 100%
<PAGE>
EXHIBIT 23
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-19180, 33-89896, 33-25244 and 33-87626 of Analysts International Corporation
on Form S-8 of our reports dated August 18, 1997, appearing and incorporated by
reference in this Annual Report on Form 10-K of Analysts International
Corporation for the year ended June 30, 1997.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
September 25, 1997
<PAGE>
EXHIBIT 24
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
POWER OF ATTORNEY
TO SIGN
ANNUAL REPORT ON FORM 10-K
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned hereby appoints
F.W. Lang or Thomas R. Mahler, or either of them, my true and lawful
attorneys in fact, for me and in my name, place and stead, to sign and affix
my name as a Director of Analysts International Corporation to the Annual
Report on Form 10-K for the year ended June 30, 1997 and all amendments
thereto to be filed by said Company with the Securities and Exchange
Commission, Washington, D.C. as required by Section 13 of the Securities
Exchange Act of 1934, as amended granting and giving unto said attorneys in
fact, or any one of them, full authority and power to do and perform any and
all acts necessary or incidental to the performance and execution of powers
herein expressly granted, with full power to do and perform all acts
authorized hereby as fully to all intents and purposes as I might or could do
if personally present, with full power of substitution.
IN TESTIMONY WHEREOF, I have hereunto set my hand this 24th day of
September, 1997.
/s/ Victor C. Benda
--------------------------
Victor C. Benda
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 24th day of September, 1997, before me, personally came Victor C.
Benda to me known to be the person described in and who executed the foregoing
instrument and acknowledged that he executed the same as his free act and
deed.
/s/ Charles M. Mannie
--------------------------
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
POWER OF ATTORNEY
TO SIGN
ANNUAL REPORT ON FORM 10-K
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned hereby appoints
F.W. Lang or Thomas R. Mahler, or either of them, my true and lawful
attorneys in fact, for me and in my name, place and stead, to sign and affix
my name as a Director of Analysts International Corporation to the Annual
Report on Form 10-K for the year ended June 30, 1997 and all amendments
thereto to be filed by said Company with the Securities and Exchange
Commission, Washington, D.C. as required by Section 13 of the Securities
Exchange Act of 1934, as amended granting and giving unto said attorneys in
fact, or any one of them, full authority and power to do and perform any and
all acts necessary or incidental to the performance and execution of powers
herein expressly granted, with full power to do and perform all acts
authorized hereby as fully to all intents and purposes as I might or could do
if personally present, with full power of substitution.
IN TESTIMONY WHEREOF, I have hereunto set my hand this 24th day of
September, 1997.
/s/ Willis K. Drake
--------------------------
Willis K. Drake
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 24th day of September, 1997, before me, personally came Willis K.
Drake to me known to be the person described in and who executed the foregoing
instrument and acknowledged that he executed the same as his free act and
deed.
/s/ Charles M. Mannie
--------------------------
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
POWER OF ATTORNEY
TO SIGN
ANNUAL REPORT ON FORM 10-K
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned hereby appoints
F.W. Lang or Thomas R. Mahler, or either of them, my true and lawful
attorneys in fact, for me and in my name, place and stead, to sign and affix
my name as a Director of Analysts International Corporation to the Annual
Report on Form 10-K for the year ended June 30, 1997 and all amendments
thereto to be filed by said Company with the Securities and Exchange
Commission, Washington, D.C. as required by Section 13 of the Securities
Exchange Act of 1934, as amended granting and giving unto said attorneys in
fact, or any one of them, full authority and power to do and perform any and
all acts necessary or incidental to the performance and execution of powers
herein expressly granted, with full power to do and perform all acts
authorized hereby as fully to all intents and purposes as I might or could do
if personally present, with full power of substitution.
IN TESTIMONY WHEREOF, I have hereunto set my hand this 24th day of
September, 1997.
/s/ Margaret Loftus
--------------------------
Margaret Loftus
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 24th day of September, 1997, before me, personally came Margaret
Loftus to me known to be the person described in and who executed the foregoing
instrument and acknowledged that he executed the same as his free act and
deed.
/s/ Charles M. Mannie
--------------------------
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
POWER OF ATTORNEY
TO SIGN
ANNUAL REPORT ON FORM 10-K
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned hereby appoints
F.W. Lang or Thomas R. Mahler, or either of them, my true and lawful
attorneys in fact, for me and in my name, place and stead, to sign and affix
my name as a Director of Analysts International Corporation to the Annual
Report on Form 10-K for the year ended June 30, 1997 and all amendments
thereto to be filed by said Company with the Securities and Exchange
Commission, Washington, D.C. as required by Section 13 of the Securities
Exchange Act of 1934, as amended granting and giving unto said attorneys in
fact, or any one of them, full authority and power to do and perform any and
all acts necessary or incidental to the performance and execution of powers
herein expressly granted, with full power to do and perform all acts
authorized hereby as fully to all intents and purposes as I might or could do
if personally present, with full power of substitution.
IN TESTIMONY WHEREOF, I have hereunto set my hand this 24th day of
September, 1997.
/s/ Edward M. Mahoney
--------------------------
Edward M. Mahoney
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 24th day of September, 1997, before me, personally came Edward M.
Mahoney to me known to be the person described in and who executed the foregoing
instrument and acknowledged that he executed the same as his free act and
deed.
/s/ Charles M. Mannie
--------------------------
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
POWER OF ATTORNEY
TO SIGN
ANNUAL REPORT ON FORM 10-K
KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned hereby appoints
F.W. Lang or Thomas R. Mahler, or either of them, my true and lawful
attorneys in fact, for me and in my name, place and stead, to sign and affix
my name as a Director of Analysts International Corporation to the Annual
Report on Form 10-K for the year ended June 30, 1997 and all amendments
thereto to be filed by said Company with the Securities and Exchange
Commission, Washington, D.C. as required by Section 13 of the Securities
Exchange Act of 1934, as amended granting and giving unto said attorneys in
fact, or any one of them, full authority and power to do and perform any and
all acts necessary or incidental to the performance and execution of powers
herein expressly granted, with full power to do and perform all acts
authorized hereby as fully to all intents and purposes as I might or could do
if personally present, with full power of substitution.
IN TESTIMONY WHEREOF, I have hereunto set my hand this 24th day of
September, 1997.
/s/ Robb Prince
--------------------------
Robb Prince
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 24th day of September, 1997, before me, personally came Robb
Prince to me known to be the person described in and who executed the
foregoing instrument and acknowledged that he executed the same as his free
act and deed.
/s/ Charles M. Mannie
--------------------------
Notary Public
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