UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
_x_ Quarterly period Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended
June 30, 1996
or
___ Transition Report Pursuant to Section 13 or 15(d)
of the securities Exchange Act of 1934
Commission File Number 0-13111
ANALYTICAL SURVEYS, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0846389
(State of incorporation) (IRS Employer Identification No.)
1935 Jamboree Drive
Colorado Springs, Colorado 80920
(Address of principal executive offices) (Zip Code)
719-593-0093
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past (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
ninety (90) days.
Yes _X_ No ___
The number of shares of common stock outstanding as of August 5, 1996 was
4,851,036.
Transitional small Business Disclosure Format:
Yes ___ No_X_
<PAGE>
Part I Item I
<TABLE>
<CAPTION>
ANALYTICAL SURVEYS, INC.
BALANCE SHEETS
(Unaudited)
June 30, Sept. 30,
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 489,565 $ 665,274
Accounts receivable, net of $20,000
allowance for doubtful accounts 3,732,819 2,925,094
Unbilled revenues 7,996,354 4,705,020
Prepaid expenses 482,774 209,343
Deferred tax assets 73,727 49,713
----------- ---------
Total current assets 12,775,239 8,554,444
----------- ---------
PROPERTY AND EQUIPMENT, at cost
Equipment 6,359,750 5,656,521
Furniture and fixtures 855,970 735,313
Leasehold Improvements 152,858 133,711
---------- ---------
7,368,578 6,525,545
---------- ---------
Less Accumulated depreciation and amortization (5,715,319) (5,046,065)
---------- ---------
1,653,259 1,479,480
Goodwill, less accumulated amortization 2,850,294 13,751
---------- ---------
TOTAL ASSETS $17,278,792 $10,047,675
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, Sept. 30,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Notes payable to bank (Note 2) $ 150,000 $ --
Current Maturities of long-term debt 782,697 417,100
Billings in excess of costs 299,653 176,934
Accounts payable and accrued expenses 1,834,214 1,560,227
Accrued payroll and benefits 909,580 661,951
---------- ---------
Total current liabilities 3,976,144 2,816,212
Deferred income tax 25,197 113,290
Long-term debt, less current maturities 3,236,746 408,078
Deferred compensation 61,672 55,407
---------- ---------
Total Liabilities 7,299,759 3,392,987
---------- ---------
STOCKHOLDERS EQUITY
Preferred stock-authorized 2,500,000 shares
of no par value; none issued and outstanding
-- --
Common stock-authorized 100,000,000 shares of
no par value; issued and outstanding
4,838,211 shares at June 30, 1996 and
4,247,024 shares at September 30, 1995 (Note 1) 5,507,321 3,461,100
Treasury stock - 35,250 shares at cost (124,844) (124,844)
Retained Earnings 4,596,556 3,318,432
---------- ---------
Total stockholders' equity 9,979,033 6,654,688
---------- ---------
TOTAL LIABILITIES AND EQUITY $17,278,792 $10,047,675
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES OF SERVICES $ 15,296,158 $ 9,768,929 $ 5,963,011 $ 3,576,340
---------- ---------- --------- ---------
COSTS AND EXPENSES
Salaries, wages and benefits 7,076,949 3,802,521 2,746,767 1,352,661
Subcontractor costs 2,652,387 2,366,228 970,750 811,918
General and Administrative 2,503,343 1,700,046 961,552 598,666
Depreciation and amortization 801,663 583,702 290,689 196,017
---------- --------- --------- ---------
13,034,342 8,452,497 4,969,758 2,959,262
---------- --------- --------- ---------
EARNINGS FROM OPERATIONS 2,261,816 1,316,432 993,253 617,078
---------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest (expense) (217,274) (98,697) (91,369) (24,472)
Miscellaneous income 15,081 1,662 12,512 1,615 1,615
---------- --------- --------- ---------
(202,193) (97,035) (78,857) (22,857)
---------- --------- --------- ---------
EARNINGS BEFORE INCOME TAXES 2,059,623 1,219,397 914,396 594,221
INCOME TAX EXPENSE 781,500 465,000 346,000 227,000
---------- --------- --------- ---------
NET EARNINGS $ 1,278,123 $ 754,397 $ 568,396 $ 367,221
========== ========= ========= ========
EARNINGS PER SHARE $ 0.26 $ 0.17 $ 0.11 $ 0.08
========== ========= ======== ========
</TABLE>
See accompanying notes to financial statements
<PAGE>
ANALYTICAL SURVEYS, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
June 30, June 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS PROVIDED (USED) $ 23,295 $ 187,688
----------- --------
BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 12,025 --
Purchase of property and equipment (484,344) (568,167)
Purchase of Intelligraphics (4,439,269)
-----------
--
Net cash used in investing activities (4,911,588) (568,167)
----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under notes payable 150,000 150,000
Proceeds from issuance of ;long-term debt 3,707,797 459,179
Principal payments of long-term debt (513,533) (632,144)
Proceeds from issuance of common stock 1,368,320 427,737
Purchase of treasury stock (Note 4) -- (124,844)
----------- --------
Net cash provided (used) by financing activities 4,712,584 279,928
----------- --------
Net increase (decrease) in cash (175,709) (100,551)
Cash at beginning of period 665,274 552,232
----------- --------
Cash at end of period $ 489,565 $ 451,681
=========== ========
Supplemental cash flow disclosures:
Interest paid $ 215,392 $ 97,460
=========== ========
Income taxes paid $ 375,565 $ 624,736
=========== ========
</TABLE>
See accompanying financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
Quarterly Report on Form 10-QSB
June 30, 1996
Notes to Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
The accompanying interim financial statements have been prepared by management
in accordance with the accounting policies described in the Company's annual
report for the year ended September 30, 1995. They have not been audited by
independent auditors.
On June 17, 1996 the Company announced a three for two split of its outstanding
no par value common stock, to be distributed in the form of a stock dividend on
July 1, 1996 to holders of record on June 27, 1996. The accompanying financial
statements and notes thereto reflect the effect of the stock split in both
current and historical information.
The financial statements reflect all adjustments which are in the opinion of
management, necessary to present fairly the financial position of Analytical
Surveys, Inc. at June 30, 1996 and its results of operations for the nine and
three months ended June 30, 1996 and 1995 and its cash flows for the nine months
ended June 30, 1996 and 1995. All such adjustments are of a normal recurring
nature.
The Statement of Cash Flows for the nine months ended June 30, 1995 includes
certain reclassifications to conform the presentation to that used in the 1995
annual report and the current period.
The computation of earnings per common share is based on the weighted average
number of shares outstanding plus common stock equivalents as follows:
Nine months ended June 30, 1996 4,962,600
Nine months ended June 30, 1995 4,308,000
Three months ended June 30, 1996 5,219,500
Three months ended June 30, 1995 4,491,000
2. Notes Payable to Bank
Effective December 20, 1995, the Company renewed its line of credit loan
agreement with its existing bank for one year and increased the maximum loan
amount to $1,850,000. The interest rate is 0.5 percent above the bank's
published prime lending rate and is variable with changes in that prime rate.
On December 22, 1995, the Company borrowed $3,430,000 from a bank to fund
substantially all of the cash portion of the purchase price of the acquisition
described in note 3 below. The debt is to be repaid in monthly installments of
$56, 062 in the first year increasing to $57,356 in the fourth year. A final
payment of $1,685,552 will be due at the end of the fourth year. Interest on
this term debt is 0.6 percent above the bank's published prime lending rate and
is variable with changes in that prime rate.
See Note 5 for subsequent events regarding notes payable to bank.
<PAGE>
ANALYTICAL SURVEYS, INC.
Quarterly Report on Form 10-QSB
June 30, 1996
3. Acquisitions
On December 22, 1995 the Company acquired substantially all of the net operating
assets of Intelligraphics Inc. of Waukesha, Wisconsin. The business operates as
a division of the Company under the name of Intelligraphics International, a
division of Analytical Surveys, Inc., is in substantially the same line of
business as the Company and had sales of approximately $8,000,000 in calendar
year 1995. Intelligraphics serves the utilities market with emphasis on electric
distribution and telephone data conversion.
The acquisition was recorded using the purchase method of accounting, and the
financial statements include the operations of Intelligraphics from the date of
acquisition, December 22, 1995 through the end of the period.
The $4,439,269 consideration paid for the net assets acquired and related
acquisition costs consisted of cash in the amount of $3,548,019 plus 230,000
shares of Analytical Surveys, Inc. no par value common stock, which shares are
subject to restrictions on both transfer and voting rights for a period of two
years. These restricted shares were recorded at $3.875 per share reflecting the
effect of the restrictions on the fair market value of the shares.
The acquisition included goodwill valued at $2,941,064 which will be amortized
over a 15 year life using the straight line method.
A portion of the consideration paid ($250,000 plus 70,000 of the restricted
shares) was held in escrow awaiting satisfactory conclusion of certain pending
matters. During the three months ended June 30, 1996 those matters related to
the escrowed $250,000 were resolved resulting in a refund of $150,000 to the
Company with the remaining $100,000 released from the escrow to the sellers.
This $150,000 refund reduced the amount of goodwill recorded and total
consideration paid in the transaction. The 70,000 restricted shares continue to
be held in the escrow account.
See note 5 for subsequent events, regarding an additional acquisition.
4. Stock Options
The following table summarizes stock option transactions under the Company's
five non-qualified stock option plans as adjusted for the three for two stock
split:
<TABLE>
<CAPTION>
Shares Average
under Option Price
option per share
<S> <C> <C>
Outstanding at September 30, 1995 1,066,913
Exercised (246,188) 2.16
Canceled (15,000) 3.36
Issued 245,925 12.26
---------
Outstanding June 30, 1996 1,051,650
=========
At June 30, 1996:
Options Exercisable 505,725
========
Available for grant 66,038
========
</TABLE>
<PAGE>
ANALYTICAL SURVEYS, INC.
Quarterly Report on Form 10-QSB
June 30, 1996
5. Subsequent Events
On July 15, 1996, subsequent to the end of the quarterly period ended June 30,
1996, the Company acquired substantially all of the net operating assets of
Westinghouse Landmark GIS, Inc. of Cary, North Carolina. The business will
operate as a wholly owned subsidiary of the Company under the name of ASI
Landmark, Inc., is in substantially the same line of business as the Company and
had sales of $6,374,000 in the year ended December 9, 1995.
The acquisition will be recorded using the purchase method of accounting and
future financial statements will include the results of operations from the date
of acquisition. These financial statements do not include any operating results
nor any of the assets and liabilities acquired.
Consideration paid for the business included $1,930,000 cash and the assumption
of selected current liabilities of the predecessor company. Substantially all of
the cash paid for the business was obtained from a $1,900,000 bank loan. The
bank loan is repayable in monthly installments of $22,619 increasing to $31,667
in the third year continuing through November 2001. Interest on the term loan
is 0.5 percent above the bank's published prime lending rate and is variable
with changes in that prime rate.
<PAGE>
Part I Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations:
Three Months Ended June 30, 1996
Sales for the three months ended June 30, 1996 were 67% greater than sales for
the same period one year ago. The primary reason for this increase is the
acquisition of the Intelligraphics division in December 1995.
Costs and expenses for the three months ended June 30, 1996 also increased 68%
over the same period of the previous year, again due primarily to the
Intelligraphics acquisition. There were changes in the mix of specific expense
categories of the costs and expenses group. Salaries and wages increased from
38% of sales in 1995 to 46% of sales in 1996 due to the greater internal labor
component of utilities conversion work. At the same time subcontractor costs
decreased from 23% of sales in 1995 to 16% of sales in 1996 due to the lesser
subcontractor component of the utilities work. These two categories taken
together were 62% of sales in 1996 versus 60% in 1995. Depreciation and
amortization includes approximately $46,000 in expense related to the
amortization of the Intelligraphics goodwill.
Interest expense increased 273% due to the term debt incurred as part of the
Intelligraphics acquisition.
Net income (all from continuing operations) for the three months ended June 30,
1996 of was 55% higher than the same period of the previous year due to the
increased sales described above. Earnings per share increased 38%, which was
less than the increase in net income due to the effect of shares issued in the
acquisition, shares issued for stock option exercises and the effect of common
stock equivalents on the average number of shares outstanding.
As discussed in note 5 to the financial statements, on July 15, 1996, the
Company acquired the operations of Westinghouse Landmark GIS, Inc. This
transaction is not reflected in either the balance sheet nor the results of
operations for the period ended June 30, 1996. Future results will include both
operations and balance sheet effects of this transaction.
Nine months Ended June 30, 1996
Net income (all from continuing operations) for the nine months ended June 30,
1996 increased 69% over the same nine months of 1995. Increased production in
the first quarter plus the effects of the Intelligraphics acquisition caused
sales to increase 57% and earnings from operations to increase 72%. Salaries
expense increased 86% due to the acquisition. Subcontractor costs increased only
12% due the lesser use of subcontractors in the utilities conversion work. The
47% increase in general and administrative expenses was primarily the result of
the acquisition, increased selling and marketing activity and increased
production. Interest expense was 120% more than the same period of the previous
year due the term debt incurred as part of the Intelligraphics acquisition.
Earnings per share increased 44%, which was less than the increase in net income
due to the effect of shares issued in the acquisition, shares issued for stock
option exercises and the effect of common stock equivalents on the average
number of shares outstanding.
Cash flow provided by operations in the nine months ended June 30, 1996 was
$23,295 compared to $187,688 in the same nine months of the previous year. Cash
flow from operations was affected by normal variations in investment in unbilled
revenues and accounts receivable. The Company maintains an open line of credit
to finance the investment in unbilled revenue and accounts receivable. The
increase in current assets and current liabilities is attributable to the
acquisition.
Cash flow from investing activities includes the investment in the net assets of
the new Intelligraphics division plus equipment acquisitions required by
increased production at both locations.
Cash flow from financing activities consists of the borrowing of cash and the
issuance of shares to finance the acquisition of Intelligraphics as well as
financing of equipment using capital leases, the scheduled repayment of debt and
capitalized leases and proceeds from the exercise of stock options by employees.
The Company's backlog of contracted work increased to $22,489,649 at June 30,
1996 up 88% from 1995 due primarily the acquisition of Intelligraphics. The
Landmark acquisition made on July 15, 1996 and discussed in Note 5 to the
financial statements increased backlog to approximately $31,000,000.
Liquidity and Capital Resources:
Management expects to meet long-term liquidity requirements through cash flows
generated by operations supplemented from time to time by short term borrowings
on a bank line of credit. Routine capital expenditures will usually be financed
with term debt and/or capital leases. The Company is dependent, however, upon
its ability to successfully deliver acceptable products in order to maintain
adequate operating cash flows.
As discussed in note 5 to the financial statements, on July 15, 1996, the
Company acquired the operations of Westinghouse Landmark GIS, Inc. for
$1,930,000 in cash. Substantially of the cash for this acquisition was raised
through bank debt. The Company has not committed to significant capital
expenditures at June 30, 1996.
<PAGE>
ANALYTICAL SURVEYS, INC.
Quarterly Report on Form 10-QSB
June 30, 1996
Part II
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
One report on Form 8-K was filed during the three months ended June 30,
1996. A report on Form 8-K was filed June 17, 1996. Item 5. "Other
Events" reporting that the Company declared a three for two split of
its outstanding no par value common stock to be distributed as a stock
dividend on July 1, 1996 to holders of record on June 27, 1996.
<PAGE>
ANALYTICAL SURVEYS, INC.
Quarterly Report on Form 10-QSB
June 30, 1996
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.
Analytical Surveys, Inc.
(Registrant)
Date: August 7, 1996 /s/ Sidney V. Corder
-----------------------------
Sidney V. Corder, President
Chief Executive Officer
Date: August 7, 1996 /s/ Scott C. Benger
-----------------------------
Scott C. Benger, Secretary/Treasurer
(principal financial officer and
principal accounting officer)
Date: August 7, 1996 /s/ Brian J. Yates
-----------------------------
Brian J. Yates, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from SEC Form 10-QSB and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000753048
<NAME> ANALYTICAL SURVEYS INC
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 489565
<SECURITIES> 0
<RECEIVABLES> 11749173
<ALLOWANCES> 20000
<INVENTORY> 0
<CURRENT-ASSETS> 12775239
<PP&E> 7368578
<DEPRECIATION> 5715319
<TOTAL-ASSETS> 17278792
<CURRENT-LIABILITIES> 3976144
<BONDS> 0
<COMMON> 5382477
0
0
<OTHER-SE> 4596556
<TOTAL-LIABILITY-AND-EQUITY> 17278792
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<TOTAL-REVENUES> 15296158
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<TOTAL-COSTS> 13034342
<OTHER-EXPENSES> (15081)
<LOSS-PROVISION> 0
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<NET-INCOME> 1278123
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
