UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
__X__ Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended
December 31, 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 February 11, 1997 was
4,980,152.
<PAGE>
Part I Item 1.
ANALYTICAL SURVEYS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ -------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 766 $ 1,022
Accounts receivable, net of allowance
for doubtful accounts of $60 7,022 5,781
Revenue in excess of billings 8,760 9,329
Prepaid expenses and other 267 215
Deferred income taxes 93 105
------ ------
Total current assets 16,908 16,452
------ ------
PROPERTY AND EQUIPMENT, at cost
Equipment 7,651 7,544
Furniture and fixtures 970 957
Leasehold improvements 169 162
------ ------
8,790 8,663
Less Accumulated depreciation and amortization (6,318) (6,049)
------ ------
2,472 2,614
Goodwill, net of accumulated amortization 2,830 2,881
Long Term Deferred income taxes 3 --
Other Assets 38 41
------ ------
TOTAL ASSETS $ 22,251 $ 21,988
====== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ -------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line-of-credit with bank $ 200 $ 500
Current portion of long-term debt 1,311 1,247
Billings in excess of revenue 1,651 1,091
Accounts payable and accrued liabilities 1,889 2,268
Income taxes payable 272 20
Accrued payroll and benefits 977 1,340
------ ------
Total current liabilities 6,300 6,466
Deferred income taxes payable -- 4
Long-term debt, less current portion 4,368 4,528
Deferred compensation payable 66 64
------ ------
Total liabilities 10,734 11,062
------ ------
STOCKHOLDERS' EQUITY
Preferred stock-authorized 2,500,000 shares
of no par value; no shares issued or outstanding
Common stock-authorized 100,000 shares of no par value;
issued and outstanding 4,925 shares at December 31, 1996 and
4,922 shares at September 30, 1996 5,832 5,820
Treasury stock of 35 shares at cost (124) (125)
Retained earnings 5,810 5,231
------ ------
Total stockholders' equity 11,517 10,926
------ ------
TOTAL LIABILITIES AND EQUITY $ 22,251 $ 21,988
====== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months Ended Three months Ended
December 31, December 31,
1996 1995
------------------ ------------------
<S> <C> <C> <C> <C>
SALES OF SERVICES $ 7,609 $ 3,649
------ ------
COSTS AND EXPENSES
Salaries, wages and benefits 3,675 1,447
Subcontractor costs 1,227 935
General and administrative 1,303 574
Depreciation and amortization 338 217
------ ------
6,543 3,173
------ ------
EARNINGS FROM OPERATIONS 1,066 476
------ ------
OTHER INCOME (EXPENSE)
Interest (expense) (133) (28)
Gain on Sale of Assets 5 --
------ ------
(128) (28)
------ ------
EARNINGS BEFORE INCOME TAXES 938 448
INCOME TAX EXPENSE 360 173
------ ------
NET EARNINGS $ 578 $ 275
====== ======
EARNINGS PER SHARE $ 0.11 $ 0.06
==== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months Ended Three months Ended
December 31, December 31,
1996 1995
------------------ ------------------
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED (USED)
BY OPERATING ACTIVITIES $ 275 $ (1,288)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 147 --
Purchase of property and equipment (287) (125)
Net assets acquired in business combinations -- (3,506)
------ ------
Net cash used in investing activities (140) (3,631)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under notes payable (300) 300
Proceeds from issuance of long-term debt 214 3,498
Principal payments of long-term debt (309) (105)
Proceeds from issuance of common stock 4 895
------ ------
Net cash provided (used) by financing activities (391) 4,589
------ ------
Net increase (decrease) in cash (256) (330)
Cash at beginning of period 1,022 665
------ ------
Cash at end of period $ 766 $ 335
====== ======
Supplemental cash flow disclosures:
Interest paid $ 135 $ 18
====== ======
Income taxes paid $ 96 $ 4
====== ======
</TABLE>
See accompanying notes to financial statements.
Notes to Consolidated Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
The accompanying interim consolidated 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, 1996. The consolidated financial
statements include the accounts of the Company and ASI Landmark, Inc., its
wholly owned subsidiary. All significant intercompany balances and transactions
have been eliminated in consolidation. The financial statements have not been
audited by independent auditors.
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 December 31, 1996 and its results of operations for the three
months ended December 31, 1996 and 1995, and its cash flows for the three months
ended December 31, 1996 and 1995. All such adjustments are of a normal recurring
nature.
The computation of earnings per common share is based on the weighted average
number of shares outstanding plus common stock equivalents as follows (in
thousands):
Three months ended December 31, 1996 5,262
Three months ended December 31, 1995 4,656
2. Stock Options
The following table summarizes stock option transactions under the Company's
four non-qualified stock option plans (in thousands except per share amounts):
Shares Average
under Option Price
option per share
Outstanding at September 30, 1996 989 $ 0.67 to 14.33
Issued --
Exercised (2) 1.58 to 2.08
Canceled (4) 1.58 to 11.08
---
Outstanding December 31, 1996 983 0.67 to 14.33
===
At December 31, 1996:
Options Exercisable 564
===
Available for Grant 306
===
Part I Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This discussion contains forward looking statements, primarily those statements
which are not statements of historical facts. There are important factors that
could cause results to differ materially from those anticipated in the forward
looking statements including factors which are beyond the control of the
Company. These factors include the competitive environment such as entry of new
competitors, improved technical capabilities by existing competitors and
capacity utilization achieved by all competitors. Market conditions that may
also affect future results include competitive environment in the utilities
market, local tax collections by municipalities and federal government spending
levels.
1997 Compared to 1996
Results of Operations
Three Months Ended December 31, 1996
The Company implemented a strategy to enter the utilities facility data
conversion market by the acquisition of Intelligraphics International
(Intelligraphics) on December 22, 1995. This utilities market is competitive and
margins are generally lower than those earned by the Company in its traditional
markets. The lower margins are usually mitigated by the larger contract size and
term and the expected greater volume of conversion work to be done in this
market. A second acquisition in July 1996, Westinghouse Landmark GIS, also
contributed to the growth strategy and provided the capability to perform deeds
research tax mapping as opposed to the use of outside subcontractors to perform
this work. This acquisition also provided additional capacity in the Company's
traditional photogrammetry and cadastral markets as well as an enhanced regional
presence in the east and southeast regions of the country.
The acquisitions, combined with the Company's original Colorado-based business,
caused net income from continuing operations (net earnings) to increase 110%
over the previous year on a sales increase of 108%. Total costs and expenses
were 86% of sales in 1997 compared to 87% in 1996, with a shift between
salaries, wages and benefits increasing to 48% from 40% of sales while
subcontractor costs decreased to 16% of sales from 31% last year. The
combination of salaries plus subcontractor costs remained at 64% of sales. This
shift towards a greater salaries component reflects the higher labor input
required at the two acquired production facilities and lower use of outside
subcontractors in those locations. The acquisitions will also allow the Company
to complete a greater proportion of its production work using internal resources
as opposed to outside subcontractors.
Interest expense increased 370% over the previous year and increased from 0.8%
of sales to 1.7% of sales due to the increased debt undertaken to complete the
two acquisitions.
Earnings per share increased 83% over the same period of the previous year. This
increase reflects the 110% increase in net earnings (all from operations) and
the 13% increase in the average number of shares outstanding in 1997 over the
same period of 1996.
Cash flows presented on the Consolidated Statements of Cash Flows for the three
months ended December 31, 1995 have been reclassified from the original
presentation in 1995 to conform to the presentation in the September 30, 1996
annual report. Cash flows used by operating activities was $241,000 before the
reclassification and $1,288,000 after the reclassification. The reclassification
treats the purchase of net current assets in the acquisition as a use of cash by
operating activities.
Cash flows from operating activities increased to cash provided of $275,000 from
net cash used by operating activities of $1,288,000, a change of $1,563,000.
Most (67% ) of the change in operating cash flows is attributable to the
purchase of net current assets in the previous year. The balance of the change
is attributable to normal fluctuations in the investment in contract related
current accounts, principally accounts receivable, revenues in excess of
billings and billings in excess of revenues. Net earnings plus depreciation and
amortization increased 86%.
Cash flows used in investing activities are comprised of the proceeds from the
sale of surplus equipment and expenditures for routine capital equipment
additions.
Cash flows provided by financing activities are comprised of the borrowing
(repayment) of cash under the routine use of the line of credit, financing of
capital expenditures and scheduled debt reductions.
The Company's backlog of signed contracts increased to approximately $33
million, up 43% from $23 million in 1995. The Company's expansion strategy has
enabled it to sign significant contracts with utilities customers as well as
municipal customers and commercial companies. Some of these projects are large
multiple-year contracts which offer the Company the benefit of increased work
but also subject the Company to increased risk due to possible inflation and/or
changing customer expectations. The Company continues to seek and perform both
larger and smaller projects for future work.
Liquidity and Capital Resources
Short-term liquidity requirements are met primarily through operating receipts
supplemented by a bank line of credit with a $1,850,000 limit. At December 31,
1996, the Company's balance on the line of credit was $200,000. The cost of
capital equipment is usually financed through term debt and/or capitalized
leases with terms of from three to five years. The Company has up to $222,000
available under its line of credit for equipment acquisitions through the end of
February 1997. Management expects to renew the Bank line of credit in February
1997. The Company has not committed to any material capital purchases.
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.
Management believes the line of credit combined with cash flows from operations
are adequate to finance ongoing operations. Management also believes the Company
will be able to finance any required capital expenditures from a combination of
operating cash flows and new term debt or lease arrangements. The Company is
dependent, however, upon its ability to successfully deliver acceptable products
in order to maintain adequate operating cash flows.
Other Risk Factors
The Company faces, as do all businesses, a wide range of increasingly complex
legal, regulatory and compliance requirements. The Company is not aware of any
substantial risk of loss from product liability litigation nor from
noncompliance with environmental, labor or other laws and regulations.
The Company has been awarded several projects with contract values in the
range of $3 million to $10 million, usually on a fixed-price basis. While these
projects provide improved availability of work, the projects may extend over two
to four years. The extended production period may increase the Company's
exposure to the risk of inflation, changes in customer expectations and customer
funding capabilities.
The Company has not paid any dividends since its inception, and there is no
intention to pay dividends in the foreseeable future. Under its present bank
loan agreement, the Company must obtain the bank's prior written consent should
the Company wish to pay a dividend. The bank has agreed to not unreasonably
withhold such consent; however, there is no assurance that the Company would
receive the bank's consent to pay a dividend.
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended December 31, 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 February 13, 1997 /s/ Sidney V. Corder
------------------------
Sidney V, Corder, President
and Chief Executive Officer
Date February 13, 1997 /s/ Scott C. Benger
------------------------
Scott C. Benger, Secretary/Treasurer
(principal financial officer and
principal accounting officer)
Date February 13, 1997 /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>
<MULTIPLIER> 1000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 766
<SECURITIES> 0
<RECEIVABLES> 15842
<ALLOWANCES> 60
<INVENTORY> 0
<CURRENT-ASSETS> 16908
<PP&E> 8790
<DEPRECIATION> 6318
<TOTAL-ASSETS> 22251
<CURRENT-LIABILITIES> 6300
<BONDS> 0
<COMMON> 5708
0
0
<OTHER-SE> 5810
<TOTAL-LIABILITY-AND-EQUITY> 22251
<SALES> 0
<TOTAL-REVENUES> 7609
<CGS> 0
<TOTAL-COSTS> 6543
<OTHER-EXPENSES> (5)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133
<INCOME-PRETAX> 938
<INCOME-TAX> 360
<INCOME-CONTINUING> 578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 578
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
