<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,
1999
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.)
3601 West 76th Street, Minneapolis, Minnesota 55435
(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 31, 1999 was $274,648,000 based
upon the closing price as reported by Nasdaq.
As of August 31, 1999 there were 22,557,691 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, 1999 (Parts I and II) and (ii) proxy statement dated
September 13, 1999 (Part III).
<PAGE>
PART I
ITEM 1. BUSINESS
Analysts International Corporation ("Analysts International" or the
"Company") 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 90% 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 the Company'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.
Analysts International offers its clients a full range of software service
offerings, sometimes referred to by others in the industry as "solutions,"
including custom software development under Company 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 Managed Services Group. 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 are highlighted in detail in the Company's 1999 Annual Report.
Analysts International'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.
2
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To meet these needs, and to facilitate its management of over 1,000
computer programmers and other technical personnel it has on assignment at U S
West, the Managed Services Group of the Company fills requirements, manages
assigned personnel and provides time record keeping/billing services through
proprietary software developed specifically for this service offering. The
Company's initial three-year contract expired May 31, 1998. The current
contract was extended through March 31, 2000. Revenues from services provided
to U. S. West, were approximately 23%, 22% and 22% of total revenues during the
last three fiscal years, respectively, and are expected to be approximately the
same percentage for fiscal 2000. Loss of this business would have a material
adverse effect on the Company.
The Company has expanded the Managed Services Group offering to other
clients, including Chevron Information Technology Company (Chevron Corporation's
technology subsidiary), Salt River Project (the nation's third largest public
power utility), and Motorola's Semi-Conductor Products Sector. These Managed
Services Group customers use the Company as their sole source for supplemental
IT/software engineering staffing.
Analysts International provided services through 30 of its branch offices
during the year to various divisions of International Business Machines
Corporation (IBM), its second largest customer, as a national service provider
under IBM's National Procurement initiative.
The Company's contract with IBM expires December 31, 2000, subject to IBM's
right to cancel for convenience on 30 days' written notice. IBM's National
Procurement initiative requires the Company and the other participating vendors
to accept lower hourly rates in return for the opportunity to do a greater
volume of business with IBM. There can be no assurance, however, that volume
will offset lower rates. IBM business under the national contract
3
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accounted for about 16% to 21% of revenues in each of the last three fiscal
years, and loss of this business would have a material adverse effect on the
Company.
Analysts International provides its services to a wide range of industries.
Its fiscal 1999 revenues were derived from services rendered to customers in the
following industry groups:
<TABLE>
<CAPTION>
Approximate Percent
Industry Group FY 1999 Revenues
- -----------------------------------------------------------------------------
<S> <C>
Telecommunications 24.8%
Electronics 18.9%
Services 13.6%
Manufacturing 7.8%
Oil and Chemical 6.9%
Financial 6.4%
Merchandising 4.7%
Insurance 3.8%
Government 2.2%
Health Care 1.9%
Food 1.8%
Power and Utility 1.7%
Transportation .8%
Other 4.7%
</TABLE>
4
<PAGE>
Analysts International provided services to more than 900 clients during
the fiscal year. Consistent with its practices in prior years, the Company
rendered these services almost exclusively 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
Analysts International 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 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 locations: Atlanta, Austin, Boca Raton, Chicago, Cincinnati/Dayton,
Cleveland, Columbus (Ohio), Dallas, Danbury, Denver, Des Moines, Detroit,
Houston, Indianapolis, Kansas City, Iselin (New Jersey), Lexington (Kentucky),
Los Angeles, Minneapolis, New York City, Omaha, Phoenix, Portland,
Raleigh/Durham, Rochester (Minnesota), Rochester (New York), St. Louis, San
Francisco, Seattle, Silicon Valley, Tampa, Toronto, Canada and Tulsa. Analysts
International utilizes its own direct sales force to sell its services. At the
end of the fiscal year, the Company's sales staff totaled 110 in number. The
ability to recruit and hire experienced technical personnel
5
<PAGE>
with backgrounds and experience suitable for customer requirements is an
important factor in the Company'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 125 in number.
COMPETITION
Analysts International competes with software consulting divisions of
several large companies (including DEC, Andersen Consulting, IBM, Olsten, Volt
and Manpower) 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.
The Company also competes with other national software services companies
such as Computer Task Group, CGA, Keane Inc., and Computer Horizons.
The Company's branches compete in their local market areas with numerous
regional and locally-based software services firms. Most of these 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.
The Company believes its total staff and sales volume are larger than most
of the national, regional 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, the Company 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. Analysts International believes it is competitive
in these respects.
6
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PERSONNEL
Analysts International has approximately 4,900 personnel. Of these,
approximately 4,100 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 the
Company 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 would have a material adverse effect on the registrant's
business.
OTHER MATTERS
Analysts International 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.
7
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CAUTIONARY STATEMENT UNDER THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Statements included in this document may be "forward-looking statements"
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 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.
ITEM 2. PROPERTIES
Analysts International's principal executive offices and the
Minneapolis, Minnesota branch offices are located at 3601 West 76th Street,
Minneapolis, Minnesota 55435, in a 154,000 square foot office building which
it owns. All branch offices and field offices (except for the Minneapolis
branch office) are held under leases with varying expiration dates ranging
from 30 days to 9 years. See Note I of Notes to Consolidated Financial
Statements at page 24 of the Company's 1999 Annual Report to Shareholders.
8
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company 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 Company's shareholders during the
fourth quarter of fiscal 1999.
9
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Frederick W. Lang 74 Chairman and Chief Executive Officer since 1989;
President and Chief Executive Officer from 1966-1989;
Treasurer from 1987-1989.
Victor C. Benda 68 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 58 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 53 Secretary since 1979; General Counsel since 1982.
Gerald M. McGrath 60 Chief Financial Officer since 1996; Treasurer since
1989; Vice President, Finance since 1988; Assistant
Treasurer from 1976 to 1989; Controller from 1966 to
1989.
</TABLE>
Terms of office expire October 15, 1999.
10
<PAGE>
PART II
The following portions of the Company's annual report to shareholders
for the fiscal year ended June 30, 1999 are incorporated by reference in
response to Items 5, 6, 7 and 8 as follows:
<TABLE>
<CAPTION>
Items in Form 10-K Caption or Section and Page in Annual Report
- ------------------ --------------------------------------------
<S> <C> <C>
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 1 and 18-26
</TABLE>
(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 Company's
independent auditors within the past 24 months.
11
<PAGE>
PART III
The information regarding executive officers required by Item 10 is set
forth under the caption "Executive Officers" 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 Company's
definitive proxy statement for the annual meeting of shareholders to be held
October 27, 1999, filed pursuant to Regulation 14A, as follows:
<TABLE>
<CAPTION>
Items in Form 10-K Caption and Page in Definitive Proxy Statement
- ------------------ ----------------------------------------------
<S> <C> <C>
10 Election of Directors 2-5
11 Board Committees and Compensation and
Executive Compensation 2-4, 11-15
12 Election of Directors and Principal
Shareholders 2-5, 18
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1999:
a. No director, executive officer, nominee for election as a director,
holder of more than five percent of the Company'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 Company was a party and in which the amount exceeded
$60,000, nor is any such transaction proposed;
12
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b. The Company was not a party with any entity in which any of the Company'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
Company 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
Company in excess of $60,000.
Subparagraph d. of this Item is not applicable.
13
<PAGE>
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, 1999:
<TABLE>
<CAPTION>
Pages in Annual Report
----------------------
<S> <C>
Consolidated Balance Sheets at June 30, 1999 and 1998 18
Consolidated Statements of Income for each of the
three years in the period ended June 30, 1999 19
Consolidated Statements of Cash Flows for each of the
three years in the period ended June 30, 1999 20
Consolidated Statements of Shareholders' Equity for
each of the three years in the period ended June 30, 1999 21
Notes to Consolidated Financial Statements 22-24
Independent Auditors' Report 25
a.2 CONSOLIDATED FINANCIAL STATEMENT SCHEDULES Page Herein
----------
Independent Auditors' Report on Schedule 18
Schedule II. Valuation and Qualifying Accounts 19
</TABLE>
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.
14
<PAGE>
a.3 EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Exhibit Page
- -------------- ------------
<S> <C> <C>
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).
3-d Amendment to Articles of Incorporation to increase authorized
shares to 60 million (Exhibit 3-d to Annual Report on Form 10-K
for fiscal year 1998, Commission File No. 0-0409, incorporated
by reference).
3-e Amendment to Articles of Incorporation to increase authorized
shares to 120 million (Exhibit A to Definitive Proxy Statement
dated September 8, 1998, Commission File No. 0409, 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).
15
<PAGE>
a.3 EXHIBITS (con't)
<CAPTION>
Exhibit Number Exhibit Page
- -------------- ------------
<S> <C> <C>
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).
4-e Restated Rights Agreement dated as of June 16, 1989 and restated
as of April 16, 1998 between Analysts International Corporation
and Norwest Bank Minnesota, N.A. as Rights Agent (Exhibit 4-e to
Annual Report on Form 10-K for fiscal year 1998, 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).
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).
10-f 1999 Stock Option Plan (Exhibit A to Definitive Proxy Statement
dated September 13, 1999, Commission File No. 0-4090, incorporated
by reference).
11 Calculations of Earnings Per Share.
13 1999 Annual Report to Shareholders.
21 Subsidiaries of Registrant.
23 Independent Auditors' Consent.
16
<PAGE>
24 Powers of Attorney.
27 Financial Data Schedule
</TABLE>
b. REPORTS ON FORM 8-K
There were no reports on Form 8-K for the three months ended June 30, 1999.
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, 1999 and 1998, and for each of the
three years in the period ended June 30, 1999, and have issued our report
thereon dated August 16, 1999; such consolidated financial statements and report
are included in your 1999 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 Analysts International 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 16, 1999
18
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Deductions Balance
beginning costs and net of at end
of period expenses recoveries of period
---------- ---------- ---------- ---------
Description
- -----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended June 30, 1999 $750,000 $989,000 $889,000 $850,000
Year ended June 30, 1998 550,000 502,000 302,000 750,000
Year ended June 30, 1997 500,000 322,000 272,000 550,000
</TABLE>
19
<PAGE>
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 28, 1999 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.
<TABLE>
<CAPTION>
Signature Title Date
- ---------
<S> <C> <C>
/s/ F. W. Lang Chairman & Chief Executive Officer
- ------------------------ (Principal Executive Officer)
F.W. Lang
/s/ G. M. McGrath Vice President, Finance and Treasurer
- ------------------------ (Principal Finance and Accounting Officer)
G. M. McGrath
/s/ V. C. Benda President and Chief Operating Officer
- ------------------------
V. C. Benda*
September 28, 1999
/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*
</TABLE>
*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
20
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
- ----------------------------------------------------------------------
<S> <C>
11 Calculations of Earnings Per Share.
13 1999 Annual Report to Shareholders.
21 Subsidiaries of Registrant.
23 Independent Auditors' Consent.
24 Powers of Attorney.
27 Financial Data Schedule.
</TABLE>
For a list of exhibits incorporated by reference and not filed with this Form
10-K, see Item 14 a.3 at pages 15-16 of this Form 10-K.
21
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
EXHIBIT 11
(Page 1 of 2)
CALCULATION OF BASIC EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended June 30
-------------------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net earnings $16,381,000 $22,610,000 $22,733,000
========== ========== ==========
Weighted average number of common shares
outstanding 22,095,000 22,376,000 22,524,000
========== ========== ==========
Net earnings per common
share, based upon weighted
average number of shares
outstanding $.74 $1.01 $1.01
=== ==== ====
</TABLE>
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
EXHIBIT 11
(Page 2 of 2)
CALCULATION OF DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended June 30
----------------------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net earnings $16,381,000 $22,610,000 $22,733,000
========== ========== ==========
Weighted average number of
common shares outstanding 22,095,000 22,376,000 22,524,000
Dilutive effect of stock
options outstanding after
application of treasury
stock method 449,000 453,000 208,000
------- ------- -------
22,544,000 22,829,000 22,732,000
========== ========== ==========
Net earnings per common and common
equivalent share, based upon weighted
average number of shares outstanding $.73 $.99 $1.00
=== === ====
</TABLE>
<PAGE>
ANALYSTS
INTERNATIONAL-SM-
BRIDGING THE GAP BETWEEN STRATEGY AND IT-SM-
1999 ANNUAL REPORT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1 FINANCIAL HIGHLIGHTS
2 LETTER TO SHAREHOLDERS
6 BRIDGING THE GAP:
THE ANALYSTS
PERSPECTIVE
8 CASE STUDIES
16 MANAGEMENT'S
DISCUSSION AND
ANALYSIS
18 CONSOLIDATED FINANCIAL
STATEMENTS
22 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
25 INDEPENDENT AUDITORS'
REPORT
26 QUARTERLY REVENUES
AND INCOME AND FIVE
YEAR FINANCIAL SUMMARY
27 BOARD OF DIRECTORS
AND OFFICERS
28 REGIONAL, BRANCH AND
FIELD OFFICES
THE ANALYSTS PERSPECTIVE-SM-
Since 1966, Analysts International has specialized in applying information
technology to help companies achieve their business objectives. We focus
first on understanding our clients' opportunities and challenges, before
creating technology-based solutions that take our clients where they seek to
be. We call this approach The Analysts Perspective. It's how we have created
and will continue to create shareholder value and grow the business.
BRIDGING THE GAP BETWEEN
STRATEGY AND IT-SM-
<PAGE>
FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30 % INCREASE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998 (DECREASE)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional services revenues:
Provided directly $ 480,790 $ 454,339 5.8
Provided through sub-suppliers 139,366 133,072 4.7
----------- -----------
Total revenues 620,156 587,411 5.6
Income before income taxes 37,268 37,687 (1.1)
Net income 22,733 22,610 0.5
Per share of common stock:
Net income (diluted) 1.00 .99 1.0
Shareholders' equity 4.35 3.70 17.6
Dividends declared .40 .31 29.0
Average common and common equivalent shares outstanding 22,732,000 22,829,000 (0.4)
Number of personnel 4,900 5,300 (7.5)
Return on equity 25.1% 30.3% (17.2)
Current ratio 2.31 2.59 (10.8)
Working capital $ 79,224 $ 67,474 17.4
</TABLE>
BRIDGING THE GAP BETWEEN STRATEGY AND IT 1
<PAGE>
[PICTURE]
TO OUR SHAREHOLDERS
In fiscal year 1999, we matched our record performance of 1998 and took
action to align our services and operations with the rapidly changing
information technology (IT) services market.
During the past 12 months, organizations worldwide focused on finalizing
their Y2K initiatives, often using in-house staff for testing. In addition,
many organizations have deferred new projects until the year 2000 to avoid
creating additional compliance issues. This temporary, dramatic change in our
clients' spending patterns affected our usual profit growth, and temporarily
slowed growth across the IT services industry.
REVENUES PER EMPLOYEE INCREASED
We recorded revenues of $620 million in fiscal 1999, up 6 percent from $587
million in 1998.
Net income was $22.7 million, up from $22.6 million in the previous year.
Diluted earnings per share were $1.00, up from 99 cents in fiscal 1998.
We paid regular quarterly dividends of 10 cents per share during fiscal 1999.
Our total staff was 4,900 people at year end, compared with 5,300 at the end
of 1998, located in 45 offices in the United States, Canada and the United
Kingdom. The higher revenue with a smaller staff is the result of our
emphasis on higher-margin, value-added work.
2 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
POSITIONING THE COMPANY IN A DYNAMIC GROWTH MARKET
With Y2K projects nearing completion, we expect the resumption of strong
growth in the year 2000. Current industry forecasts project an annual market
expansion rate of 20 percent.
At the same time, the IT landscape is changing. For example, supplemental
staffing, the industry segment in which we started, is becoming a
lower-margin business. We have taken action in response to such industry
changes. Our initiatives include pursuing higher-margin, value-added services
and aggressively leveraging the capabilities of e-commerce, as well as
strengthening our own operations.
MOVING INTO HIGHER-MARGIN SERVICES
In fiscal 1999, we extended our value-based services that merit premium rates
and margins. These new competencies are beginning to have an impact on our
margins and revenue mix.
NATIONAL PRACTICES. Our national practices seek to meet common, critical
client needs in the most effective way possible. They combine corporate-level
research, process development, sales training and marketing resources with
local branch implementation and support.
Our Rapid Application Design and Development (RADD-TM-) practice, which
provides expert resources to quickly turn around software projects, has been
expanded to 20 branches. And the three regional centers in our Lawson
Software Practice -- whereby we help speed customers' implementation of
Lawson enterprise resource planning software -- have completed more than 400
projects to date.
Our Managed Services national practice enables major companies to outsource the
entire technical support process, by providing and managing both our own
personnel and the employees of sub-suppliers. Current clients include U S WEST,
Chevron and Motorola. Managed Services enables us to foster strong client
relationships and position ourselves for additional assignments over time.
BRANCH-LEVEL PRACTICES. We also are pursuing higher-margin work in our
branches, through focused practices aimed at regional opportunities. Our San
Jose, Calif., office provides testing for hardware and software manufacturers
in Silicon Valley. Our Lexington, Ky., office has extensive multimedia
capabilities. Our Portland, Ore., branch has a telecommunications consulting
specialty. We are constantly evaluating local competencies, with an eye
toward marketing these services nationwide.
BRIDGING THE GAP BETWEEN STRATEGY AND IT 3
<PAGE>
SEIZING E-COMMERCE OPPORTUNITIES
The Internet has opened a major new IT services market. We are aggressively
pursuing initiatives to leverage the potential of e-commerce both for our
clients and in our own organization.
Across the country, we are applying our business and technical expertise to
create Internet-based solutions with our clients that help them increase
productivity, make better decisions and further sales. Virtually every
Analysts International branch is involved in an e-commerce project.
Our services include creating Web-based marketing and sales applications;
developing and implementing electronic ordering, invoicing and payroll
systems; and creating other e-commerce solutions with our clients to support
their business goals.
The drive to turn data into business intelligence through central data
warehousing applications and tools is creating strategic new opportunities
for Analysts International. Companies increasingly are turning to us for
Web-deployed applications that speed data entry, collection, analysis and
dissemination across their entire scope of operations -- and out to customers
and suppliers as well.
For example, we created a solution with a global agricultural firm that
enables management to track major customer purchases across all lines of
business -- then use that information to identify cross-selling
opportunities. In another example, the chief information officer of a major
U.S. retailer retained us to create custom software that tracks the weekly
performance of all their stores' computer systems -- providing intelligence
to guide staffing and capital investment decisions.
Reflecting our e-commerce expertise, Lawson Software has named us its
selected partner for creating Electronic Data Interchange (EDI) interfaces to
its applications.
We have expanded both our e-commerce services and delivery mechanisms through
our strategic alliance with the CDXC Corporation. Its cutting-edge CDXC
Solution enables companies to manage and deliver digital assets -- including
text, photos and images, audio and video -- from an individual desktop. The
CDXC Solution is faster, more flexible and more cost-effective than
traditional Digital Asset Management or overnight delivery services. As a
CDXC-licensed host, we provide users and other hosts with technology and
service support.
4 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
STRENGTHENING OUR OPERATIONS
We also use Web-enabled applications to improve our own operations. In 1999,
we implemented Web-based time sheet entry, permitting more than
4,000 technical employees to enter and submit their time electronically. This
paperless system eliminates the administrative work associated with manual
entry; longer term, it also gives us a tool to track real-time productivity
and trends.
We use extensive electronic information-sharing networks to serve our
National Contracts and Managed Services clients. We routinely use EDI with
clients such as IBM -- streamlining work on both ends by processing purchase
orders, submitting invoices and receiving payments electronically.
ANALYSTS INTERNATIONAL: POSITIONED FOR GROWTH
Analysts International's success lies in our unique perspective -- applying
vision, experience and an integrated approach to help our clients bridge the
gap between their business strategy and the capabilities of IT. In the next
section, we describe the advantages The Analysts Perspective brings to our
clients and to our ability to compete effectively in the IT services
marketplace.
We expect demand for IT services to increase significantly next calendar
year, as companies tackle a large backlog of postponed applications and new
Internet-based projects. Across the business, we are taking the right steps
to thrive in this dynamic business and achieve profitable growth in the new
millennium.
Sincerely,
/s/ Frederick W. Lang /s/ Victor C. Benda
Frederick W. Lang Victor C. Benda
Chairman and Chief Executive Officer President and Chief Operating Officer
August 16, 1999
BRIDGING THE GAP BETWEEN STRATEGY AND IT 5
<PAGE>
BRIDGING THE GAP BETWEEN STRATEGY AND IT
In 1966, we formed Analysts International to help businesses understand and
leverage the powers of a new business tool: Computers. Today, we continue to
apply this forward thinking -- creating shareholder value by anticipating and
responding to our clients' changing needs.
We are extremely well-positioned in a dynamic, demanding environment. The drive
to create computer systems, networks and applications with ever greater
functionality is moving so swiftly that only dedicated IT experts can keep fully
abreast of new developments.
At the same time, smart organizations are demanding new strategies for
leveraging IT for a tangible business advantage. They recognize that IT,
expertly applied, can improve processes, cut internal costs and help them
deliver services more efficiently.
Analysts International is uniquely qualified to help these organizations. We
add value through The Analysts Perspective-SM-. Through our unique blend of
technical and business expertise, we enable clients to bridge the gap between
strategy and IT.
We know that clients value this perspective. Ninety percent of our fiscal 1999
revenues represented repeat business from our existing client base. By
leveraging IT to provide bottom-line benefits, we position ourselves as a
strategic partner and command pricing that reflects the value we can bring to
our clients.
THE ANALYSTS PERSPECTIVE HAS THREE IMPORTANT DIMENSIONS: VISION, EXPERIENCE AND
INTEGRATION. HERE IS A SUMMARY OF HOW EACH ELEMENT SHAPES OUR WORK -- AND
DIFFERENTIATES OUR COMPANY IN THE MARKETPLACE.
VISIONARY
THE VISIONARY PERSPECTIVE
With every assignment, we start with a clear objective: to apply information
technology in a manner that creates measurable, long-term payback.
Our analysts look beyond the client's initial technical requirements to fully
understand the relevant issues and needs. Then we work with the client to design
and implement IT-based applications that meet its needs.
We bridge the gap by seeing both the "big picture" and the smallest details.
Companies increasingly are reducing their vendors to a small, value-added
group. Analysts International offers both value-added consulting and
implementation support services -- differentiating ourselves from the large
consulting companies, which focus on the "big picture"; and smaller IT firms
that provide only staffing support.
We apply the visionary perspective to our own operations, continuously seeking
new ways to meet our clients' challenges. We created our National Contracts
Division, for instance, to provide large clients with a single point of contact
for filling their nationwide IT staffing needs with Analysts International
consultants. And we are expanding our e-commerce capabilities to meet emerging
customer needs.
6 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
BRIDGING THE GAP BETWEEN STRATEGY AND IT
INTEGRATED
THE INTEGRATED PERSPECTIVE
We never lose sight of the fact that IT is a tool within the larger
organization. We continuously look beyond technology to the key people and
processes involved.
We go beyond the technical staff -- teaming with such client functions as
Finance, Customer Service and Supply Management to understand their business
processes and deliver high-functionality applications. We provide internal staff
support that ranges from mentoring IT staff to training end users.
We frequently evaluate key processes during an assignment, providing feedback
on best practices and suggesting process improvements.
Our integrated perspective also refers to how we apply our own resources. We
customize our support for each client, drawing from services that range from
supplemental staffing, to systems integration and network design, to rapid
design and development of critical business applications.
[LOGO]
VISION
INTEGRATION
EXPERIENCE
THESE ARE THE FOUNDATION FOR OUR STRONG CLIENT RELATIONSHIPS -- AND FOR THE
BUSINESS GROWTH WE WILL CONTINUE TO ACHIEVE.
EXPERIENCED
THE EXPERIENCED PERSPECTIVE
Our customers seek expertise in cutting-edge technology not available in their
own organizations. We deliver on this expectation -- and more.
We have several thousand experienced technical consultants, whose work crosses
nearly all computer environments. They provide our clients with a full range of
testing, application design, networking, integration and project management
skills.
We seek to recruit and retain senior-level consultants, giving our clients
consistency of service and the quality support that comes from our extensive
experience.
We also bring our clients the benefit of having worked on similar assignments
for many other companies. The applications we suggest and create often go far
beyond our customers' requirements. And in a business environment where time is
literally money, we have the expertise to identify and resolve technical
challenges more quickly than the internal staff might be able to do.
BRIDGING THE GAP BETWEEN STRATEGY AND IT 7
<PAGE>
[PICTURE]
PROFESSIONALS AT OUR MINNEAPOLIS CUSTOMER SUPPORT FACILITY AND AT LAWSON
SOFTWARE WORK TOGETHER TO PROVIDE SUTTER HEALTH WITH REMOTE SUPPORT. FROM LEFT,
PAUL BESTER, KATHY SANDBERG, CHERYL MORTON, ANALYSTS INTERNATIONAL; AND JOHN
MULCHRONE, VICE PRESIDENT OF PRODUCT DEVELOPMENT, PROCUREMENT AND SUPPLY CHAIN,
LAWSON.
LAWSON SOFTWARE SUPPORT: HELPING A HEALTHCARE NETWORK MEET ITS STRATEGIC GOALS
HOW WE ADDED VALUE:
- - HELPED SUTTER HEALTH IMPROVE PATIENT CARE, FUNCTION MORE EFFICIENTLY AND
ENHANCE ITS COMPETITIVENESS
- - SHORTENED THE TIME IT TOOK SUTTER HEALTH TO CREATE ITS ELECTRONIC NETWORK, BY
APPLYING OUR EXPERIENCE IN CREATING LAWSON INTERFACES TO OTHER BUSINESS
APPLICATIONS
- - PROVIDED A STRONG, TECHNICAL TEAM OVER A LENGTHY ROLL-OUT PERIOD
- - DELIVERED ONGOING REMOTE SUPPORT, COMBINED WITH ON-SITE ASSISTANCE WHEN
NEEDED
[LOGO] Now the nation's seventh-largest healthcare network, Sutter Health was
formed by individual Northern California hospitals seeking to reap economies
of scale and be more competitive.
The strategy was clearly successful. The non-profit network spans hospitals,
outpatient clinics and other health-related operations in more than 100
communities in Northern California, Southern Oregon and Hawaii.
As part of its ongoing commitment to provide value, Sutter Health is
implementing a five-year plan to link all affiliates electronically, permitting
them to seamlessly share critical information.
Analysts International is helping Sutter Health turn this vision into reality.
Creating such a massive electronic network poses significant challenges,
including the integration of many different legacy systems and applications
across the affiliates.
But the result will be improved patient care, more efficient service, better
access to information and improved cash flow.
"These connections will make our system stronger as a business; our decisions
as an organization based on better and more accurate data; and most importantly,
the medical care we provide our patients more timely, appropriate, convenient
and efficient," notes Elizabeth Shih, Sutter Health's chief administrative
officer.
Sutter Health retained our Lawson Software Practice after converting its
financial, payroll and human resources functions to Lawson software. As a
Lawson Global Alliance Integrated Network-TM- (GAIN) partner, we have
customized and created interfaces for Lawson software on more than
400 projects.
Initially, Sutter Health asked us to develop six interfaces between Lawson
systems and other business applications. To date, we have created and delivered
27 such interfaces -- a number that will continue to grow. We also are
developing an Electronic Data Interchange system linking the network and key
vendors.
We serve Sutter Health through our dedicated Customer Support Facility (CSF) in
Minneapolis. The CSF staff designs, develops and delivers the interface code and
provides related support remotely. When Sutter Health needs more direct
assistance, our team members go to the health network's site. We also are
modifying existing interfaces, providing advice related to testing and providing
technical assistance during implementation.
Sutter Health says it appreciates our high staff retention rate, and the
continuity in services that our team provides as Sutter expands its electronic
network. Sutter Health has recommended Analysts International to other health
care organizations.
"Analysts International has been a true partner," says Peggy Tindal, Sutter
Health interface development manager. "Without the Analysts team and the
Lawson-specific expertise they brought us, this project wouldn't be where it is
today."
8 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
PRODUCT TESTING: A HIGH-TECH
START-UP FIRM GETS THE
EXPERT RESOURCES IT NEEDS
[LOGO] Based in Silicon Valley, Telocity, Inc. is a fierce competitor in the
Broadband Internet services market. As a start-up company, the firm must be
especially swift and flexible in its product and services launches to succeed.
Telocity uses high-speed Digital Service Line (DSL) service to provide
residential consumers with Internet service products. DSL technology supports
data, audio and video transmission at speeds 50 times faster than most users can
access today.
One of the company's first products, Telocity Interchange, is a breakthrough
residential gateway that for the first time makes it easy to get fast Internet
access. The Interchange Residential Gateway is the first DSL modem that users
can install themselves -- greatly reducing installation, operation, service and
overall cost barriers.
Telocity contracted with Analysts International to help test its modem. Located
in Silicon Valley, our Testing Practice offers testing facilities, staff
expertise in numerous testing environments and a strong track record in working
with leading-edge technology firms.
"We evaluated several testing partners," says Mark Poese, Telocity director of
system development and integration. "Analysts International scored the highest
in its understanding of our DSL technology. And they proposed a thorough and
innovative approach to meeting our testing requirements."
Our team is putting Telocity's cutting-edge residential gateway through a full
battery of functional, configuration, installation and usability evaluations.
Among the customized test cases, we have simulated a connection between the
modem and the local Internet service provider, so that technicians can measure
performance under such conditions as line interference and geographic distance.
[PICTURE]
Our Testing Practice team worked on site with Telocity staff at a critical
product development stage. Standing from left, Steve Gallmam, Telocity manager
of quality assurance; Wes Hanson, Analysts International; Mark Poese, Telocity
director of systems development and integration; and seated, Bruce Lundeen,
Analysts International.
Our team also is testing the modem's performance with different brands of
personal computers and various means of connectivity; evaluating its ability to
support multiple devices connected sequentially; and checking installation
documentation against actual installation. Our reports include recommendations
on improving ease of use for consumers.
Our Testing Practice also has been able to respond quickly to Telocity's
evolving requirements. We have conducted many of the tests at our own
facilities, enabling Telocity to concentrate its own resources on other
activities. And, to support Telocity's focus on being first to market, we have
provided expert test management leadership at Telocity's site.
"Analysts International came through for us at a critical stage," says Poese.
"Their work at Telocity gives our development team real-time expert feedback.
And their testing at Analysts facilities provides an outside perspective,
enabling us to look at possible problem areas in greater detail."
HOW WE ADDED VALUE:
- - PROVIDED A TEAM WITH PROVEN TESTING AND QUALITY ASSURANCE EXPERTISE
- - PROVIDED OBJECTIVE EVALUATION AND FEEDBACK, PLUS PRECISE TRACKING AND
REPORTING
- - EXTENDED TELOCITY'S OWN TESTING RESOURCES
- - OFFERED ACCESS TO OUR STATE-OF-THE-ART LABORATORIES
- - DELIVERED THE FLEXIBILITY TO MEET TELOCITY'S RAPIDLY EVOLVING REQUIREMENTS
BRIDGING THE GAP BETWEEN STRATEGY AND IT 9
<PAGE>
[PICTURE]
MARTY LISOR, BANK OF AMERICA VICE PRESIDENT OF TECHNICAL CONTRACT LABOR
SERVICES, LOOKS TO ROD BRYLAWSKI, NATIONAL CONTRACTS DIVISION DIRECTOR, AND HIS
COLLEAGUES TO FILL THE BANK'S NATIONWIDE IT STAFFING NEEDS.
NATIONAL CONTRACTS: PROVIDING BANK OF AMERICA
WITH QUALITY SERVICE AND QUALIFIED
PROFESSIONALS NATIONWIDE
HOW WE ADDED VALUE:
- - SIMPLIFY RECRUITING AND HIRING PROCESSES NATIONWIDE, BY PROVIDING A SINGLE
ANALYSTS INTERNATIONAL POINT OF CONTACT
- - PROVIDE A SINGLE NATIONAL AGREEMENT, COVERING ALL ASPECTS OF PLACING ANALYSTS
INTERNATIONAL CONTRACTORS AT ALL BRANCH BANK LOCATIONS
- - DELIVER CONSISTENT SERVICE ACROSS BOTH OUR AND THE BANK'S ORGANIZATIONS
- - PROVIDE CUSTOMIZED REPORTS TRACKING UTILIZATION AND PERFORMANCE
- - MAXIMIZE THE CLIENT'S ECONOMIES OF SCALE, WHILE REDUCING INTERNAL
CONTRACTOR-RELATED MANAGEMENT ACTIVITIES AND COSTS
[LOGO] Information technology plays a key role at Bank of America. "Technology
is the fuel for our growth," says Marty Lisor, vice president and manager of
technical contract labor services. "It's critically important."
But finding high-quality IT professionals is anything but simple. The 1998
merger between Bank of America and NationsBank created the country's largest
banking system, spanning 21 states and 37 countries. Its technology-supported
operations run the gamut from credit card services and 14,000 ATMs to on-line
banking services that generate 3.5 million hits per day. Virtually every day, a
Bank of America business needs IT professionals for 6- to 12-month assignments.
Analysts International's National Contracts Division (NCD) has dramatically
simplified the bank's recruiting and hiring processes, while delivering
significant time and cost savings. After a rigorous qualification process, our
NCD became one of a select group of suppliers that meet the bank's IT staffing
needs nationwide.
We already had carried out numerous assignments for both Bank of America and
NationsBank. Our teams had staffed and managed a national desktop technical
"help" desk for six years, responding to 30,000 calls a month. Additionally, we
helped develop the database for an interactive Web site enabling the bank's
corporate clients to track their investment funds.
As a preferred supplier, we give Bank of America a single, value-added point of
contact for all 40 U.S. Analysts International offices. A Bank of America
manager with an IT opening sends the requirements to the bank's Technical
Contract Labor Services Program staff in Richmond, Va. The information is then
e-mailed to our NCD office in Tampa -- which electronically forwards the
information to the appropriate branch office.
Our NCD staff provides the branch with Bank of America's negotiated pricing
arrangements, background check requirements and contractor performance
expectations. Our local branch office forwards resumes of qualified candidates
to the Bank of America manager who made the request, and follows through as
needed.
To help Bank of America track utilization, our NCD staff provides customized
reports that include such information as volume of requests received, response
time, number of consultants hired and costs.
According to Lisor, working with our NCD saves thousands of hours in
recruitment, interviewing, management and tracking.
"But the real value is the consistently high quality of service we receive," she
notes. "Analysts International helps make sure we get the people that are
needed, when we need them, in every location that we have."
10 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
MANAGED SERVICES: PROVIDING
A CENTRAL RESOURCE TO FILL
MOTOROLA'S IT STAFFING NEEDS
[LOGO] It made strategic sense for Motorola's Semiconductor Products Sector to
spin off a division into a separate company. But the decision, made early in
1999, raised a critical question: Where would the company find the resources to
develop and maintain the software system for the new entity's business
operations?
Analysts International's Managed Services Division had the answer. As part of
our ongoing contract with Motorola, we worked closely with a hand-picked group
of leading IT service providers to find staff for the mission-critical project.
In just a few months, our Managed Services helped Motorola build a large staff
of qualified contract professionals -- then provided single-source management
and administrative support tailored to meet Motorola's needs.
"This was our largest assignment, and Analysts International was very
responsive," says Renee Lentz, director of business operations systems for the
Motorola sector. "They did a very thorough job of supporting us."
Created in 1995, our Managed Services Division acts as a value-added, general IT
staffing contractor. The division gives Motorola access to a customized network
of IT consulting companies with the right expertise to meet its business
requirements. We oversee staff identification, selection and management; track
performance; and handle all administrative and accounting tasks.
A Managed Services Client Support Manager (CSM) works on site at Motorola's
offices, providing a high level of responsiveness. When an opening occurs, the
CSM distributes the requirements electronically to suppliers in our network. The
CSM forwards appropriate candidates' resumes, sets up interviews and oversees
orientation and hiring processes. Once a position is filled, the CSM monitors
the individual's performance and helps solve any problems.
[PICTURE]
WHEN MOTOROLA DECIDED TO SPIN OFF A DIVISION, OUR CLIENT SUPPORT MANAGERS HELPED
FIND IT PROFESSIONALS TO SUPPORT THE NEW FIRM. FROM LEFT, JUDY PERRY, ANALYSTS
INTERNATIONAL; JOHN ROGERS, INFORMATION TECHNOLOGIES MANAGER, STRATEGIC PROGRAMS
AND OUTSOURCING, MOTOROLA; AND DAWN HARRINGTON, ANALYSTS INTERNATIONAL.
Our Managed Services provides Motorola with consolidated, customized bills and
reports -- thus simplifying internal administration and tracking. We work
closely with Motorola to define criteria for sub-suppliers and evaluate
potential network additions. Additionally, at our suggestion, Motorola has
created a cross-functional advisory team. The team meets periodically with our
Managed Services leaders to review performance, address issues and identify
opportunities to serve Motorola better.
Since the managed-services relationship began in late 1997, we have filled
scores of Motorola positions for database and Unix system administrators,
software developers and other IT professionals. And, based on the experience of
Motorola's Phoenix operations, company operations in Austin have begun calling
on our Managed Services as well.
"Analysts International's Managed Services enables us to reach a broader base of
contracting agencies more efficiently than we could do on our own," notes Lentz
at Motorola. "We have a better chance of getting the right people at the right
time with the skill sets we need."
HOW WE ADDED VALUE:
- - DELIVER SINGLE-SOURCE ACCESS TO A NETWORK OF IT STAFFING FIRMS
- - OFFER EXPERT MANAGEMENT OF THE ENTIRE IT STAFFING PROCESS
- - PROVIDE CONSOLIDATED, CUSTOMIZED BILLING AND REPORTING
- - PROVIDE AN ON-SITE CLIENT SUPPORT MANAGER TO WORK CLOSELY WITH MOTOROLA
MANAGERS
- - ENABLE MOTOROLA TO OUTSOURCE MUCH OF ITS IT STAFFING-RELATED WORK, FREEING
INTERNAL STAFF TO FOCUS ON THE COMPANY'S CORE BUSINESS NEEDS
BRIDGING THE GAP BETWEEN STRATEGY AND IT 11
<PAGE>
[PICTURE]
IN LAS VEGAS, WHERE NEVADA POWER COMPANY LIGHTS UP THE CITY, WE HELPED THE
UTILITY'S IT STAFF QUICKLY BECOME EFFECTIVE IN A NEW ORACLE-BASED ENVIRONMENT.
SUPPLEMENTAL STAFFING: ADDING BUSINESS VALUE
THROUGH MENTORING AND PROJECT MANAGEMENT
HOW WE ADDED VALUE:
- - PROVIDED EXPERT, ON-SITE HELP IN TRANSLATING CLASSROOM KNOWLEDGE INTO
HANDS-ON EXPERIENCE
- - HELPED CREATE A STRONG, FORMAL INFRASTRUCTURE FOR ONGOING APPLICATIONS WORK
- - GREATLY REDUCED PROBLEMS ASSOCIATED WITH LEARNING A NEW APPLICATIONS
ENVIRONMENT
- - SHORTENED THE APPLICATION DEVELOPMENT CYCLE WHILE REDUCING RISKS
- - HELPED THE STAFF CREATE A MUCH MORE SOPHISTICATED APPLICATION THAN ORIGINALLY
ENVISIONED, BY LEVERAGING OUR OWN EXPERTISE AND THE CAPABILITIES OF ADVANCED
DESIGN TOOLS
[LOGO] Companies typically have used supplemental staffing to meet short-term
needs without adding to fixed costs. But Analysts International can provide
additional value -- by helping effect operational improvements that deliver
financial benefits long after our consulting assignment is completed.
That was our objective at Nevada Power Company. Based in Las Vegas, with more
than 500,000 customer accounts, the publicly held firm is the nations
fastest-growing utility.
Wayne Tunheim, MIS applications manager for Nevada Power's finance and legal
functions, says we dramatically improved his staff's effectiveness in working in
a new Oracle-based environment.
"With Analysts International's expert help, we created a sophisticated
application that's key to our business in just six months," Tunheim notes.
"It would have taken us three or four years to fully understand the Oracle
toolset, and to create an application with the same functionality on our own."
Nevada Power is currently converting its information systems from a mainframe to
an Oracle-based client-server environment. While the change will provide
advantages, it also has created a major challenge: how to quickly build the MIS
staff's skills in using Oracle.
Following Oracle classroom training, Nevada Power retained Analysts
International. Working on site at Nevada Power, our team mentored the staff
through the development of a unique, Oracle-based financial application designed
to advance Nevada Power's business. And we helped create an infrastructure to
support ongoing Oracle applications work.
The Analysts International team brought both project management and Oracle
expertise to the assignment. We helped the MIS department quickly overcome
initial problems by recommending that it change to a different Oracle release.
Working closely with Nevada Power software developers, we showed them how to
maximize Oracle design and development tools in their application design.
We established development standards and project management methodologies to
guide the MIS staff's ongoing application work. And we suggested and helped
implement a new MIS organizational structure to better accommodate roles and
work flow in the new client-server environment.
"Analysts International had the mentoring, technical and standards-setting skill
sets we needed," says Tunheim at Nevada Power. "They saved us a lot of false
steps and provided us with a very strong infrastructure."
12 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
THE YEAR 2000: OFFERING
TECHNICAL EXPERTISE AND
AN OUTSIDE PERSPECTIVE
[LOGO] When the federal government looked at how the Year 2000 might affect its
services, computers that manage unemployment insurance benefits ranked among its
top 10 priorities.
That's why every state is required to have an independent expert validate and
verify the state's Y2K-related work on its unemployment benefits systems. In
Minnesota, the state's Department of Economic Security (MDES) turned to Analysts
International for help.
Selected from among 20 vendors, we brought the expertise of our Year 2000
Practice, as well as substantial experience in software development and testing.
We applied this expertise to review MDES's work on two systems. The newer system
helps manage benefits payments to about 130,000 Minnesotans annually. Because
the records look forward, establishing a one-year claim period for each
recipient, the benefits system had to be assessed by Nov. 30, 1998.
The older system, featuring components up to 30 years old, tracks employers' tax
payments. We submitted our project review report on this system in April 1999.
Our team assessed three key areas: 1) the department's Y2K plan and
implementation processes, 2) change control -- or the degree to which any
non-Y2K-related software changes were taken into account during the Y2K-related
activities, and 3) the staff's use of testing tools.
Analysts International designed the process to be as efficient as possible. We
provided a list, in advance, of all documentation we would need. Then we held a
kickoff meeting to walk MDES staff through the process and put them at ease.
The result? We were able to review the work on each system and provide a written
report within just six weeks. MDES immediately used some of
[PICTURE]
WORKING WITH THE MINNESOTA DEPARTMENT OF ECONOMIC SECURITY, WE ASSESSED ITS Y2K
WORK ON THE STATE'S UNEMPLOYMENT BENEFITS SYSTEMS. FROM LEFT, DAVE GRIGGS,
ANALYSTS INTERNATIONAL; RONALD NIEMANN, MDES DIRECTOR OF SYSTEMS AND
PROGRAMMING; SHAWN SAUVE AND GERALD BALTRUSCH, ANALYSTS INTERNATIONAL.
the findings in our first report -- regarding work on the benefits-related
system -- to improve its work on the second system.
To add further value, our team benchmarked MDES's work against the best Y2K work
at other organizations. We identified MDES's best practices, so they could be
applied consistently across the IT organization. And we provided technical
documentation on software tools for the staff's future use.
Having an outside organization review your work can be intimidating, according
to Ronald Niemann, MDES director of systems and programming. But the Analysts
International team made a positive contribution.
"Y2K is new and uncharted issue for all IT professionals," Niemann notes.
"Through Analysts International, we learned how our work compares to that of
other organizations, and we received reassurance that we are doing the right
things, the right way."
HOW WE ADDED VALUE:
- - USED OUR Y2K EXPERTISE TO BENCHMARK THE STAFF'S ACTIVITIES AGAINST INDUSTRY
STANDARDS
- - IDENTIFIED THE CLIENT'S BEST PRACTICES, SO THEY CAN BE CONSISTENTLY DEPLOYED
- - INDICATED OPPORTUNITIES FOR IMPROVEMENT, WHICH THE STAFF IMMEDIATELY
INCORPORATED INTO ITS WORK
- - PROVIDED EXPERT VALIDATION THAT THE STAFF'S Y2K-RELATED WORK WAS WELL-PLANNED
AND IMPLEMENTED
BRIDGING THE GAP BETWEEN STRATEGY AND IT 13
<PAGE>
[PICTURE]
THE WEB SITE WE CREATED FOR FASTENERS FOR RETAIL ENHANCES ITS CUSTOMERS'
CONVENIENCE, BY ENABLING THEM TO ACCESS A CATALOG, PLACE ORDERS AND CHECK
SHIPMENT STATUS ELECTRONICALLY.
E-COMMERCE: HELPING A SERVICE-DRIVEN COMPANY
GAIN A COMPETITIVE EDGE
HOW WE ADDED VALUE:
- - USED OUR EXPERTISE TO LEVERAGE THE INTERNET AS A MARKETING AND SALES TOOL
- - ENABLED THE CLIENT TO PROVIDE THE OPTION OF PHONE-BASED CUSTOMER SERVICE OR A
STREAMLINED ELECTRONIC FUNCTION
- - PERMITTED THE CLIENT TO OFFER CUSTOMERS GREATER CONVENIENCE AND TIMELY ACCESS
TO MORE INFORMATION
- - REDUCED FFR'S NEED TO HIRE ADDITIONAL CUSTOMER SERVICE REPRESENTATIVES
- - CUT COSTS ASSOCIATED WITH MANUAL ORDER PROCESSING AND SHIPMENT MISTAKES
[LOGO] Fasteners for Retail's business strategy boils down to two words:
"Customer Service." So it's not surprising that the company teamed with
Analysts International earlier this year to help it revolutionize customer
service and further differentiate itself.
Based in Cleveland, Ohio, Fasteners for Retail (FFr) offers sign holders, banner
and sign hangers, literature holders and other items that support retail sales
and promotions. Its worldwide customer base includes retail businesses,
marketing and printing companies, and display manufacturing firms.
FFr's customer service center receives thousands of calls a month from customers
placing orders. The customer provides the catalog page number, item number and
desired quantity -- then listens to the representative read back the
information. Checking order status requires additional phone calls. And a manual
order entry system presents the potential for mistakes.
Through research, FFr learned that most of its customers have desktop Internet
access. So its leaders asked Analysts International to revamp the FFr Web site
to provide electronic order entry. Our Network Service & Support Practice, based
in Cleveland, had just completed migrating FFr's NetWare server to an NT
platform and upgrading its local area network.
Launched in summer 1999, the new FFr Web site we developed provides immediate
access to its on-line catalog. Customers can simply click on a product to view
an engineering drawing and all specifications.
To place an order, the customer brings up an order screen and enters his or
her log-in name and password. He or she clicks on the desired items and drops
them into a "shopping cart." Once an order has been placed, the customer
receives e-mail notifications that confirm receipt, and that provide order
and shipment status as well. The customer also can use the Web site to access
the shipper.
With the new Web site, there's no need to wait on the phone for the next
available customer service representative. And the electronic system is
available 24 hours a day.
Our development team used Microsoft Site Server to support the huge database
needed for FFr's 4,000-item product portfolio -- making it simple for internal
staff to effect changes.
And we are now working to provide full interoperability between the
Internet-based applications and FFr's core business systems.
"The new Web site will raise our customer service to a level our competitors
will have difficulty matching," said Nathaniel Smith, FFr vice president and
chief financial officer. "The Analysts International team has really been
geared toward doing what is right for our business, whatever it takes."
14 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
RADD: FAST APPLICATION
DEVELOPMENT TO MEET A
CANCER CENTER'S NEEDS
[LOGO] The University of Texas M.D. Anderson Cancer Center has long relied on
Analysts International for IT professionals. More recently, the Houston cancer
center called upon our Year 2000 compliance experience.
So it's not surprising that earlier this year, M.D. Anderson took advantage of
another Analysts International strength. Needing a new application quickly, the
cancer center turned to our Rapid Application Design and Development (RADD-TM-)
Group.
The RADD Group assists IT managers who are wrestling with how to complete many
projects with limited staff. Combining technical expertise with business
knowledge, our RADD professionals provide a quick turnaround and specialized
skills.
M.D. Anderson's assignment involved its highly visible Under Cover Skin Cancer
Prevention Project, which educates Texans about the dangers of exposure to
sunlight's ultraviolet (UV) rays. Sensors in four cities measure the sun's UV
levels during the summer. A software application retrieves the UV readings four
times daily, then faxes them to almost 40 media outlets that report the readings
and exposure risks.
M.D. Anderson called us after determining that the application wasn't Y2K
compliant. The aging software also had some significant limitations. The Public
Education Office staff had to check the application regularly to make sure it
was functioning. Additionally, the application sometimes failed to fax the UV
readings -- jeopardizing the news media's commitment to use the reports.
"Newspapers have reserved column space for this service," says Bryan L. Vaughn,
an M.D. Anderson systems analyst. "It doesn't take many misses before the media
decide it's too much trouble."
[PICTURE]
FOR THE M.D. ANDERSON CANCER CENTER, WE DEVELOPED AN APPLICATION THAT IMPROVES
OPERATION OF ITS EDUCATIONAL SKIN CANCER PREVENTION PROGRAM. FROM LEFT, BRYAN L.
VAUGHN, SYSTEMS ANALYST AND STEPHANIE FELNER, MEDIA COMMUNICATIONS SPECIALIST,
M.D. ANDERSON CANCER CENTER; AND JAMES WEBB AND LIZ MAGYAR, ANALYSTS
INTERNATIONAL.
With the UV reporting season fast approaching, our RADD team created a new
application with far greater automation and functionality. We also provided a
user's manual and training.
Developed at our offices, the new application runs on two computers, permitting
uninterrupted operation when one PC is required for program management. Users
can access the data using business software programs. The application
self-corrects problems when possible; when it can't, it immediately sends an
e-mail to the Public Education Office staff.
The application maintains a history of all readings, enabling long-term
tracking. It can fax or e-mail its reports. And adjustments no longer require a
software expert. With a few keystrokes, users can make changes and customize the
data a media outlet receives.
"The new application has saved us major time and headaches," says Stephanie
Felner, a Public Education Office communications specialist and Under Cover
project manager. "We know it was created by professionals, and we can count on
it to perform."
HOW WE ADDED VALUE:
- - PROVIDED THE CLIENT WITH A MUCH MORE FUNCTIONAL APPLICATION WITHIN A SHORT
TIMEFRAME
- - FREED INTERNAL STAFF TO FOCUS ON MORE MISSION-CRITICAL IT NEEDS
- - USED OUR OFF-SITE RESOURCES, RATHER THAN REQUIRING OFFICE EQUIPMENT ON SITE
- - SAVED STAFF TIME SPENT CHECKING AND FIXING THE OLD APPLICATION
- - HELPED ENHANCE THE CANCER CENTER'S RELATIONSHIP WITH ITS MEDIA PARTNERS,
WHILE POSITIONING AN IMPORTANT PROGRAM FOR FUTURE GROWTH
BRIDGING THE GAP BETWEEN STRATEGY AND IT 15
<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, 1999, 1998, and 1997.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PERCENT OF REVENUES
YEAR ENDED JUNE 30, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional services revenues:
Provided directly 77.5% 77.3% 78.4%
Provided through sub-suppliers 22.5 22.7 21.6
- -------------------------------------------------------------------------------------------------------------
Total revenues 100.0 100.0 100.0
Salaries, contracted services and direct charges 78.5 77.9 77.4
Selling, administrative and other operating costs 15.7 15.9 16.6
Non-operating income and interest expense 0.2 0.2 0.2
- -------------------------------------------------------------------------------------------------------------
Income before income taxes 6.0 6.4 6.2
Income taxes 2.3 2.6 2.5
- -------------------------------------------------------------------------------------------------------------
Net income 3.7% 3.8% 3.7%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Company operates in one business segment.
Revenues provided directly increased approximately $26 million, or 5.8%,
in fiscal 1999 over 1998. Nearly all of these increases are the result of
increases in hourly rates. Fiscal 1998 revenues provided directly increased
31.8% over fiscal 1997. Approximately 65% of this increase was the result of
an increase in billed hours and 35% from increases in hourly rates. While the
Company has been able to increase rates somewhat over the prior fiscal year,
there can be no assurance the Company will be able to continue this as
competitive conditions in the industry make it difficult for the Company to
continually increase the hourly rates it charges for services. Revenues
provided through sub-supplier billings, primarily with U S WEST and IBM,
increased 4.7% in fiscal 1999 over 1998 and had increased 40.4% in fiscal
1998 over fiscal 1997. These increases in sub-supplier revenues resulted
almost exclusively from increases in billable hours of service rendered to
clients.
Personnel totalled 4,900 at June 30, 1999, compared to 5,300 at June 30,
1998 and 4,650 at June 30, 1997. Substantially all of the decrease from 1998 to
1999 and the increase from 1997 to 1998 consisted of billable technical staff.
Salaries, contracted services and direct charges, which represent primarily
the Company's direct labor costs, were 78.5% of revenues in fiscal 1999 compared
to 77.9% of revenues in fiscal 1998 and 77.4% in fiscal 1997. The increase in
this expense category as a percentage of revenues is mainly a consequence of
increases in direct labor charges. Excluding both sub-suppliers revenues and
labor costs associated with these contracts, this category of expense was 72.3%
of revenues in fiscal 1999, 71.4% in fiscal 1998 and 71.3% in fiscal 1997. 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 15.7% in fiscal 1999,
15.9% in 1998 and 16.6% in 1997. Excluding the sub-suppliers revenues associated
with the contracts referred to above, this percentage would have been 20.2% for
fiscal 1999, 20.6% for fiscal 1998 and 21.1% for fiscal 1997. 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 1999 increased 0.5% over fiscal 1998 and fiscal 1998's
net income increased 38.0% over fiscal 1997. As a percentage of total revenues,
net income was 3.7% in fiscal 1999 as compared to 3.8% in fiscal 1998 and 3.7%
in fiscal 1997. The Company's net income as a percentage of revenues provided
directly was 4.7%, 5.0% and 4.8% for fiscal years 1999, 1998 and 1997,
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, 1999 was $79.2 million, up 17.4% from the $67.5
million at June 30, 1998 which was up 22.7% from the $55.0 million at June 30,
1997. This includes cash and cash equivalents of $33.9 million at June 30, 1999
compared to $11.9 million at June 30, 1998 and $17.9 million a year earlier and
accounts receivable of $101.5 million at June 30, 1999 compared to $94.3 million
at June 30, 1998 and $67.0 million a year earlier. Ratios of current assets to
current liabilities and total assets to total liabilities have decreased since
June 30, 1998. On December 30, 1998, the Company entered into a Notes Purchase
Agreement whereby it sold $20,000,000 of 7% Senior Notes due December 30, 2006.
The increase in working capital and long-term debt and the changes in the
16 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
ratios are primarily due to cash provided by operating activities and the
proceeds from the $20 million Notes Purchase Agreement used to finance the
acquisition of office facilities for headquarters and Minneapolis branch
operations.
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.
In fiscal 1999, the Company made capital expenditures totaling $23,182,000
compared to capital expenditures of $7,722,000 and $2,955,000 in fiscal years
1998 and 1997, respectively. Fiscal 1999 capital expenditures consisted of (i)
$4,914,000 for computer equipment and furniture and to enlarge certain branch
facilities as a result of the increased level of business, (ii) $1,354,000 to
purchase, develop and implement new financial systems throughout the Company (in
part to achieve Year 2000 compliance) and (iii) $16,914,000 for progress
payments related to the new headquarters/Minneapolis branch facility. These
capital expenditures were funded through a combination of unsecured debt and
cash reserves. Fiscal 2000 capital spending is expected to approximate
$4,500,000.
During fiscal 1999, the Company increased its regular quarterly cash
dividends to $.10 per share, up from $.08 declared during fiscal 1998 and the
$.06 declared during fiscal 1997. 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. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the disclosure provisions of No. 123, "Accounting for
Stock-Based Compensation," in the first quarter of fiscal 1997. The Company also
adopted Statements of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," and No. 131, "Disclosures About Segments of An Enterprise
and Related Information," in the first quarter of fiscal 1999. The adoption of
these standards did not have a significant effect on the Company's financial
position and operating results.
In the second quarter of fiscal 1998, the Company adopted Statements of
Financial Accounting Standards No. 128, "Earnings per Share." This statement
replaces the presentation of primary EPS with a presentation of basic EPS.
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.
On November 6, 1998 the Company acquired specific assets and assumed
certain liabilities of Enterprise Solutions, Inc., a Minneapolis, Minnesota
based provider of software services. On February 26, 1999, the Company acquired
all of the assets of Real World Training Systems LLC, a Phoenix, Arizona based
provider of software services. The amount paid in connection with these
purchases was approximately $4.2 million which was paid with internal funds.
The Company believes funds generated from its business and current cash
balances are adequate to meet demands placed upon its resources by its
operations, capital investments and the payment of quarterly dividends.
The Company believes it has achieved Y2K readiness by replacing its
computer systems with new, Y2K compliant hardware and software. The new
hardware/software system was put into production February 1, 1999. The cost of
the new system was approximately $3,000,000. The Company depends on its computer
system for critical business functions, including time record keeping, billing,
payroll, and accounts payable and receivable. The loss of these capabilities
would have a material adverse impact on the Company. The Company believes its
new computer system has remedied the millennium date change, however if
weaknesses (Y2K or otherwise) in the new system are discovered, the Company
intends to develop a contingency plan, which will likely take into account the
fact it has a staff of over 4,000 computer programmers as well as a national Y2K
practice which can assist in achieving Y2K readiness. The Company's business
does not depend on raw materials, parts or other goods supplied by third parties
and therefore, the Company believes the inability of its vendors to achieve Y2K
compliance would not have a material adverse impact on the Company. The Company
does use utility services (electricity, telecommunication, natural gas and the
like) for its offices, and interruption of these services could have a material
adverse impact on the Company's operations. The inability of the Company's
clients to achieve Y2K compliance could have an impact on their ability to pay
the Company for the services it renders to them, with consequent adverse impact
on the Company's cash flow. Nearly all of the Company's revenue is derived from
services rendered to Fortune 1000 companies, and the Company considers it
unlikely that a material number of its customers would encounter Y2K compliance
issues which would prevent them from paying the Company's invoices in a timely
manner.
The Company's services addressing the Year 2000 problem involve key aspects
of its clients' computer systems. A failure in a client's system could result in
a claim for substantial damages against the Company, regardless of the Company's
responsibility for such failure. Litigation, regardless of its outcome, could
result in substantial cost to the Company. Accordingly, any contract liability
claim or litigation against the Company could have an adverse effect on the
Company's business, operations and financial results.
The Company does not believe the most likely worst-case Y2K scenario would
have a material effect on its results of operations, liquidity or financial
condition.
BRIDGING THE GAP BETWEEN STRATEGY AND IT 17
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 33,870 $ 11,868
Accounts receivable, less allowance for doubtful
accounts of $850 and $750, respectively 101,523 94,294
Prepaid expenses and other current assets 4,499 3,808
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 139,892 109,970
Property and equipment 29,644 10,360
Intangible assets, net of accumulated amortization of $969 and $554, respectively 7,029 3,597
Other assets 9,651 8,734
- ------------------------------------------------------------------------------------------------------------------------
$186,216 $132,661
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,791 $ 21,236
Dividend payable 2,255 1,795
Salaries and vacations 23,227 15,669
Other, primarily self-insured health care reserves 3,311 2,161
Income taxes payable 1,084 1,635
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 60,668 42,496
Long-term debt 20,000 --
Other long-term liabilities 7,534 7,171
Commitments (Note I) -- --
Shareholders' equity:
Common stock, par value $.10 a share; authorized
120,000,000 shares; issued and outstanding
22,552,441 and 22,439,743 shares, respectively 2,255 2,244
Additional capital 13,900 12,604
Retained earnings 81,859 68,146
- ------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 98,014 82,994
- ------------------------------------------------------------------------------------------------------------------------
$186,216 $132,661
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
18 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional services revenues:
Provided directly $480,790 $454,339 $344,790
Provided through sub-suppliers 139,366 133,072 94,756
- ---------------------------------------------------------------------------------------------------------------------------
Total revenues 620,156 587,411 439,546
Expenses:
Salaries, contracted services and direct charges 486,816 457,318 340,483
Selling, administrative and other operating costs 97,302 93,705 72,898
- ---------------------------------------------------------------------------------------------------------------------------
584,118 551,023 413,381
- ---------------------------------------------------------------------------------------------------------------------------
Operating income 36,038 36,388 26,165
Non-operating income 1,408 1,299 1,045
Interest expense 178 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 37,268 37,687 27,210
Income taxes 14,535 15,077 10,829
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 22,733 $ 22,610 $16,381
- ---------------------------------------------------------------------------------------------------------------------------
Per common share:
Net income (basic) $ 1.01 $ 1.01 $ .74
- ---------------------------------------------------------------------------------------------------------------------------
Net income (diluted) $ 1.00 $ .99 $ .73
- ---------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 22,524,000 22,376,000 22,095,000
- ---------------------------------------------------------------------------------------------------------------------------
Average common and common equivalent
shares outstanding 22,732,000 22,829,000 22,544,000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
BRIDGING THE GAP BETWEEN STRATEGY AND IT 19
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
(IN THOUSANDS) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 22,733 $ 22,610 $ 16,381
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 3,844 3,454 2,562
Amortization of goodwill 415 277 277
Loss on disposal of assets 19 4 4
Increase in deferred income tax benefit (436) (1,192) (531)
Tax effect of stock transactions 543 336 513
Appreciation of annuities and cash surrender values (582) (549) (478)
Increase in accounts receivable (7,229) (27,340) (15,915)
Increase in prepaid expenses (590) (268) (186)
Increase in accounts payable 9,555 3,105 6,582
Increase in salaries and vacations 7,558 4,156 3,897
Increase (decrease) in other accrued expenses 1,150 514 (30)
(Decrease) increase in income taxes payable (551) 1,440 (187)
Increase in long-term liabilities 363 727 448
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 36,792 7,274 13,337
Cash flows from investing activities:
Property and equipment additions (23,182) (7,722) (2,955)
Investment purchases -- -- (120)
Payments for acquisitions (3,847) -- (5,153)
Proceeds from property and equipment sales 35 25 32
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (26,994) (7,697) (8,196)
Cash flows from financing activities:
Cash dividends (8,560) (6,563) (5,083)
Proceeds from borrowings 20,000 -- --
Proceeds from exercise of stock options 764 966 812
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 12,204 (5,597) (4,271)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 22,002 (6,020) 870
Cash and equivalents at beginning of year 11,868 17,888 17,018
- ---------------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $ 33,870 $ 11,868 $ 17,888
- ---------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the year for:
Income taxes $ 15,421 $ 14,565 $ 11,034
Interest -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
20 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) STOCK CAPITAL EARNINGS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balances at June 30, 1996 $ 2,198 $10,023 $41,497
Common stock issued - 297,815 shares
upon exercise of stock options 30 782
Income tax benefit from stock option plans 481
Other 32
Cash dividends ($.24 per share) (5,320)
Net income 16,381
- ---------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1997 2,228 11,318 52,558
Common stock issued - 153,601 shares
upon exercise of stock options 16 950
Income tax benefit from stock option plans 264
Other 72
Cash dividends ($.31 per share) (7,022)
Net income 22,610
- ---------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1998 2,244 12,604 68,146
Common stock issued - 112,698 shares
upon exercise of stock options 11 753
Income tax benefit from stock option plans 102
Other 441
Cash dividends ($.40 per share) (9,020)
Net income 22,733
- ---------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1999 $2,255 $ 13,900 $81,859
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
BRIDGING THE GAP BETWEEN STRATEGY AND IT 21
<PAGE>
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 (15-50 years for
building and improvements and 2-7 years for office furniture and equipment)
of the assets for financial statement purposes and accelerated methods for
income tax purposes.
FINANCIAL INSTRUMENTS - In accordance with the requirements of Statement of
Financial Accounting Standards (SFAS) No. 107, "Disclosures about Fair Value
of Financial Instruments," management estimates the carrying value of
long-term debt approximates fair value. The estimated fair value amounts have
been determined through the use of discounted cash flow analysis using
interest rates currently available to the Company for issuance of debt with
similar terms and remaining maturities. All other financial instruments
approximate fair value because of the short-term nature of these instruments.
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 23%, 22% and 22% of revenues in
fiscal 1999, 1998 and 1997, respectively. Another customer accounted for 16%,
16% and 21% of revenues in fiscal 1999, 1998 and 1997, respectively. Revenue
is recognized on contracts as services are performed.
INTANGIBLE ASSETS - Intangible assets consist 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 periods
of 2-15 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 - Basic and diluted earnings per share (EPS) are
presented in accordance with Statement of Financial Accounting Standards No.
128, "Earnings per Share." 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. The difference between
average common shares and average common and common equivalent shares is the
result of outstanding stock options.
CASH EQUIVALENTS - Temporary cash investments in money market accounts and
Treasury Bills are considered to be cash equivalents.
SHARES RESERVED - At June 30, 1999, there were approximately 25,414,000
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.
B. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
JUNE 30
(IN THOUSANDS) 1999 1998
- ---------------------------------------------------------
<S> <C> <C>
Cost:
Land $ 1,940 $ 1,940
Building and improvements 19,912 2,565
Office furniture & equipment 22,900 19,820
- ---------------------------------------------------------
Total 44,752 24,325
Accumulated depreciation (15,108) (13,965)
- ---------------------------------------------------------
$ 29,644 $ 10,360
- ---------------------------------------------------------
</TABLE>
In January 1998 the Company entered into an agreement to build a facility for
use as its headquarters and Minneapolis branch operations. In May 1999 the
Company moved into this facility. Construction and related costs were
approximately $22,000,000 and are included in the above amounts. These costs
were financed through the use of cash reserves and the proceeds of the Notes
Purchase Agreement described in footnote D. Included in these costs are
approximately $529,000 of capitalized interest costs.
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, 1999
and 1998 is $7,534,000 and $7,171,000, 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, 1999 and 1998 is $6,229,000 and $5,697,000, respectively,
representing the carrying value of annuities, which approximates market
value, and insurance cash value. Deferred compensation expense for the fiscal
years 1999, 1998 and 1997 was approximately $363,000, $727,000 and $448,000,
respectively.
D. LONG-TERM DEBT
In December 1998, the Company entered into a Notes Purchase Agreement whereby
it sold $20,000,000 of 7% Senior Notes due December 30, 2006. Minimum future
maturities on these Notes is as follows: 2000, $0; 2001, $5,250,000; 2002,
$4,000,000; 2003, $3,000,000; 2004, $3,000,000; thereafter, $4,750,000. The
agreement contains, among other things, provisions regarding maintenance of
working capital and net worth and restriction on payments of dividends
22 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
on common stock. The Company's working capital and net worth are in excess of
the minimum net requirements and fiscal 1999 dividend payments did not exceed
the $22,000,000 maximum allowed under the agreement.
E. COMMON STOCK
In December 1997, the Board of Directors approved an amendment to the
Company's Articles of Incorporation increasing the number of shares of Common
Stock authorized for issuance to 60,000,000 shares. Also, in December 1997,
the Company distributed a three-for-two stock split effected in the form of a
stock dividend. All share and per share data has been adjusted to reflect
this stock split. In October 1998, the shareholders approved an ammendment to
the Company's Articles of Incorporation increasing the number of shares of
Common Stock authorized for issuance to 120,000,000 shares.
F. STOCK OPTION PLANS
The Company has three stock-based compensation plans, which are described
below. The Company adopted the disclosure provisions of SFAS 123, "Accounting
for Stock-Based Compensation," 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 its stock option plans. 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, 1999, 1998 and 1997 would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Net income (in thousands):
As reported $ 22,733 $ 22,610 $ 16,381
Pro forma 22,038 21,539 15,400
Net income per share (basic):
As reported $ 1.01 $ 1.01 $ .74
Pro forma .98 .96 .70
Net income per share (diluted):
As reported $ 1.00 $ .99 $ .73
Pro forma .97 .94 .68
</TABLE>
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: for 1999, an expected life of 5 years, expected
volatility of 53%, a dividend yield of 1.0% and a risk-free interest rate of
7.0%, for 1998 and 1997, 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
weighted average fair value of options granted during the years ended June
30, 1999, 1998 and 1997 was $6.15, $9.15 and $9.47, respectively.
The Company has options outstanding under three option plans, two of which
remain active. Under the 1994 Stock Option Plan, the Company may grant
options to its employees for up to 1,200,000 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 240,000 shares of common
stock. Under the 1996 Non-employee Directors Plan, options to purchase 6,000
shares are automatically granted on the first business day of each calendar
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,
1999, 1998 and 1997, and changes during the years ending on those dates is
presented below:
<TABLE>
<CAPTION>
1999 1998 1997
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 889,760 $ 14.58 981,060 $ 12.03 1,182,804 $ 8.98
Granted 228,223 16.45 107,407 27.91 176,738 19.57
Exercised (101,189) 8.62 (188,207) 9.07 (370,982) 5.91
Expired (11,135) 16.10 (10,500) 12.20 (7,500) 11.36
--------- --------- ----------
Outstanding
at end of
year 1,005,659 $ 15.58 889,760 $ 14.58 981,060 $ 12.03
- ------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes information about stock options outstanding at
June 30, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
NUMBER WEIGHTED-AVERAGE WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 6/30/99 CONTRACTUAL LIFE EXERCISE PRICE AT 6/30/99 EXERCISE PRICE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 6.42 - $12.09 275,020 4.57 years $ 9.36 144,568 $ 7.93
12.59 - 12.75 320,704 1.83 12.59 219,880 12.59
13.59 - 22.83 195,434 5.71 18.30 81,400 18.09
22.94 - 34.94 214,501 8.62 25.54 39,157 26.46
--------- -------
$ 6.42 - $34.94 1,005,659 4.78 $ 15.58 485,005 $ 13.24
- ------------------------------------------------------------------------------------------------------------
</TABLE>
G. 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. The Board of Directors
amended the plan on April 29, 1996 and April 16, 1998. The rights, which
expire on April 16, 2008, 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 $160.00, subject
BRIDGING THE GAP BETWEEN STRATEGY AND IT 23
<PAGE>
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).
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.
H. INCOME TAXES
The provision for income taxes charged was as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
(IN THOUSANDS) 1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $ 12,648 $ 13,627 $ 9,486
State 2,323 2,642 1,874
- --------------------------------------------------------------
14,971 16,269 11,360
Deferred:
Federal (348) (1,002) (439)
State (88) (190) (92)
- --------------------------------------------------------------
(436) (1,192) (531)
- --------------------------------------------------------------
Total $ 14,535 $ 15,077 $ 10,829
- --------------------------------------------------------------
</TABLE>
Net deferred tax assets are comprised of the following:
<TABLE>
<CAPTION>
JUNE 30
(IN THOUSANDS) 1999 1998
- --------------------------------------------------------------
<S> <C> <C>
Deferred compensation $ 2,938 $ 2,869
Accrued vacation and compensatory time 1,723 1,538
Self-insured health care reserves 819 760
Allowance for doubtful accounts 332 300
Depreciation 197 115
Other 395 333
- --------------------------------------------------------------
Deferred tax assets 6,404 5,915
Other (205) (152)
- --------------------------------------------------------------
Deferred tax liabilities (205) (152)
- --------------------------------------------------------------
Net deferred tax assets $ 6,199 $ 5,763
- --------------------------------------------------------------
Whereof:
Current $ 2,929 $ 2,726
Noncurrent 3,270 3,037
- --------------------------------------------------------------
$ 6,199 $ 5,763
- --------------------------------------------------------------
</TABLE>
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:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income tax rates 35.0% 35.0% 35.0%
State and local taxes,
net of federal benefit 3.9% 4.2% 4.3%
Other 0.1% 0.8% 0.5%
- --------------------------------------------------------------
Effective tax rates 39.0% 40.0% 39.8%
- --------------------------------------------------------------
</TABLE>
I. COMMITMENTS
At June 30, 1999 aggregate net minimum rental commitments under noncancelable
operating leases having an initial or remaining term of more than one year
are payable as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
- --------------------------------------------------------
<S> <C> <C>
Year ending June 30, 2000 $ 6,196
2001 4,919
2002 3,439
2003 2,954
2004 1,395
Later 1,180
- --------------------------------------------------------
Total minimum obligation $20,083
- --------------------------------------------------------
</TABLE>
Rent expense, primarily for office facilities, for the years ended June 30,
1999, 1998 and 1997 was $5,879,000, $4,900,000 and $3,812,000, respectively.
The Company has compensation arrangements with its five senior executives and
certain other employees which provide for certain payments in the 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 contribu-tions vest after the employee has completed seven years of
service and for 1999, 1998 and 1997 amounted to approximately $1,439,000,
$1,347,000 and $792,000, respectively.
J. BUSINESS ACQUISITIONS
On November 6, 1998 the Company acquired specific assets and assumed certain
liabilities of Enterprise Solutions, Inc., a Minneapolis, Minnesota based
provider of software services. On February 26, 1999, the Company acquired all
of the assets of Real World Training Systems LLC, a Phoenix, Arizona based
provider of software services. The amount paid in connection with these
purchases was approximately $4.2 million which was paid with internal funds.
These acquisitions were 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
their 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 periods of 3 to 12 years.
24 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
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,
1999 and 1998 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended June 30, 1999. 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 consolidated 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, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 1999, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
August 16, 1999
REPORT OF MANAGEMENT
The consolidated financial statements of Analysts International Corporation
published in this report were prepared by company management, which is
responsible for their integrity and objectivity. The statements have been
prepared in accordance with generally accepted accounting principles applying
certain estimates and judgments as required. The financial information elsewhere
in this report is consistent with the statements.
Analysts International maintains an internal control structure adequate to
provide reasonable assurance its transactions are appropriately recorded and
reported, its assets are protected and its established policies are followed.
The structure is enforced by written policies and procedures, internal audit
activities and a qualified financial staff.
Our independent auditors, Deloitte & Touche LLP, provide an objective
independent review by audit of Analysts International's consolidated financial
statements and issuance of a report thereon. Their audit is conducted in
accordance with generally accepted auditing standards.
The Audit Committee of the Board of Directors, comprised solely of outside
directors, meets with the independent auditors and representatives from
management to appraise the adequacy and effectiveness of the audit functions,
internal control structure and quality of our financial accounting and
reporting.
/s/ Frederick W. Lang /s/ Gerald M. McGrath
Frederick W. Lang Gerald M. McGrath
CHAIRMAN AND CHIEF EXECUTIVE OFFICER VICE PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
STOCK DATA
<TABLE>
<CAPTION>
MARKET RANGE DIVIDEND TRAILING 12-MONTH
Fiscal 1999 HIGH LOW CLOSE DECLARED P/E RATIO
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fourth Quarter $ 17.19 $ 9.38 $ 14.38 $ .10 14
Third Quarter 19.75 10.63 11.50 .10 11
Second Quarter 29.00 13.25 19.25 .10 19
First Quarter 31.50 20.00 30.00 .10 29
Fiscal 1998
- --------------------------------------------------------------------------------------------------
Fourth Quarter $ 31.63 $ 26.38 $ 28.38 $ .08 29
Third Quarter 36.00 25.25 29.25 .08 32
Second Quarter 36.50 25.58 34.50 .08 41
First Quarter 29.17 20.83 25.83 .07 32
- --------------------------------------------------------------------------------------------------
</TABLE>
The Company's common shares are traded on The Nasdaq Stock Market-Registered
Trademark- under the symbol ANLY. As of August 13, 1999, there were
approximately 1,300 shareholders of record and approximately 8,500
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 $.10 a share in fiscal 1999 and $.08
a share in fiscal 1998. On August 19, 1999, the Board of Directors declared a
quarterly cash dividend of $.10 a share.
BRIDGING THE GAP BETWEEN STRATEGY AND IT 25
<PAGE>
QUARTERLY REVENUE AND INCOME
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) QUARTER QUARTER QUARTER QUARTER ANNUAL
Fiscal 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $158,464 $152,986 $154,128 $154,578 $620,156
Income before income taxes 10,193 8,136 9,357 9,582 37,268
Income taxes 4,067 3,175 3,652 3,641 14,535
Net income 6,126 4,961 5,705 5,941 22,733
Net income per share (basic) .27 .22 .26 .26 1.01
Net income per share (diluted) .27 .22 .25 .26 1.00
Fiscal 1998
- ---------------------------------------------------------------------------------------------------------
Total revenues $135,158 $141,265 $150,011 $160,977 $587,411
Income before income taxes 8,967 8,384 9,215 11,121 37,687
Income taxes 3,587 3,353 3,687 4,450 15,077
Net income 5,380 5,031 5,528 6,671 22,610
Net income per share (basic) .24* .23 .24 .30 1.01
Net income per share (diluted) .24* .22 .24 .29 .99
- ---------------------------------------------------------------------------------------------------------
</TABLE>
*Adjusted to reflect the 3 for 2 common stock split in the form of a stock
dividend distributed December 3, 1997.
FIVE YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
FISCAL YEAR
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998 1997* 1996* 1995*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Professional services revenues:
Provided directly $ 480,790 $ 454,339 $ 344,790 $ 267,317 $ 213,785
Provided through sub-suppliers 139,366 133,072 94,756 62,227 4,641
- ------------------------------------------------------------------------------------------------------------------------
Total revenues 620,156 587,411 439,546 329,544 218,426
Salaries, contracted services
and direct charges 486,816 457,318 340,483 252,518 155,743
Non-operating income, net 1,230 1,299 1,045 1,027 760
Income before income taxes 37,268 37,687 27,210 20,739 18,530
Income taxes 14,535 15,077 10,829 8,321 7,274
- ------------------------------------------------------------------------------------------------------------------------
Net income 22,733 22,610 16,381 12,418 11,256
Total assets 186,216 132,661 105,370 81,445 67,533
Long-term liabilities 27,534 7,171 6,444 5,996 5,352
Shareholders' equity 98,014 82,994 66,104 53,718 45,134
Per share data:
Net income (basic) 1.01 1.01 .74 .57 .52
Net income (diluted) 1.00 .99 .73 .56 .51
Cash dividends .40 .31 .24 .20 .17
Shareholders' equity 4.35 3.70 2.97 2.44 2.07
Average common shares outstanding 22,524,000 22,376,000 22,095,000 21,852,000 21,579,000
Average common and common equivalent
shares outstanding 22,732,000 22,829,000 22,544,000 22,221,000 21,822,000
Number of personnel 4,900 5,300 4,650 3,770 3,170
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Per share data and average shares outstanding were restated for the effect
of the 3 for 2 common stock split in the form of a 50% stock dividend paid
December 3, 1997.
26 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
[PICTURE]
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.
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
Michael J. LaVelle
Senior Vice President, Field Operations
Paulette M. Quist
Senior Vice President, National Business Practices
Richard J. Chiappetta
Vice President, Central Region
Philip P. Colligan
Vice President, Eastern Region
Susan B. Furlow
Vice President, North Central Region
Richard W. Gilman
Vice President, Southern Region
Alan C. King
Vice President, Western Region
Gary D. Mosley
Vice President, Southwest Region
Roman E. Rowan
Vice President, Northwest Region
George R. Zak
Vice President, Investor Relations
Marti R. Charpentier
Controller and Assistant Treasurer
BRIDGING THE GAP BETWEEN STRATEGY AND IT 27
<PAGE>
REGIONAL, BRANCH AND FIELD OFFICES
[PICTURE]
WORLD HEADQUARTERS
3601 West 76th Street
Minneapolis, Minnesota 55435-3000
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 2420
New York, New York 10119-2499
Tele: (212) 465-1660
Tele: (800) 473-7333
Fax: (212) 465-1724
NORTH CENTRAL
3601 West 76th Street, Suite 200
Minneapolis, Minnesota 55435-3000
Tele: (612) 897-4590
Tele: (800) 328-9905
Fax: (612) 897-4551
NORTHWEST
3601 West 76th Street, Suite 200
Minneapolis, Minnesota 55435-3000
Tele: (612) 897-4633
Tele: (800) 328-9905
Fax: (612) 897-4551
SOUTHERN
Gateway Centre Park, Suite 900
2700 Gateway Centre Boulevard
Morrisville, North Carolina 27560-9137
Tele: (919) 460-6141
Tele: (800) 669-2772
Fax: (919) 460-9724
SOUTHWEST
11024 N 28th Drive, Suite 240
Phoenix, Arizona 85029-4379
Tele: (602) 789-7200
Tele: (800) 735-7573
Fax: (602) 789-6077
WESTERN
1850 Gateway Boulevard, Suite 100
Concord, California 94520-3299
Tele: (925) 687-5522
Tele: (800) 698-9411
Fax: (925) 687-5552
DIVISIONS
APPLICATIONS MANAGEMENT GROUP
2111 E Highland Avenue, Suite B-215
Phoenix, Arizona 85016
Tele: (602) 957-4457
Fax: (602) 957-8933
and
4730 Oracle Road, Suite 116
Tucson, Arizona 85705
Tele: (520) 293-1700
Fax: (520) 293-1717
MANAGED SERVICES GROUP
7800 E Union Avenue, Suite 630
Denver, Colorado 80237-2755
Tele: (303) 721-0341
Tele: (800) 721-0772
Fax: (303) 779-3559
NATIONAL PROJECTS OFFICE
621 NW 53rd Street, Suite 140
Boca Raton, Florida 33487-8211
Tele: (561) 241-5912
Tele: (800) 597-5912
Fax: (561) 241-6705
NATIONAL CONTRACTS DIVISION
600 N Westshore Boulevard, Suite 304
Tampa, Florida 33609-1145
Tele: (813) 288-0058
Tele: (800) 360-9575
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
Tele: (800) 597-5995
Fax: (404) 252-4732
AUSTIN
LaCosta Green
1033 LaPosada Drive, Suite 300
Austin, Texas 78752-3824
Tele: (512) 206-2700
Tele: (800) 654-8194
Fax: (512) 206-2720
BOCA RATON
621 NW 53rd Street, Suite 140
Boca Raton, Florida 33487-8211
Tele: (561) 241-5912
Tele: (800) 597-5912
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
Tele: (800) 960-9682
Fax: (513) 398-7894
CLEVELAND
Corporate Plaza I, Suite 350
6450 Rockside Woods Boulevard S
Cleveland, Ohio 44131-2230
Tele: (216) 524-8990
Tele: (800) 541-5859
Fax: (216) 524-9535
COLUMBUS
471 E Broad Street, Suite 2001
Columbus, Ohio 43215-3861
Tele: (614) 224-6790
Tele: (888) 832-6242
Fax: (614) 224-1935
DALLAS
3030 LBJ Freeway, Suite 820, LB52
Dallas, Texas 75234-7703
Tele: (972) 243-2001
Tele: (800) 800-8699
Fax: (972) 243-7468
DANBURY
100 Mill Plain Road, 2nd Floor
Danbury, Connecticut 06811-5188
Tele: (203) 825-3940
Tele: (800) 552-5995
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
Tele: (800) 755-4900
Fax: (515) 221-0173
DETROIT
3000 Town Center, Suite 570
Southfield, Michigan 48075-1297
Tele: (248) 353-7230
Tele: (888) 353-7230
Fax: (248) 353-5139
HOUSTON
1415 N Loop West, Suite 300
Houston, Texas 77008-1645
Tele: (713) 869-3420
Tele: (800) 487-1881
Fax: (713) 861-7933
28 ANALYSTS INTERNATIONAL CORPORATION
<PAGE>
INDIANAPOLIS
5750 Castle Creek Parkway N
Suite 259
Indianapolis, Indiana 46250-4335
Tele: (317) 842-1100
Tele: (800) 783-1101
Fax: (317) 842-1157
KANSAS CITY
Broadway Summit
3101 Broadway, Suite 101
Kansas City, Missouri 64111-2416
Tele: (816) 531-5050
Tele: (800) 530-5259
Fax: (816) 531-5636
LEXINGTON
2365 Harrodsburg Road, Suite B450
Lexington, Kentucky 40504-3342
Tele: (606) 223-0001
Tele: (800) 279-8433
Fax: (606) 224-4389
LOS ANGELES
7700 Irvine Center Drive, Suite 280
Irvine, California 92618-2924
Tele: (949) 450-8930
Tele: (800) 555-0012
Fax: (949) 450-8940
MINNEAPOLIS
3601 West 76th Street, Suite 200
Minneapolis, MN 55435-3000
Tele: (612) 897-4590
Tele: (800) 328-9905
Fax: (612) 897-4551
NEW JERSEY METRO
111 Wood Avenue S
Iselin, New Jersey 08830-2700
Tele: (732) 906-0100
Tele: (800) 745-5995
Fax: (732) 906-8808
NEW YORK METRO
One Penn Plaza, Suite 2420
New York, New York 10119-2499
Tele: (212) 465-1660
Tele: (800) 473-7333
Fax: (212) 465-1724
OMAHA
11949 Q Street, Suite 100
Omaha, Nebraska 68137-3503
Tele: (402) 861-0061
Tele: (800) 735-3300
Fax: (402) 861-0062
PHOENIX
11024 N 28th Drive, Suite 240
Phoenix, Arizona 85029-4379
Tele: (602) 789-7200
Tele: (800) 735-7573
Fax: (602) 789-6077
PORTLAND
One SW Columbia Street, Suite 710
Portland, Oregon 97258-2008
Tele: (503) 727-0200
Tele: (800) 510-4850
Fax: (503) 727-0222
RALEIGH/DURHAM
Gateway Centre Park, Suite 900
2700 Gateway Centre Boulevard
Morrisville, North Carolina 27560-9137
Tele: (919) 460-6141
Tele: (800) 669-2772
Fax: (919) 460-9724
ROCHESTER, MINNESOTA
1530 Greenview Drive SW, Suite 205
Rochester, Minnesota 55902-1080
Tele: (507) 280-6663
Tele: (800) 657-0030
Fax: (507) 280-9213
ROCHESTER, NEW YORK
16 W Main Street, Suite 500
Rochester, New York 14614-1601
Tele: (716) 325-6640
Tele: (800) 864-6816
Fax: (716) 325-6273
ST. LOUIS
600 Emerson Road, Suite 200
St. Louis, Missouri 63141-6708
Tele: (314) 997-1746
Tele: (800) 998-5995
Fax: (314) 997-4929
SAN FRANCISCO-EAST BAY
1850 Gateway Boulevard, Suite 100
Concord, California 94520-3299
Tele: (925) 687-5522
Tele: (800) 698-9411
Fax: (925) 687-5552
SEATTLE
10655 NE 4th Street, Suite 800
Bellevue, Washington 98004-5022
Tele: (425) 454-2500
Tele: (800) 442-9242
Fax: (425) 454-4288
SILICON VALLEY
151 Martinvale Lane
San Jose, California 95119-1319
Tele: (408) 629-9300
Tele: (800) 750-2922
Fax: (408) 629-0141
TAMPA
600 N Westshore Boulevard, Suite 304
Tampa, Florida 33609-1145
Tele: (813) 281-0458
Tele: (800) 949-5995
Fax: (813) 289-9475
TORONTO
36 Toronto Street, Suite 530
Toronto, Ontario M5C 2C5, Canada
Tele: (416) 603-3822
Tele: (877) 603-3822
Fax: (416) 603-4989
TULSA
Corporate Place
5800 E Skelly Drive, Suite 1200
Tulsa, Oklahoma 74135-6448
Tele: (918) 663-0030
Tele: (800) 898-6164
Fax: (918) 663-1812
FIELD OFFICES
Akron/Canton, Ohio
(330) 899-9000
Boulder, Colorado
(303) 442-7338
Charlotte, North Carolina
(704) 676-9732
Jacksonville, Florida
(904) 519-5009
Las Vegas, Nevada
(702) 990-9020
Little Rock, Arkansas
(501) 372-0338
Miami, Florida
(800) 597-5912
Sacramento, California
(916) 565-7458
Salt Lake City, Utah
(801) 561-1008
San Francisco, California
(415) 352-0760
Vancouver, Washington
(360) 693-4604
Washington, D.C.
(703) 573-4400
AiC Analysts Limited
Cambridge, England
011 44 1223 500055
CORPORATE INFORMATION
10-K AVAILABLE
A copy of the Company's 1999 Annual Report on Form 10-K, filed with the
Securities and Exchange Commission, is available to Analysts International
security holders without charge upon request to the Treasurer, Analysts
International, 3601 West 76th Street, Minneapolis, Minnesota 55435-3000.
STOCK TRANSFER AGENT
State Street Bank & Trust Company
c/o EquiServe Limited Partnership
P.O. Box 8200
Boston, Massachusetts 02266-8200
(800) 426-5523
http://www.equiserve.com
EXPECTED DIVIDEND PAYMENT DATES
November 15, 1999
February 15, 2000
May 15, 2000
August 15, 2000
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Minneapolis, Minnesota
ANNUAL MEETING
The 1999 Annual Meeting of Shareholders will be held on
October 27, 1999 at 3 p.m. at the Edina Country Club,
5100 Wooddale Avenue,
Edina, Minnesota.
QUARTERLY REPORTS
Analysts International Corporation mails quarterly earnings releases to
registered shareholders.
WORLD WIDE WEB ADDRESS
http://www.analysts.com
Statements contained herein that are not historical facts are forward-looking
statements. Any forward-looking statements in this release are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Actual results may vary materially from those projected as a result of
certain risks and uncertainties. Refer to discussions of certain of these risks
and uncertainties in the company's Annual Reports, 10-Ks, 10-Qs and other
Securities and Exchange Commission filings.
<PAGE>
ANALYSTS INTERNATIONAL CORPORATION
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
State or Percentage
Jurisdiction of Voting
of Incorporation Securities Owned
---------------- ----------------
Subsidiaries
- ------------
<S> <C> <C>
AiC Analysts Limited United Kingdom 100%
</TABLE>
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-19180, 33-89896, 33-25244 and 33-87626 of Analysts International Corporation
on Form S-8 of our reports dated August 16, 1999, appearing and incorporated by
reference in this Annual Report on Form 10-K of Analysts International
Corporation for the year ended June 30, 1999.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
September 27, 1999
<PAGE>
ANALYSTS INTERNATIONAL
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 to the Annual Report on Form 10-K for the
year ended June 30, 1999 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 28th day of
September, 1999.
/S/ Willis K. Drake
Willis K. Drake
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 28th day of September, 1999, 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/ Linda L. Kanis
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL
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 to the Annual Report on Form 10-K for the
year ended June 30, 1999 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 28th day of
September, 1999.
/S/ Margaret Loftus
Margaret Loftus
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 28th day of September, 1999, 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/ Linda L. Kanis
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL
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 to the Annual Report on Form 10-K for the
year ended June 30, 1999 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 28th day of
September, 1999.
/S/ Edward M. Mahoney
Edward M. Mahoney
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 28th day of September, 1999, 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/ Linda L. Kanis
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL
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 to the Annual Report on Form 10-K for the
year ended June 30, 1999 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 28th day of
September, 1999.
/S/ Robb Prince
Robb Prince
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 28th day of September, 1999, 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/ Linda L. Kanis
Notary Public
<PAGE>
ANALYSTS INTERNATIONAL
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 to the Annual Report on Form 10-K for the
year ended June 30, 1999 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 28th day of
September, 1999.
/S/ Victor C. Benda
Victor C. Benda
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 28th day of September, 1999, 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/ Linda L. Kanis
Notary Public
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<PERIOD-START> JUL-01-1998
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<CASH> 33,870
<SECURITIES> 0
<RECEIVABLES> 102,373
<ALLOWANCES> 850
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<CURRENT-ASSETS> 139,892
<PP&E> 44,752
<DEPRECIATION> 15,108
<TOTAL-ASSETS> 186,216
<CURRENT-LIABILITIES> 60,668
<BONDS> 0
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<COMMON> 2,255
<OTHER-SE> 95,759
<TOTAL-LIABILITY-AND-EQUITY> 186,216
<SALES> 620,156
<TOTAL-REVENUES> 620,156
<CGS> 486,816
<TOTAL-COSTS> 486,816
<OTHER-EXPENSES> 96,313
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<INCOME-PRETAX> 37,268
<INCOME-TAX> 14,535
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