UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
to
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 15, 1996
(Date of Report)
December 22, 1995
(Date of earliest event reported)
ANALYTICAL SURVEYS, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State of incorporation)
0-13111
(Commission File Number)
084-846389
(IRS Employer Identification No.)
1935 Jamboree Drive
Colorado Springs, Colorado 80920
(Address of principal executive offices)
(719)-593-0093
(Registrant's telephone number)
Item 7. Financial Statements and Exhibits
Analytical Surveys, Inc. (the "Company") acquired
substantially all of the net assets of Intelligraphics, Inc.
("Intelligraphics"),741 North Grand Avenue, Waukesha,
Wisconsin on December 22, 1995. The Company filed a Current Report
on form 8-K on January 8, 1996 to report the transaction.
This amendment number 1 to Current Report on Form 8-K dated
January 8, 1996 presents the audited financial statements and
unaudited pro forma financial information.
(a) Financial statements of business acquired<PAGE>
Intelligraphics, Inc.
Financial Statements of Net Assets to be Sold
Nine Months Ended September 30, 1995
and Year Ended December 31, 1994
Independent Auditors' Report
Intelligraphics, Inc.
Waukesha, Wisconsin
We have audited the accompanying statements of net assets to
be sold of Intelligraphics, Inc. as of September 30, 1995
and December 31, 1994, and the related statements of
operations of net assets to be sold and cash flows of net
assets to be sold for the nine months ended September 30,
1995 and year ended December 31, 1994. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these 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 audits to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
The accompany financial statements were prepared for the
purpose of complying with the proposed asset purchase
agreement between Analytical Surveys, Inc. and the Company
as described in Note 1 and are not intended to be a complete
presentation of the Company's financial position and results
of operations.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets of
Intelligraphics, Inc. as of September 30, 1995 and December
31, 1994 to be sold pursuant to the purchase agreement
referred to in Note 1, and the results of its operations and
cash flows of these net assets for the periods then ended in
conformity with generally accepted accounting principles.
/S/BDO Seidman, LLP
November 27, 1995
<PAGE>
<TABLE>
<CAPTION>
Intelligraphics, Inc.
Statement of Net Assets to be Sold
September 30, December 31,
1995 1994
<S> <C> <C>
Assets to be sold (Note 1)
Accounts receivable - trade (Note 2) $ 775,954 $ 731,150
Accounts receivable - other 3,400 8,401
Unbilled revenue (Note 2) 1,044,134 857,638
Prepaid expenses 2,861 8,310
Net property and equipment (Note 3) 402,330 561,679
Other assets 5,226 4,672
--------- ---------
Total assets to be sold 2,233,905 2,171,850
--------- ---------
Liability to be sold
Billings in excess of costs and
estimated earnings (Note 2) 267,842 371,489
Accounts payable - trade 315,479 280,952
Accounts payable - related parties 135,229 81,117
Accrued payroll and benefits 228,522 189,084
Other liabilities 311,037 232,046
Less: liabilities to be
retained by Company (297,537) (232,046)
--------- ---------
Total liabilities to be sold 960,572 922,642
--------- ---------
Net assets to be sold $1,273,333 $1,249,208
========= =========
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Intelligraphics, Inc.
Statements of Operations of Net Assets to be Sold
Nine months ended Year ended
September 30, December 31,
1995 1994
<S> <C> <C>
Sales $5,350,368 $4,769,817
--------- ---------
Costs and expenses
Salaries, wages and related benefits 3,397,372 3,435,455
Subcontractor costs 681,036 303,009
General and administrative 956,306 1,146,424
Depreciation and amortization 181,895 346,466
--------- ---------
Total costs and expenses 5,216,609 5,231,354
--------- ---------
Operating income (loss) 133,759 (461,537)
--------- ---------
Other income (expenses)
Other expense, net (Note 5) (265,535) (362,807)
Interest expense (28) (6,310)
Gain on sale of assets - 13,423
--------- ---------
Net other expense (265,563) (355,694)
--------- ---------
Net loss $(131,804) $(817,231)
========= =========
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Intelligraphics, Inc.
Statements of Cash Flows of Net Assets to be Sold
Nine months ended Year ended
September 30, December 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities
Net loss $(131,804) $(817,231)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 181,894 346,466
Gain on sale of assets - (13,423)
Changes in assets and liabilities:
Accounts receivable (39,803) (32,167)
Unbilled revenue (186,496) (251,396)
Prepaid expenses 5,449 (7,299)
Other assets (554) (3,619)
Billing in excess of costs (103,647) 204,141
Accounts payable 88,639 156,624
Accrued payroll and benefits 39,438 10,997
Accrued liabilities 78,991 178,169
--------- ---------
Cash used in operating activities (67,893) (228,738)
--------- ---------
Cash flows from investing activities
Purchase of property and equipment (22,545) (136,192)
Proceeds from the sale of property
and equipment - 13,423
--------- ---------
Cash used in investing activities (22,545) (122,769)
--------- ---------
Cash used in the operations of the
net assets to be sold $ (90,438) $(351,507)
========= =========
Supplemental disclosure
Cash paid during the period
for interest $ 28 $ 6,310
========= =========
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to
financial statements.
<PAGE>
Intelligraphics, Inc.
Summary of Accounting Policies
Line of Business The Company provides digital mapping,
facilities management and geographic
information systems.
Sales The Company recognizes revenue on the
percentage of completion basis using the
cost-to-cost method, whereby the
percentage that is complete is based on
costs incurred to date in relation to
total estimated costs. The cost
associated with sales of services are
expensed when incurred.
Unbilled revenue represents work completed
but not billed. The Company is able to
bill based upon the terms as contained in
the contract. When billed, such amounts
are recorded as accounts receivable.
The Company recognizes the entire
estimated loss on a contract, when a loss
is expected to be incurred, in the period
it is determined. The Company does not
believe warranty obligations on completed
contracts are material.
Property and
Equipment Property and equipment are stated at cost.
Depreciation and amortization are provided
on the straight-line method over the
following estimated lives:
Estimated
Classification Useful Lives
Technical equipment 2 - 5 years
Purchased software 3 - 5 years
Furniture and fixtures 3 - 10 years
Leasehold improvements (lease term) 2 - 5 years
Capital leases - computer equipment 3 years
Use of Estimates The preparation of the financial
statements requires the use of
management's estimates. These estimates
relate primarily to total project revenues
and total project costs at completion.
It is reasonably possible that these
estimates will change in the future due to
factors such as the number of units to be
produced or labor productivity. However,
management feels that the estimates used
are reasonably accurate in all material
respect.
<PAGE>
Intelligraphics, Inc.
Notes to Financial Statements
1. Basis of Presentation
The financial statements were prepared for
the purpose of complying with the proposed
asset purchase agreement between
Analytical Surveys, Inc. and the Company.
Assets and liabilities of the Company that
are specifically excluded from the asset
purchase agreement are not included in the
financial statements. Accordingly, the
results of operations and cash flows do
not include amounts attributable to the
excluded assets and liabilities.
2. Accounts Receivable, Unbilled Revenue, and Billings in
Excess of Cost and Estimated Earnings
At September 30, 1995, the range to
complete contracts in process is generally
1 to 36 months, and the Company expects to
collect within one year substantially all
amounts reflected as accounts receivable
and unbilled revenue as of September 30,
1995.
The following tables summarize contracts
in process at September 30, 1995 and
December 31, 1994.
September 30, December 31,
1995 1994
Costs incurred on uncompleted
contracts $6,020,882 $3,438,704
Estimated earnings 2,588,885 1,403,136
--------- ---------
8,609,767 4,841,840
Less billings to date
7,833,475 4,355,691
--------- ---------
$ 776,292 $ 486,149
========= =========
Included in accompanying
balance sheets under the
following captions:
Unbilled revenue $1,044,134 $ 857,638
Billing in excess of
costs and estimated
and estimated earnings (267,842) (371,489)
--------- ---------
$ 776,292 $ 486,149
========= =========
3. Property and Equipment, at Cost
Property and equipment, at cost consists
of the following:
September 30, December 31,
1995 1994
Technical equipment $2,204,441 $3,854,092
Purchased software 58,914 51,461
Furniture and fixtures 288,518 307,507
Leasehold improvements 4,321 86,656
Capital leases - 101,641
--------- ---------
2,556,194 4,401,357
Less accumulated
depreciation and
amortization 2,153,864 3,839,678
--------- ---------
Net property and
equipment $ 402,330 $ 561,679
========= =========
4. Leases
The Company leases office equipment,
technical equipment and its facilities
under operating leases.
The following is a schedule of future
minimum rental payments due under
noncancelable operating leases with terms
of one year or more at September 30, 1995.
Related Total
Year ending Party Other Operating
September 30, Leases Leases Leases
1996 $254,751 $ 55,881 $310,632
1997 261,577 22,323 283,900
1998 217,719 10,963 228,682
1999 93,271 7,156 100,427
2000 - 6,133 6,133
-------- -------- --------
Total minimum
lease payments $827,318 $102,456 $929,774
======== ======== =======
Rent expenses for operating leases was as
follows:
Nine months ended Year ended
September 30, December 31,
1995 1994
Facilities $ 80,883 $ 160,205
Equipment 82,613 81,796
--------- --------
$ 163,496 $ 242,001
========= ========
5. Other Expense Other expense is comprised of the
following:
Nine months ended Year ended
September 30, December 31,
1995 1994
Litigation settlement $ 207,500 $ -
Legal expenses related
to above litigation 32,564 205,338
Office relocation expense - 124,775
Other, net 25,471 32,694
--------- --------
$ 265,535 $ 362,807
========= ========
6. Employee Benefit Plan
The Company sponsors a qualified tax
deferred savings plan in accordance with
the provisions of section 401(k) of the
Internal Revenue Code. Employees may
defer up to 15% of their compensation,
subject to certain limitations. The
Company may make discretionary matching
contributions. There was no matching
contribution made for the nine months
ended September 30, 1995 and the year
ended December 31, 1994.
7. Major Customers
Sales to individual customers amounting to
10% or more of total sales were as
follows:
Nine months ended Year ended
September 30, December 31,
1995 1994
Customer A 16% 4%
Customer B 14 16
Customer C 14 10
Customer D 12 9
Customer E 12 11
Customer F 11 6
Customer G 9 10
Customer H 1 12
8. Related Party Transactions
The Company leases its facilities from a
partnership whose general partner is an
officer and shareholder of the Company.
The Company also pays certain fees and
occupancy costs to the management company
of the facility. This management company
is owned by a family member of an officer
and shareholder of the Company. The
Company leases equipment from a leasing
company owned by certain officers and
shareholders of the Company. The Company
purchases subcontracted services and
incurs certain other expenses from a
foreign company that is under common
management control. Related party
transactions are summarized as follows:
Nine months ended Year ended
September 30, December 31,
1995 1994
Rent and occupancy $ 90,499 $ 79,904
Fees and occupancy costs 23,327 19,665
Rent expense-equipment 51,379 -
Payments to subcontractor-
for services 216,280 123,251
Payments to subcontractor-
other 20,594 83,052
======== =========
September 30, December 31,
1995 1994
Accounts payable $ 135,229 $ 81,117
========= =========
9. Litigation Settlement
During 1995, the Company entered into a
settlement agreement and mutual release
with the former shareholders of a company
whose obligations were guaranteed by the
Company. The Company agreed to pay in
settlement $207,500. Of this, $165,000
was financed through a revolving line of
credit. The entire $207,500 is included
in other expense (Note 4) for the nine
months ended September 30, 1995.
10. Concentrations of Credit Risk
Financial instruments which potentially
expose the Company to concentrations of
credit risk, as defined by Financial
Accounting Standard Board's Statement No.
105, Disclosure of Information about
Financial Instruments with Off-Balance-
Sheet Risk and Financial Instruments with
Concentration of Credit Risk, consist
primarily of accounts receivable and
unbilled revenue with the Company's
various customers.
Historically, the Company's customers have
included cities, counties, states, utility
companies, and governmental agencies. The
majority of revenues have been
historically derived from utility clients,
both commercial and municipal.
The Company's accounts receivable and
unbilled revenue are due from a variety of
organizations throughout the world. The
Company provides for uncollectible amounts
when specific credit problems arise.
Management's estimates have been adequate
during historical periods, and management
believes that all significant credit risks
have been identified at September 30, 1995.
<PAGE>
Item 7. Financial Statements and Exhibits (continued)
(b) PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ANALYTICAL SURVEYS, INC.
PRO FORMA BALANCE SHEET
As of September 30, 1995
(UNAUDITED)
Intelli- Analytical Combined Pro Forma Pro Forma
graphics Surveys Historical Adjustments Combined
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash - 665,274 665,274 (231,508) (a) 433,766
Accounts receivable 1,162,656 2,925,094 4,087,750 4,087,750
Revenue in excess of billing 772,933 4,705,020 5,477,953 5,477,953
Deferred income taxes - 49,713 49,713 49,713
Prepaid expenses 7,230 209,343 216,573 216,573
--------- ---------- ---------- --------- ----------
total current assets 1,942,819 8,554,444 10,497,263 (231,508) 10,265,755
--------- ---------- ---------- --------- ----------
Equipment 273,455 5,656,521 5,929,976 5,929,976
Furniture and fixtures 82,283 735,313 817,596 817,596
Leasehold improvements 3,792 133,711 137,503 137,503
--------- ---------- ---------- --------- ----------
359,530 6,525,545 6,885,075 6,885,075
Accumulated depreciation - (5,046,065)(5,046,065) (5,046,065)
--------- ---------- ---------- --------- ----------
359,530 1,479,480 1,839,010 1,839,010
Goodwill - 13,751 13,751 3,145,989 (a) 3,159,740
--------- ---------- ---------- --------- ----------
Total assets 2,302,349 10,047,675 12,350,024 2,914,481 15,264,505
========= ========== ========== ========= ==========
Liabilities and Stockholders' Equity
Current portion of long term debt - 417,100 417,100 364,969 (a) 782,069
Billings in excess of costs and re - 176,934 176,934 176,934
Accounts payable 544,701 1,560,227 2,104,928 2,104,928
Accrued Payroll and benefits 350,879 661,951 1,012,830 1,012,830
Income taxes payable - - - -
--------- ---------- ---------- --------- ----------
Total current liabilities 895,580 2,816,212 3,711,792 364,969 4,076,761
--------- ---------- ---------- --------- ----------
Deferred income taxes - 113,290 113,290 113,290
Deferred compensation - 55,407 55,407 55,407
Long term debt - 408,078 408,078 3,065,031 (a) 3,473,109
--------- ---------- ---------- --------- ----------
Total liabilities 895,580 3,392,987 4,288,567 3,430,000 7,718,567
--------- ---------- ---------- --------- ----------
Seller's equity 1,406,769 - 1,406,769 (1,406,769) (a) -
Common stock - 3,461,100 3,461,100 891,250 (a) 4,352,350
Treasury stock - (124,844) (124,844) (124,844)
Retained earnings - 3,318,432 3,318,432 3,318,432
--------- ---------- ---------- --------- ----------
Total equity - 6,654,688 6,654,688 891,250 7,545,938
--------- ---------- ---------- --------- ----------
Total liabilities and equity 2,302,349 10,047,675 12,350,024 2,914,481 15,264,505
========= ========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
ANALYTICAL SURVEYS, INC.
PRO FORMA STATEMENT OF OPERATIONS
Pro Forma Year ended September 30, 1995
(UNAUDITED)
Intelli- Analytical Combined Pro Forma Pro Forma
graphics Surveys Historical Adjustments Combined
<S> <C> <C> <C> <C> <C> <C>
Sales 6,794,604 13,538,507 20,333,111 20,333,111
--------- ---------- ---------- --------- ----------
Salaries 4,262,053 5,246,616 9,508,669 9,508,669
Subcontractors 861,561 3,244,485 4,106,046 4,106,046
General and administration 1,201,931 2,244,207 3,446,138 3,446,138
Depreciation and amortization 280,111 783,838 1,063,949 213,813 (b) 1,277,762
--------- ---------- ---------- --------- ----------
total costs and expenses 6,605,656 11,519,146 18,124,802 213,813 18,338,615
--------- ---------- ---------- --------- ----------
operating income 188,948 2,019,361 2,208,309 (213,813) 1,994,496
--------- ---------- ---------- --------- ----------
Other income (expense)
Other expense, net (592,314) 1,689 (590,625) 445,402 (d) (145,223)
Interest expense (28) (120,462) (120,490) (308,479)(c) (428,969)
Gain on sale of assets 967 (411) 556 556
--------- ---------- ---------- --------- ----------
total other income (expense) (591,375) (119,184) (710,559) 136,923 (573,636)
--------- ---------- ---------- --------- ----------
Net income before tax (402,427) 1,900,177 1,497,750 (76,890) 1,420,860
Income taxes 0 716,000 716,000 (178,153)(e) 537,847
--------- ---------- ---------- --------- ----------
Net income (402,427) 1,184,177 781,750 101,263 883,013
========= ========== ========== ========= ==========
Earnings per share 0.40 (f) 0.28
==== ====
</TABLE>
ANALYTICAL SURVEYS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
On December 22, 1995, Analytical Surveys, Inc., acquired sub-
stantially all of the the net operating assets of Intelligraphics,
Inc., a Wisconsin corporation. These pro forma statements present
the results of operations as if the purchase were completed on
October 1, 1995 and the financial position of Analytical
Surveys, Inc., as if the acquisition were completed on
September 30, 1995.
Basis of presentation:
The historical results of operations for Intelligraphics
were prepared by combining the audited results of operations
for the nine months ended September 30, 1995 with the
unaudited results of operations for the three months ended
December 31, 1994. The financial position of the net assets
acquired was prepared from the unaudited preliminary
statement of net assets acquired as of December 22, 1995 as
prepared by Intelligraphics, Inc. This preliminary statement
of net assets is subject to possible adjustment as the final
figures are determined, however management does not expect
these adjustments to be material.
The historical financial position of Analytical Surveys,
Inc. at September 30, 1995 and the results of operations for
the year then ended were prepared from the audited financial
statements of that date which were filed with the 10-KSB on
December 19, 1995, and are hereby incorporated by reference.
Pro forma adjustments:
The following pro forma adjustments to the combined balance
sheet and results of operations are reflected in the pro
forma financial statements and are referenced by the letter
indicated
(a) Purchase entry
The pro forma adjustment to reflect the purchase of the net
operating assets and the assumption of certain liabilities per
the purchase agreement with Intelligraphics, Inc. The
excess of the fair market value of the 230,000 shares of
Analytical Surveys, Inc. no par value common stock plus the
cash paid to the seller plus transaction costs of $231,507
over the fair market value of the net assets acquired was
recorded as goodwill. Goodwill will be amortized over a
fifteen year period.
(b) Amortization of goodwill
Reflects one year of amortization of goodwill, based on a
fifteen (15) year period.
(c) Interest expense
Reflects the interest expense for the first year of the term
debt borrowed to pay substantially all of the cash portion
of the purchase consideration.
(d) Litigation costs
Reflects the elimination of certain litigation costs and
expenses incurred by Intelligraphics, Inc. in connection
with assets not included in this transaction. The costs
eliminated are described in Notes 5 ("Other Expense") and 9
(Litigation Settlement) to Financial Statements of Assets
Acquired presented in this Form 8-K.
(e) Income taxes
Reflects the accrual of income tax expense benefit for the
results of operations of Intelligraphics.
(f) Earnings per share
The average number of shares outstanding, including common
stock equivalents, was increased by the 230,000 shares issued
to the seller in the acquistion, reducing the (combined)
earnings per share accordingly.
---------------------------------------------------------------
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 hereunto duly
authorized.
Analytical Surveys, Inc.
by: /s/ Scott C. Benger
Secretary/Treasurer
