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
March 31, 1997
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 May 9, 1997 was
5,089,510.
Transitional Small Business Disclosure Format:
Yes _____ No__X__
<PAGE>
Part I Item 1.
ANALYTICAL SURVEYS, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
March 31, September 30,
1997 1996
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash ............................................... $ 2,350 $ 1,022
Accounts receivable, net of $60
allowance for doubtful accounts ................... 5,935 5,781
Revenues in excess of billings ..................... 9,319 9,329
Prepaid expenses and other ......................... 337 215
Prepaid income taxes ............................... 641
Deferred tax assets ................................ 115 105
--- ---
Total current assets ............................... 18,697 16,452
------ ------
PROPERTY AND EQUIPMENT, at cost
Equipment .......................................... 7,791 7,544
Furniture and fixtures ............................. 1,021 957
Leasehold improvements ............................. 174 162
--- ---
8,986 8,663
----- -----
Less Accumulated depreciation and amortization ..... (6,581) (6,049)
------ ------
2,405 2,614
Goodwill, net of accumulated amortization ............ 2,779 2,881
Other assets ......................................... 40 41
-- --
TOTAL ASSETS ......................................... $ 23,921 $ 21,988
======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
March 31, September 30,
1997 1996
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line-of-credit with bank (Note 2) ................ $ -- $ 500
Current portion of long-term debt ................ 1,317 1,247
Billings in excess of revenue .................... 922 1,091
Accounts payable and accrued liabilities ......... 2,989 2,268
Income taxes payable ............................. -- 20
Accrued payroll and benefits ..................... 1,229 1,340
----- -----
Total current liabilities ........................ 6,457 6,466
Deferred income taxes payable ...................... 2 4
Long-term debt, less current portion ............... 4,042 4,528
Deferred compensation payable ...................... 68 64
-- --
Total liabilities .................................. 10,569 11,062
------ ------
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
5,123 shares at March 31, 1997 and
4,922 shares at September 30, 1996 .............. 6,990 5,820
Treasury stock of 35 shares, at cost ............. (125) (125)
Retained earnings ................................ 6,487 5,231
----- -----
Total stockholders' equity ......................... 13,352 10,926
------ ------
TOTAL LIABILITIES AND EQUITY ....................... $ 23,921 $ 21,988
======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)
(Unaudited)
Six Months Three Months
Ended Ended
March 31, March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES OF SERVICES ............. $ 16,160 $ 9,333 $ 8,550 $ 5,685
-------- -------- -------- --------
COSTS AND EXPENSES
Salaries, wages and benefits 7,541 4,330 3,866 2,884
Subcontractor costs ......... 3,028 1,681 1,802 747
General and administrative .. 2,647 1,542 1,344 967
Depreciation and amortization 653 511 314 294
--- --- --- ---
13,869 8,064 7,326 4,892
------ ----- ----- -----
EARNINGS FROM OPERATIONS ...... 2,291 1,269 1,224 793
----- ----- ----- ---
OTHER INCOME (EXPENSE)
Interest .................... (260) (126) (127) (98)
Miscellaneous Income ........ 1 2 (3) 3
- - -- -
(259) (124) (130) (95)
---- ---- ---- ---
EARNINGS BEFORE INCOME TAXES .. 2,032 1,145 1,094 698
INCOME TAX EXPENSE ............ 777 435 417 263
--- --- --- ---
NET EARNINGS .................. $ 1,255 $ 710 $ 677 $ 435
======== ======== ======== ========
EARNINGS PER SHARE ............ $ 0.24 $ 0.15 $ 0.13 $ 0.09
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Six Months
Ended Ended
March 31, March 31,
1997 1996
<S> <C> <C>
CASH FLOWS PROVIDED (USED)
BY OPERATING ACTIVITIES ..................... $ 2,124 $ 2
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment ............. 157 --
Purchase of property and equipment .......... (495) (225)
Net assets acquired in business combinations --
(3,696)
------ ------
Net cash used in investing activities ....... (338) (3,921)
---- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under notes payable (500) 175
Proceeds from issuance of long-term debt .... 214 3,502
Principal payments of long-term debt ........ (630) (305)
Proceeds from issuance of common stock ...... 458 296
--- ---
Net cash provided (used)
by financing activities ................. (458) 3,668
---- -----
Net increase (decrease) in cash ............... 1,328 (251)
Cash at beginning of period ................... 1,022 665
----- ---
Cash at end of period ......................... $ 2,350 $ 414
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid ............................... $ 260 $ 124
======= =======
Income taxes paid ........................... $ 738 $ 364
======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Notes to Consolidated 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, 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 March 31, 1997 and its
results of operations for the six and three months ended March 31, 1997 and
1996, and its cash flows for the six months ended March 31, 1997 and 1996.
All such adjustments are of a normal recurring nature. The Statement of
Cash Flows for the six months ended March 31, 1996 includes certain
reclassifications to conform the presentation to that used in the 1996
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 (in thousands):
<TABLE>
<S> <C>
Six months ended March 31, 1997 5,226
Six months ended March 31, 1996 4,834
Three months ended March 31, 1997 5,190
Three months ended March 31, 1996 5,012
</TABLE>
2. Notes Payable to Bank
In February 1997, the Company renewed its line of credit loan
agreement with its existing bank for one year at the same maximum loan
amount of $1,850,000. The interest rate was reduced to 0.25 percent above
the bank's published prime lending rate and is variable with changes in
that prime rate.
3. Stock Options
<TABLE>
<CAPTION>
The following table summarizes stock option transactions under the
Company's four non-qualified stock option plans (in thousands except per share
amounts):
Shares under Option Price
option per share
<S> <C> <C>
Outstanding at September 30, 1996 989 $ 0.67 to 14.33
Exercised (201) 1.03 to 5.25
Canceled (9) 1.58 to 11.08
Issued 2 11.00
----
Outstanding March 31, 1997 781 0.67 to 14.33
===
Options Exercisable at March 31, 1997: 361
===
Available for Grant at March 31, 1997 304
===
</TABLE>
<PAGE>
Part I Item 2.
- -----------------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This discussion contains certain forward looking statements, primarily
those which discuss the future goals of the Company. 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 the 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, but are not limited to, the competitive and
regulatory environments in the utilities market, local tax collections by
municipalities and spending levels by local, state and federal governments.
1997 Compared to 1996
Results of Operations:
Three Months Ended March 31, 1997
-----------------------------------
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
utility 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.
Sales for the three months ended March 31, 1997 were 50%
greater than sales for the same period one year ago. The increase is due to
increased production and the acquisition of the ASI Landmark subsidiary in July
1996. Costs and expenses for the three months ended March 31, 1997 also
increased 50% over the same period of the previous year, again due increased
production and the normal costs and expenses of ASI Landmark. Increased aerial
photography caused subcontractor costs to increase to 21% of sales in 1997 from
13% of sales in 1996. Aerial photography is a seasonal expenditure related both
to the early stages of new projects and the time of year when leaves are off of
the trees. The remaining components of costs and expenses are in line with
normal expectations as percentages of sales.
Interest expense increased 30% in
the three months ended March 31, 1997 over the same period of 1996 due to the
greater term debt balances incurred as part of the ASI Landmark acquisition.
Net
income (all from continuing operations) for the three months ended March 31,
1997 was 56% higher than the same period of the previous year due to the
increased sales described above. Earnings per share increased 50%, which was
less than the increase in net income due to the effect of shares issued for
stock option exercises and the effect of common stock equivalents on the average
number of shares outstanding.
Six Months Ended March 31, 1997
- ---------------------------------
Net income (all from continuing operations) for the six months ended March
31, 1997 increased 77% over the first half of 1996. Increased production plus
the effects of the two acquisitions caused sales to increase 73% and earnings
from operations to increase 81%. Salaries expense increased 74% due to the
acquisitions and increased production. Subcontractor costs increased 80% due the
greater use of aerial photography subcontractors in the second quarter. The 72%
increase in general and administrative expenses was primarily the result of the
acquisitions, increased selling and marketing activity and increased production.
Interest expense was 106% more than the same period of the previous year due the
term debt incurred as part of the acquisitions. Earnings per share increased
64%, which was less than the increase in net income due to the effect of shares
issued for stock option exercises and the effect of common stock equivalents on
the average number of shares outstanding.
<PAGE>
Cash flows presented on the Consolidated Statements of Cash Flows for the
six months ended March 31, 1996 have been reclassified from the original
presentation in 1996 to conform to the presentation in the September 30, 1996
annual report.
Cash flow provided by operations in the six months ended March 31, 1997 was
$2,124,000 compared to $2,000 in the same six months of the previous year. Cash
flow from operations was improved by normal variations in investment in unbilled
revenues and accounts receivable. The Company maintains an open line of credit
to finance the normal variations in investment in unbilled revenue and accounts
receivable.
Cash flows from investing activities include the proceeds from the sale of
surplus equipment and the expenditures for routine capital equipment additions.
Cash flow from financing activities consists of the 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 $43,678,000 at March
31, 1997 up 69% from 1996. The Company's expansion strategy has enabled it to
sign significant contracts with utilities customers as well as municipal and
commercial companies. Some of these projects are large multiple-year contracts
which offer the Company the benefits 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.
The Company's management believes that the domestic market for its data
conversion services is growing at annual rates of 15% to 20% per year. Over the
next several years, the Company is seeking to more than double the market's
annual growth rates by capitalizing on a variety of opportunities including
increased participation in selected international markets. Additionally, the
Company is seeking to develop new products and services which could expand its
sales by offering even more solutions to customer needs than it does today. A
third strategy for growth includes acquisitions where opportunities can be found
that meet the Company's criteria for quality, technology, personnel and growth
opportunity and that can be acquired in a manner that will contribute to the
long term success of the Company. There is no assurance that the Company will be
successful in any or all of these strategies and there are business risks
inherent in seeking growth at these rates. Among the risks faced in successfully
implementing these strategies are the continuing possibility of new competitors
in the industry, possible attempts by others to consolidate the industry by the
acquisition and combination of existing competitors, and the ability of the
Company's management team to manage all of the elements of a rapidly growing
business. There can be substantial variation in the short term rate of growth
even if the Company is successful in achieving its longer term growth goals.
<PAGE>
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. There was no balance owed under the line of
credit at March 31, 1997 and the line of credit agreement was renewed for an
additional year with the existing bank. Routine capital expenditures will
usually be financed with term debt and/or capital leases.
The Company has not committed to significant capital expenditures at March
31, 1997.
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 variety 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.
<PAGE>
Part II Other Information
- -------------------------
Item 2. Legal Proceedings
The Company is not a party to any material pending legal proceeding nor is
its property the subject of a pending legal proceeding. The Company is involved
in routine litigation from time to time, which is incidental to the business and
the outcome of which is not expected to have a material effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Two matters were voted upon at the Annual Meeting of Shareholders on
February 18, 1997: (a) All nominees for director listed in the Company's proxy
statement were elected; there was no solicitation in opposition to management's
nominees. The following directors were re-elected to serve for one year or until
the next election of directors:
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
Willem H. J. Andersen 3,930,965 21,314
Sidney V. Corder 3,939,265 13,014
Robert H. Keeley 3,937,542 14,737
Richard P. MacLeod 3,846,272 106,007
James T. Rothe 3,938,845 13,434
John A. Thorpe 3,938,845 13,434
</TABLE>
(b) The proposal to ratify the selection of KPMG Peat Marwick LLP as the
Company's independent accountants for the fiscal year ending September 30, 1997
was passed:
<TABLE>
<S> <C>
For 3,900,804
Against 33,105
Abstain 18,370
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
Three reports on Form 8-K were filed during the three months ended March
31, 1997:
1. February 13, 1997 Item 5, Other Events, reporting $6.1 million in
new contracts
2. February 24, 1997 Item 5, Other Events, reporting $8.6 million in
new contracts
3. March 20, 1997 Item 5, Other Events, reporting the election of
Sidney V. Corder to Chairman of the Board of
Directors and $3.7 million in new contracts,
<PAGE>
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: May 14, 1997 /s/ Sidney V. Corder
________________________
Sidney V, Corder, Chairman
and Chief Executive Officer
Date: May 14, 1997 /s/ Scott C. Benger
________________________
Scott C. Benger, Secretary/Treasurer
(principal financial officer and
principal accounting officer)
Date: May 14, 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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 2350
<SECURITIES> 0
<RECEIVABLES> 15314
<ALLOWANCES> 60
<INVENTORY> 0
<CURRENT-ASSETS> 18697
<PP&E> 8986
<DEPRECIATION> 6581
<TOTAL-ASSETS> 23921
<CURRENT-LIABILITIES> 6457
<BONDS> 0
0
0
<COMMON> 6865
<OTHER-SE> 6487
<TOTAL-LIABILITY-AND-EQUITY> 23921
<SALES> 0
<TOTAL-REVENUES> 16160
<CGS> 0
<TOTAL-COSTS> 13869
<OTHER-EXPENSES> (1)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 260
<INCOME-PRETAX> 2032
<INCOME-TAX> 777
<INCOME-CONTINUING> 1255
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1255
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
