UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15512.
ALPNET, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0356708
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4444 South 700 East Suite #204
Salt Lake City, Utah 84107-3075
(Address of principal executive offices) (Zip Code)
(801) 265-3300
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
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
The number of shares outstanding of the registrant's no par value Common Stock
as of August 9, 1995, was 15,562,223.
ALPNET, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Statements of Operations--Three months ended June 30,
1995 and 1994, and Six months ended June 30, 1995 and 1994
Consolidated Balance Sheets--June 30, 1995 and December 31, 1994
Consolidated Statements of Cash Flows--Six months ended June 30,
1995 and 1994
Notes to Consolidated Financial Statements--June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
Thousands of dollars and shares 1995 1994 1995 1994
<S> <C> <C> <C> <C>
SALES OF SERVICES $6,459 $4,807 $12,365 $9,145
OPERATING EXPENSES:
Cost of services sold 5,612 4,339 10,724 8,424
Selling, general and administrative
expenses 617 495 1,188 1,015
Development costs 39 26 82 60
Amortization of goodwill 94 86 186 170
Total operating expenses 6,362 4,946 12,180 9,669
OPERATING INCOME (LOSS) 97 (139) 185 (524)
Interest expense 59 35 105 106
Income (loss) before income taxes 38 (174) 80 (630)
Income taxes 32 21 60 41
NET INCOME (LOSS) $ 6 $ (195) $ 20 $ (671)
NET INCOME (LOSS) PER SHARE $ -- $(.013) $ .001 $(.043)
Weighted average shares of Common
Stock and Common Stock equivalents
outstanding 22,199 15,562 22,199 15,562
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
June 30 December 31
Thousands of dollars 1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 390 $ 344
Trade accounts receivable, less
allowance of $150 in 1995
and $108 in 1994 4,382 4,328
Work-in-process 273 227
Income taxes receivable 28 51
Prepaid expenses and other 727 660
Total current assets 5,800 5,610
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS:
Office facilities and leasehold
improvements 149 141
Equipment 3,670 3,471
3,819 3,612
Less accumulated depreciation and
amortization 2,863 2,682
Net property, equipment and leasehold improvements 956 930
OTHER ASSETS:
Goodwill, less accumulated amortization
of $2,810 in 1995 and $2,492 in 1994 6,600 6,449
Other 242 234
Total other assets 6,842 6,683
TOTAL ASSETS $13,598 $13,223
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)--continued
<CAPTION>
June 30 December 31
Thousands of dollars and shares 1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks $ 1,404 $ 1,443
Accounts payable 1,630 1,561
Accrued payroll and related benefits 486 395
Other accrued expenses 676 822
Deferred revenue 95 78
Current portion of long-term debt 91 85
Current portion of long-term debt to affiliates 43 39
Total current liabilities 4,425 4,423
Long-term debt, less current portion 116 155
Long-term debt to affiliates, less current portion 373 378
Guarantee liability (Note 3) 1,240 1,090
Commitments and contingencies (Note 3)
SHAREHOLDERS' EQUITY:
Convertible Preferred Stock, no par value;
authorized 2,000 shares; issued and
outstanding 1,044 shares in 1995 and 1994 2,891 2,894
Common Stock, no par value; authorized
40,000 shares; issued and outstanding
15,562 shares in 1995 and 1994 37,696 37,846
Accumulated deficit (31,930) (31,950)
Equity adjustment from foreign currency translation (1,213) (1,613)
Total shareholders' equity 7,444 7,177
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $13,598 $13,223
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended June 30
Thousands of dollars 1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 20 $ (671)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization of property,
equipment and leasehold improvements 175 152
Amortization of goodwill 186 170
Other (23) (6)
Changes in operating assets and liabilities:
Trade accounts receivable 152 (169)
Accounts payable and accrued expenses (204) (57)
Other 46 148
Net cash provided by (used in) operating
activities 352 (433)
INVESTING ACTIVITIES:
Purchase of property, equipment and
leasehold improvements (162) (252)
FINANCING ACTIVITIES:
Proceeds from notes payable to banks 110 362
Principal payments on notes payable to
banks (206) (164)
Proceeds from long-term debt and debt to affiliates 56
Principal payments on long-term debt and debt to affiliates (62) (20)
Net cash provided by (used in) financing activities (158) 234
Effect of exchange rate changes on cash 14 10
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 46 (441)
Cash and cash equivalents at beginning of period 344 1,012
CASH AND CASH EQUIVALENTS AT END OF PERIOD $390 $ 571
CASH PAID (RECEIVED) DURING THE PERIOD FOR:
Interest $110 $ 108
Income taxes 52 (3)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Effective March 1994, the Company issued 584,257 shares of Convertible Preferred Stock in exchange for
long-term debt to affiliates.
See accompanying notes.
</TABLE>
ALPNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995
1. BASIS OF PRESENTATION
ALPNET, Inc. and its subsidiaries (the "Company"), together with its
independent affiliates, form a worldwide network dedicated to providing
specialized language services for businesses engaged in international trade.
The Company has combined computer translation technology with experienced
human translators in its worldwide network to provide a full spectrum of
services to fulfill the language needs of customers in international
business.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnote disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for
the periods presented are not necessarily indicative of the results that may
be expected for the respective complete years. For further information,
refer to the Consolidated Financial Statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31,
1994.
Certain amounts for the six-month period ended June 30, 1994 have been
reclassified to conform to the 1995 presentation.
2. INCOME TAXES
The Company files a consolidated U.S. Federal income tax return which
includes all domestic operations. Tax returns for states within the U.S. and
for foreign subsidiaries are filed in accordance with applicable laws.
Fluctuations in the amount of income taxes arise primarily from the varying
combinations of taxable income and losses of the Company's subsidiaries in
the various domestic and foreign tax jurisdictions, including the utilization
in various degrees of net operating loss carryforwards in many of these
jurisdictions.
3. ACQUISITION GUARANTEE
In 1988, the Company acquired its German subsidiary for a combination of cash
and shares of the Company's Common Stock. The acquisition agreement required
the Company to give additional consideration if the value of the shares of
Common Stock did not reach an agreed-upon level within a specified period
following the acquisition, and remain at that level until the former owner
was able to sell the shares of the Company's Common Stock for an amount equal
to the purchase price stipulated in the acquisition agreement. As a result
of this requirement, the Company issued additional shares to the former owner
in 1990.
In 1993, the Company and the former owner entered into an agreement which
amended the original acquisition agreement. This agreement waives the
requirement to pay any additional consideration if the value of all shares of
Common Stock previously issued reached the stipulated purchase price on or
before September 30, 1994 (which date was subsequently extended to September
30, 1996). If the stock value does not reach such amount, the Company is
required to pay interest on the stock value deficiency beginning on September
30, 1996. Alternatively, the Company could settle such deficiency by making
additional payments (in cash or stock) to the former owner.
As a result of this waiver agreement, the Company recorded a guarantee
liability in the consolidated balance sheets for the stock value deficiency
calculated based on the trading value per share of the Company's Common Stock
as compared to the guaranteed value at the balance sheet dates. A decrease
in shareholders' equity has also been recorded for the same amounts.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be read in conjunction
with the Consolidated Financial Statements and notes thereto.
FOREIGN OPERATIONS
The Company serves its customers from 27 offices in 10 countries. The
operations of the Company are predominantly located outside the U.S.
Accordingly, the Company is subject to the effects of foreign currency exchange
rate fluctuations among U.S. dollars, Canadian dollars, British pounds sterling,
German marks and other European and Asian currencies. For all of the Company's
foreign subsidiaries, the functional currency has been determined to be the
local currency. Accordingly, assets and liabilities are translated at period-
end exchange rates, and operating statement items are translated at average
exchange rates prevailing during the period. The resultant cumulative foreign
currency adjustments to the assets and liabilities are recorded as a separate
component of shareholders' equity. For both of the six month periods ended June
30, 1995 and 1994, the foreign currency equity adjustments were positive
$400,000. As of June 30, 1995, the cumulative net effect to the Company of the
equity adjustment from movements in foreign currency exchange rates was a
reduction of $1.2 million in shareholders' equity. A significant portion of
the cumulative foreign currency adjustment relates to changes in the recorded
amount of goodwill, which fluctuates because it is denominated in foreign
currencies.
Because most of the Company's operations are located outside the U.S., and its
foreign operations' financial results must be translated into U.S. dollars, the
Company's actual and reported financial results and financial condition are
susceptible to movements in foreign currency exchange rates. Furthermore, since
the Company has relatively few long-term monetary assets and liabilities
denominated in currencies other than the U.S. dollar, it does not have any
ongoing hedging programs in place to manage currency risk.
RESULTS OF OPERATIONS
The following paragraphs discuss results of operations for the three- and six-
month periods ended June 30, 1995 as compared with the three- and six-month
periods ended June 30, 1994, including the significant effects of fluctuating
foreign currency exchange rates.
The Company recorded net income of $6,000 for the three months ended June 30,
1995 compared to a net loss of $195,000 for the three months ended June 30,
1994. If foreign currency exchange rates for 1995 had remained unchanged from
1994, the Company would have recorded a net loss of $7,000 instead of net income
of $6,000. Therefore currency exchange rate fluctuations did not have a
material affect on the results for the three months ended June 30, 1995.
The Company recorded net income of $20,000 for the six months ended June 30,
1995 compared with a net loss of $671,000 for the six months ended June 30,
1994. If foreign currency exchange rates for 1995 had remained unchanged from
1994, the Company would have recorded a net loss of $11,000 instead of $20,000
of net income.
Sales of services were $6.5 million for the three months ended June 30, 1995
compared to $4.8 million for the three months ended June 30, 1994. The $1.7
million increase in reported sales for 1995 consisted of an increase in sales
volume of $1.2 million and an increase of $500,000 due to currency exchange rate
fluctuations.
Sales of services were $12.4 million for the six months ended June 30, 1995 as
compared with $9.1 million for the six months ended June 30, 1994. The $3.3
million increase in reported sales from the first half of 1994 to the first half
of 1995 consisted of an increase in sales volume of $2.4 million and an increase
of $900,000 due to currency exchange rate fluctuations. The increases in sales
volume are the result of a general increase in demand for the Company's services
in all of its primary markets, especially in the U.S., the U.K. and Germany.
Demand was especially weak in the U.S. and in Germany in 1994 and sales for 1995
are somewhat more representative of historical sales levels in these locations
than were the 1994 sales results. Management also believes that international
trade agreements such as the North American Free Trade Agreement (NAFTA) and the
General Agreement on Tariffs and Trade (GATT) have had a positive effect on
demand for the language services provided by the Company. Also having a
positive effect is an increasingly global marketplace where more and more
businesses are entering foreign markets and becoming involved in worldwide
trade.
The Company competes on the basis of quality, service and geographical proximity
to clients and potential clients, and has opened several new offices in recent
years, including two new offices in 1995, in order to increase its market share
in what management believes has been and will continue to be an expanding
industry. Intense price competition which the Company encountered in 1994 has
persisted into 1995 and continues to severely restrict the prices the Company
can charge in the marketplace.
The following table shows a comparison of sales of services in each of the
Company's significant geographic areas for the six months ended June 30, 1995
and 1994, along with the effect of foreign currency exchange rate fluctuations
on the sales between periods. Intercompany sales are normally billed on a
profit-sharing basis. All intercompany sales are eliminated in determining the
totals.
<TABLE>
Thousands of dollars
<CAPTION>
Increase (Decrease) in
Six Months Sales of Services due to Total
Ended June 30 Sales Currency Increase
1995 1994 Volume Fluctuations (Decrease)
<S> <C> <C> <C> <C> <C>
United States $ 1,336 $ 784 $ 552 $ $ 552
Canada 1,852 1,763 115 (26) 89
Europe 10,195 7,139 2,081 975 3,056
Asia 1,038 703 266 69 335
Eliminations (2,056) (1,244) (633) (179) (812)
Total Sales $12,365 $9,145 $2,381 $839 $3,220
</TABLE>
As shown in the above table, all major geographical regions reported increased
sales in 1995 over 1994. In the U.S., sales can fluctuate significantly from
period to period due to industry conditions which are often less predictable and
stable than those found in the Company's foreign markets. Such conditions are
the result of the relative inexperience of many U.S. companies in international
business and clients which may be unsophisticated in the nuances of marketing to
foreign countries and the importance of related language issues. These factors,
along with the unpredictable timing and the nonrecurring nature of most large
translation projects for U.S. companies, contribute to a deficiency of "core" or
repeat business and also have a tendency to depress the profitability of work
performed by the Company for U.S. clients. These conditions had a dramatic
effect in 1994 and while 1995 sales were also affected, the impact was not as
pronounced. It is difficult to estimate how much effect such factors will have
on future operations.
Canada's reported sales for 1995 were 5% higher than in 1994; however, the
increase would have been 7% if currency exchange rates in 1995 had remained the
same as in 1994. The increase in sales in Canada was due primarily to increased
international trading and ongoing marketing and sales efforts, and has occurred
despite a continuing difficult economic situation in Canada.
The U.K. and Germany contributed over 85% of the European region's total
reported sales for both 1995 and 1994 with increases of 29% for the U.K. and 68%
for Germany in 1995 over 1994 levels. While the bulk of this growth represents
actual volume increases, a sizable portion is also due to currency exchange rate
fluctuations, especially in Germany where the German mark has been very strong
throughout 1995. This is also true for the overall increase in reported
European sales of 43% in 1995 over 1994.
The increase in sales in Germany from 1994 to 1995 was primarily attributable to
an improvement in the German economy in 1995, and an unusually steep decline in
orders from large customers in early 1994 which did not recur in 1995. The
positive results in the U.K. were due to several factors, including enhanced
sales and marketing efforts, increased core business and significantly more
large project work, all of which was helped by a healthy economic situation.
The Company expects sales to continue to expand in Europe as the investments
made in new offices and in human and equipment resources in the past three years
combine with growing demand for language services and a generally positive
economic outlook. Nevertheless, the Company's business can be impacted
dramatically by changes in the strength of the economies of the countries in
which it has a presence and results of operations are highly influenced by
general economic trends.
In Asia, 1995 sales increased 48% over 1994 levels as Hong Kong and Singapore
increased sales by a combined total of 33%. In addition, the Company's Korean
office, which was opened in July 1994, contributed to the improved sales results
in 1995. While some of the increase in reported Asian sales in 1995 was
attributable to currency exchange rate fluctuations, most of the change was due
to actual volume increases. Management expects the increased demand for Asian
language services to continue, as many Asian countries are experiencing very
high economic growth rates and interest in Asia from the business communities in
the U.S., Europe and elsewhere is accelerating rapidly.
Cost of services sold as a percentage of sales of services has fluctuated
primarily as a result of competition in the marketplace, the volume and nature
of direct production costs of large projects in each period, and certain fixed
costs which do not vary with fluctuating sales levels. Also, the Company is
continuing its programs to contain direct and indirect production costs.
Due to increased competition in early 1994, especially with regard to pricing,
the Company's gross margins deteriorated significantly. While the Company has
largely been able to limit the growth in cost of services sold to levels
consistent with growth in the volume of work produced, and at rates at or below
inflationary increases, prices charged to clients, especially in the U.S. and
Europe, have been limited by competitive price pressures which have in turn
severely compressed margins. Management expects pressures on gross margins to
continue in 1995, but does not expect pricing pressures to intensify beyond
current levels. The Company does not expect to be able to return to pre-1994
pricing levels in the foreseeable future and is continuing its efforts to
control costs to offset the effects of these pricing pressures.
Total operating expenses, including cost of services sold, increased by $2.5
million in 1995 from 1994. This increase resulted from a $1.7 million increase
in actual expenses and an increase of $800,000 due to currency exchange rate
fluctuations. The increase in actual expenses resulted primarily from the
increased volume of work produced. The increase in corporate selling, general
and administrative expenses from 1994 to 1995 is primarily attributable to
increased marketing and sales expenses and, to a lesser extent, additional costs
for existing and new offices and general corporate overhead.
Interest expense, net of interest income, increased approximately $25,000 for
the three months ended June 30, 1995 compared to 1994 and was approximately the
same for the six-month periods of both years. This has occurred primarily for
three reasons. First, the Company's cash and cash equivalents experienced a
decline during the six months ended June 30, 1994 as a result of losses incurred
in that period, and interest income has decreased accordingly in subsequent
periods. Secondly, the Company has used its available lines of credit more
extensively in 1995 than in 1994. Finally, the capital restructuring completed
in early 1994 eliminated approximately $1.8 million of long-term debt to
affiliates and the resultant decrease in interest expense, which is fully
reflected in the quarterly amounts for both years and in the six month results
for 1995, is only partially reflected in 1994's six-month amounts. For further
information on the 1994 capital restructuring, refer to Note 3 of the
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
Fluctuations in the amount of goodwill amortization resulted solely from foreign
currency exchange rate fluctuations from period to period.
The U.S. parent company and each of its subsidiaries are separate legal and
taxable entities subject to the domestic or foreign taxes pertaining to
operations in their respective jurisdictions. For tax purposes, the U.S. parent
company and most of its subsidiaries have unused net operating loss
carryforwards which can be utilized to reduce future years taxable income of
the respective entities. The availability of these net operating loss
carryforwards is governed by applicable domestic and foreign tax rules and
regulations, some of which limit the utilization of such losses due to minimum
tax requirements and other provisions.
Income tax expense as presented in the Consolidated Financial Statements
represents the combined income tax expense and income tax credits of each of the
entities of the Company. Fluctuations in the amount of income taxes arise
primarily from the varying combinations of taxable income and losses of the
Company's subsidiaries in the various domestic and foreign tax jurisdictions,
including the utilization in various degrees of net operating loss carryforwards
in many of these jurisdictions.
LIQUIDITY AND SOURCES OF CAPITAL
For the six months ended June 30, 1995, the Company had a net positive cash flow
from operations of approximately $350,000 compared with a negative cash flow
from operations for the same period in 1994 of approximately $430,000. In 1995,
as in prior years, the Company's investing activities consisted primarily of the
acquisition of equipment (approximately $160,000) needed to maintain or upgrade
production capability. Financing activities for both 1995 and 1994 included
fluctuations in the amounts utilized under bank lines of credit to finance the
Company's working capital needs.
At June 30, 1995, the Company's cash and cash equivalents were approximately
$390,000, representing an increase of approximately $46,000 during 1995. At
June 30, 1995, the Company had working capital of approximately $1.4 million,
which compares favorably to working capital of approximately $1.2 million at
December 31, 1994.
The Company's primary working capital requirements relate to the funding of
accounts receivable. The Company funds its working capital needs with various
bank lines of credit extended by banks in Canada, the U.K., Germany and Spain.
Most of the lines of credit are secured by accounts receivable and other assets
of the respective subsidiaries. As of June 30, 1995, the Company had unused
amounts under these lines of credit of approximately $600,000. The Company
believes the amounts available under these lines of credit are sufficient to
fund the Company's operations at current levels as well as enable the Company to
grow at a modest level without seeking significant new sources of working
capital. Most of the Company's credit facilities are subject to annual renewals
and the Company expects them to be renewed on substantially the same terms as
those which currently exist. Some of the banks, which have loaned funds to the
Company's subsidiaries under the credit facilities noted above, have placed
certain limits on the flow of cash outside the respective countries. Such
limitations have not been an undue burden to the Company in the past, nor are
they expected to be unduly burdensome in the foreseeable future.
The Company has no present significant commitments for capital expenditures,
which generally consist almost entirely of computer equipment and related
peripheral hardware and software. Such equipment purchases in future periods
are not expected to vary materially from the general levels of equipment
purchases experienced in recent periods. However, the Company does plan to
acquire and place additional translation services workstations in its offices
worldwide in connection with future orders from customers, as such orders are
received. The Company expects to finance a certain portion of future equipment
costs through bank and/or leasing sources.
While there are no material current commitments, the Company may open additional
offices in strategic locations worldwide, as customer demands dictate and
opportunities arise. For example, in March 1995, the Company opened a sales
office in the City of London in order to boost sales to companies located in
this important international financial district. The costs of opening this
office were not significant and the costs of any future additional offices are
not expected to require a substantial amount of cash.
Primarily as a result of positive foreign currency adjustments, the Company's
total shareholders' equity has increased from $7.2 million at December 31, 1994
to $7.4 million at June 30, 1995. The Company believes it has the ability to
issue additional equity securities if necessary, but does not currently have
plans to do so. In past years, the Company has relied on major shareholders of
the Company to fund certain obligations, but the Company does not anticipate
using this source of capital in the foreseeable future.
Current working capital, anticipated cash flows and available lines of credit,
together with management s expectations of increased revenues and plans to
control expenses, will, in management's opinion, be adequate to meet financial
obligations during 1995. It is more difficult to assess cash flows beyond
1995. The ability of the Company to meet its commitments without additional
sources of capital is directly related to the Company's operations providing a
positive cash flow. Should the Company's operations fail to provide adequate
funds to enable it to meet its future financial obligations, management has the
option, because of the Company's organizational structure, to cut costs by
selectively eliminating operations which are not contributing to the Company
financially.
Inflation has not been a significant factor in the Company s operations.
Competition, however, has been and is expected to remain a major factor. To the
extent permitted by competition and general economic and market conditions, the
Company will pass on increased costs from inflation and operations to customers
by increasing prices.
Due to prior years' operating losses, the Company and many of its subsidiaries
have net operating loss carryforwards available to offset future taxable income
in the various countries in which the Company operates. As a result, the
Company historically has not had significant income tax liabilities arise
requiring the expenditure of cash. Due to currently available net operating
loss carryforwards, the Company expects this general trend to continue through
1995 and beyond, with the exception that the Company's net operating loss
carryforwards for U.S. state purposes have expired and the Company is currently
paying state income taxes on taxable income attributed to U.S. operations.
Substantially all of the Company's deferred tax assets at June 30, 1995 were
comprised of net operating loss carryforwards for which the Company has provided
allowances. The ability of the Company to utilize these loss carryforwards in
the future is dependent on profitable operations in the various countries in
which loss carryforwards exist and the specific rules and regulations governing
the utilization of such losses, including the timeframes in which the losses
must be used.
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
(11) Statement Re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) The Company has filed the following reports on Form 8-K during the
three months ended June 30, 1995.
Date of
Report Item Reported
05/04/95 ALPNET Announces First Quarter 1995 Results
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALPNET, INC.
Registrant
Date: August 9, 1995 \s\ Thomas F. Seal
Thomas F. Seal
President and Chief Executive Officer
Date: August 9, 1995 \s\ D. Kerry Stubbs
D. Kerry Stubbs
Chief Financial Officer
E X H I B I T 1 1
<TABLE>
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
(Thousands of dollars and shares) Three Months Ended June 30 Six Months Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income (loss) $6 $(195) $20 $(671)
Weighted average shares of Common
Stock outstanding 15,562 15,562 15,562 15,562
Weighted average shares of Common
Stock issuable upon conversion
of Convertible Preferred Stock (2) 6,637 6,637
Total shares of Common Stock and
Common Stock equivalents 22,199 15,562 22,199 15,562
Net income (loss) per share $ -- $(.013) $.001 $(.043)
<FN>
(1) Primary and fully diluted per share earnings (loss) are substantially the same for each period presented.
(2) Common Stock issuable upon conversion of Convertible Preferred Stock was antidilutive in 1994.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 390
<SECURITIES> 0
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0
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