<PAGE>
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
DECEMBER 31, 1998
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.)
941 NORTH MERIDIAN STREET
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices) (Zip Code)
(317) 634-1000
(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, 1999 was
6,802,993.
<PAGE>
PART I ITEM 1.
ANALYTICAL SURVEYS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,243 $ 2,158
Accounts receivable net of allowance for doubtful
accounts of $161 and $155 at September 30 and
December 31 respectively 17,501 21,595
Revenue in excess of billings 39,316 40,531
Deferred income taxes 557 722
Income tax receivable 675
Prepaid expenses and other 659 856
------- -------
Total current assets 60,951 65,862
------- -------
Equipment and leasehold improvements, at cost:
Equipment 13,015 14,579
Furniture and fixtures 1,594 1,701
Leasehold improvements 817 828
------- -------
15,426 17,108
Less accumulated depreciation and amortization (7,470) (8,256)
------- -------
7,956 8,852
------- -------
Deferred income taxes 134 129
Goodwill net of accumulated amortization
of $1,654 and $2,044 at September 30 and
December 31, respectively 25,272 24,826
Other assets, net of accumulated amortization
of $549 and $745 at September 30 and
December 31, respectively 227 131
------- -------
Total Assets $94,540 $99,800
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
ANALYTICAL SURVEYS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1998
------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,594 $ 6,170
Billings in excess of revenue 1,232 2,392
Accounts payable and other accrued liabilities 8,229 6,531
Income taxes payable 611
Accrued payroll and related benefits 5,910 3,508
------- -------
Total current liabilities 19,965 19,212
------- -------
Long-term debt, less current portion 29,920 32,781
Deferred compensation payable 192 176
------- -------
Total liabilities 50,077 52,169
Stockholders' equity
Preferred stock; no par value. Authorized 2,500
shares; none issued or outstanding -- --
Common stock; no par value. Authorized 100,000
shares; 6,732 and 6,774 shares issued and outstanding
at September 30, and December 31, respectively 28,670 29,565
Retained earnings 15,793 18,066
------- -------
Total stockholders' equity 44,463 47,631
------- -------
Total liabilities and stockholders' equity $94,540 $99,800
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
ANALYTICAL SURVEYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1997 1998
--------- ---------
<S> <C> <C>
Sales $17,402 28,229
------- -------
Costs and Expenses
Salaries, wages and related benefits 8,822 14,288
Subcontractor costs 1,611 3,708
Other general and administrative 3,174 4,365
Depreciation and amortization 778 1,349
------- -------
14,385 23,710
------- -------
Earnings from operations 3,017 4,519
------- -------
Other income (expense):
Interest expense, net (436) (691)
Other 14 58
------- -------
(422) (633)
------- -------
Earnings before income taxes 2,595 3,886
Income tax expense 1,039 1,613
------- -------
Net earnings $ 1,556 2,273
------- -------
------- -------
Earnings per common share:
Basic $ 0.25 0.34
Diluted $ 0.23 0.32
Weighted average outstanding common shares:
Basic 6,119 6,739
Diluted 6,629 7,128
</TABLE>
See accompanying notes to financial statements and common stock equivalent.
4
<PAGE>
ANALYTICAL SURVEYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
1997 1998
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,556 $ 2,273
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 778 1,349
Deferred income tax benefit (240) (158)
Tax benefit relating to exercise of stock options 142 132
Changes in operating assets and liabilities,
net of effect of business combinations:
Accounts receivable, net (1,326) (4,094)
Revenue in excess of billings (4,599) (1,215)
Income taxes -- 1,285
Prepaid expenses and other (30) (56)
Billings in excess of revenue 913 1,160
Accounts payable and other accrued liabilities 2,087 (1,698)
Accrued payroll and related benefits (368) (2,418)
------- -------
Net cash provided (used) by operating activities (1,087) (3,440)
------- -------
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (774) (1,169)
Cash flows from financing activities:
Net borrowings (payments) under lines of credit with banks 1,178 3,400
Proceeds from issuance of long-term debt 756 1,339
Loan fees on long-term debt (162)
Principal payments of long-term debt (747) (302)
Proceeds from exercise of stock options 188 249
------- -------
Net cash provided by financing activities 1,375 4,524
------- -------
Net increase in cash (486) (85)
Cash at beginning of year 1,559 2,243
------- -------
Cash at end of period $ 1,073 $ 2,158
------- -------
------- -------
Supplemental disclosures of cash flow information:
Cash paid for interest $ 440 $ 677
------- -------
------- -------
Cash paid for income taxes $ 50 $ 195
------- -------
------- -------
Common stock issued for net assets acquired in
business combinations $ 0 $ 514
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited 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,
1998. The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. Certain information and
note disclosures normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have
been omitted. These condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and
related notes included in the Company's Annual Report on Form 10-K for the
year ended September 30, 1998.
The consolidated financial statements reflect all adjustments which are, in
the opinion of management, necessary to present fairly the financial position
of Analytical Surveys, Inc., and subsidiaries at December 31, 1998 and its
results of operations for the three months ended December 31, 1997 and 1998,
and its cash flows for the three months ended December 31, 1997 and 1998. All
such adjustments are of a normal recurring nature.
6
<PAGE>
PART I ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
THE DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE
COMPANY SET FORTH BELOW SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS
FORM 10-Q. THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISK AND UNCERTAINTIES. THE STATEMENTS CONTAINED IN THIS FORM 10-Q THAT ARE
NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. WHEN
USED IN THIS FORM 10-Q, OR IN THE DOCUMENTS INCORPORATED BY REFERENCE INTO
THIS FORM 10-Q, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE," "INTEND" AND
"EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT
LIMITATION, THE STATEMENTS REGARDING THE COMPANY'S STRATEGY, FUTURE SALES,
YEAR 2000 COMPLIANCE, FUTURE EXPENSES AND FUTURE LIQUIDITY AND CAPITAL
RESOURCES. ALL FORWARD-LOOKING STATEMENTS IN THIS FORM 10-Q ARE BASED UPON
INFORMATION AVAILABLE TO THE COMPANY ON THE DATE OF THIS FORM 10-Q, AND THE
COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.
THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN
THIS FORM 10-Q. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, IN ITEM 1.
BUSINESS--"RISK FACTORS" AND ELSEWHERE IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K.
OVERVIEW
ASI, a leading provider of data conversion and digital mapping services to
users of customized geographic information systems, was founded in 1981 by
John A. Thorpe. From 1981 to 1990, the Company experienced steady growth in
revenues with periodic fluctuations in financial results. After the hiring of
the Company's current Chief Executive Officer and Chief Financial Officer in
1990, the Company implemented a controlled growth strategy, including
improving and standardizing operating controls and procedures, investing in
infrastructure, upgrading the Company's proprietary software and establishing
capital sources.
In 1995, the Company embarked on a more aggressive growth strategy, including
consolidation of the fragmented GIS services industry. The Company's recent
acquisitions are summarized in the following table:
<TABLE>
<CAPTION>
Date Company Location Employees
---- ------- -------- ---------
<S> <C> <C> <C>
12/95 Intelligraphics Wisconsin 200
7/96 Westinghouse Landmark North Carolina 105
7/97 MSE Corporation Indiana 325
6/98 Cartotech Texas 270
</TABLE>
The Company recognizes revenue using the percentage of completion method of
accounting on a cost-to-cost basis. For each contract, an estimate of total
production costs is determined. At each accounting period and for each of the
Company's contracts, the percentage of completion is based on production
costs incurred to date as a percentage of total estimated production costs.
This percentage is then multiplied by the contract's total value to calculate
the sales
7
<PAGE>
revenue to be recognized.
Production costs consist of internal costs, primarily salaries and wages, and
external costs, primarily subcontractor costs. Internal and external
production costs may vary considerably among projects and during the course
of completion of each project. As a result, the Company experiences yearly
and quarterly fluctuations in production costs, in salaries, wages and
related benefits and in subcontractor costs. These costs may vary as a
percentage of sales from period to period. Since 1995 the Company has relied
less on subcontractors and more on employees. The Company anticipates that,
as a percentage of sales, salaries, wages and related benefits will continue
to increase, with a corresponding decrease in subcontractor costs, due, in
part, to the Company's May 1998 purchase of Interra Technologies, an
India-based company that had been a provider of subcontractor services to the
Company. The following table illustrates the relationship of salaries, wages
and related benefits and subcontractor costs:
<TABLE>
<CAPTION>
Year Three Months
Ended September 30, Ended December 31,
------------------------------- ------------------
1996 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF SALES:
Salaries, wages and related benefits 46.3% 48.5% 48.7% 50.7% 50.6%
Subcontractor costs 17.2% 14.5% 13.6% 9.3% 13.1%
----- ----- ----- ----- -----
Total . . . . . . . . . . . . . . 63.5% 63.0% 62.3% 60.0% 63.7%
</TABLE>
The Company recognizes losses on contracts in the period such loss is
determined. From the beginning of fiscal 1995 through the end of the first
three months of fiscal 1999, the Company has recognized aggregate losses on
contracts of approximately $910,000. Over the same period, the Company
recognized sales of $193.4 million. Sales and marketing expenses associated
with obtaining contracts are expensed as incurred.
Backlog increases when new contracts are signed and decreases as revenue is
recognized. As of December 31, 1998, backlog was $99.0 million. Recently, the
number of large projects awarded to the Company has increased. Contracts for
larger projects generally increase the Company's risk due to inflation as
well as changes in customer expectations and funding availability. The
Company's contracts are generally terminable on short notice, and while in
the Company's experience such termination is rare, there is no assurance that
the Company will receive all of the revenue anticipated under signed
contracts.
The Company engages in research and development activities. The majority of
these activities occur as the Company develops software or designs a product
for a particular contract, so that the costs of such efforts are included as
an integral part of the Company's services. Such custom-designed software can
often be applied to projects for other customers. These amounts expended by
the Company are not included in research and development expenses, although
the Company retains ownership of such proprietary software or products. The
Company, through its Advanced Technology Division, also engages in research
and development activities independently of the Company's work on particular
customer projects. For the three months ended December 31, 1997 and 1998, the
Company expended $55,478 and $67,072, respectively on such independent
research and development activities in the Advanced Technology Division.
8
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
consolidated statements of operations data expressed as a percentage of sales:
<TABLE>
<CAPTION>
Three Months Ended
December 31
--------------------------
1997 1998
<S> <C> <C>
PERCENTAGE OF SALES:
Sales 100.0% 100.0%
Costs and expenses
Salaries, wages and related benefits 50.7 50.6
Subcontractor costs 9.3 13.1
Other general and administrative 18.2 15.5
Depreciation and amortization 4.5 4.8
----- -----
Earnings from operations 17.3 16.0
Other expense, net (2.4) (2.2)
----- -----
Earnings before income taxes 14.9 13.8
Income tax expense 6.0 5.7
----- -----
Net earnings 8.9% 8.1%
----- -----
----- -----
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
SALES. The Company's sales consist of revenue recognized for services
performed. Sales increased $10.8 million to $28.2 million for the first three
months of fiscal 1999 from $17.4 million for the first three months of fiscal
1998. This increase was due to an increase in the number and size of customer
contracts with the Company (including Cartotech) as well as the impact of the
acquisition Cartotech in June 1998. Prior to its acquisition by the Company,
Cartotech's sales for the first three months of fiscal 1998 were
approximately $4.0 million.
SALARIES, WAGES AND RELATED BENEFITS. Salaries, wages and related benefits
includes employee compensation for production, marketing, selling,
administrative and executive employees. Salaries, wages and related benefits
increased 62.0% to $14.3 million for the first three months of fiscal 1999
from $8.8 million for the first three months of fiscal 1998. This increase
was primarily due to the addition of over 270 employees as a result of the
Cartotech acquisition in June 1998, as well as the hiring of additional
employees to support the Company's increased business. As a percentage of
sales, salaries, wages and related benefits decreased slightly to 50.6% for
the first three months of fiscal 1999 from 50.7% for the first three months
of fiscal 1998.
SUBCONTRACTOR COSTS. Subcontractor costs includes production costs incurred
through the use of third parties for production tasks such as data conversion
services to meet contract requirements, aerial photography and ground and
airborne survey services. Subcontractor costs increased 130.2% to $3.7
million for the first three months of fiscal 1999 from $1.6 million for the
first three months of fiscal 1998, and increased as a percentage of sales to
13.1% for the first three months of fiscal 1999 from 9.3% for the first three
months of fiscal 1998. Subcontractor costs were lower than normal in 1998 due
to reduced use of outside subcontractors in that period.
9
<PAGE>
OTHER GENERAL AND ADMINISTRATIVE COSTS. Other general and administrative
costs includes rent, maintenance, travel, supplies, utilities, insurance and
professional services. Such costs increased 37.5% to $4.4 million for the
first three months of fiscal 1999 from $3.2 million for the first three
months of fiscal 1998, primarily due to the acquisition of Cartotech. As a
percentage of sales, other general and administrative costs decreased to
15.5% for the first three months of fiscal 1999 from 18.2% for the first
three months of fiscal 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization consists
primarily of amortization of goodwill incurred in connection with the
Company's acquisitions, as well as depreciation of certain of the Company's
operating assets. For the first three months of fiscal 1999, depreciation and
amortization increased 73.4% to $1.3 million from $778,000 for the first
three months of fiscal 1998. This increase was primarily attributable to the
increased goodwill recorded as a result of the Cartotech acquisitions. As a
percentage of sales, depreciation and amortization increased to 4.8% for the
first three months of fiscal 1999 from 4.5% for fiscal 1998.
OTHER EXPENSE, NET. Other expense, net is comprised primarily of net interest
expense. Net interest expense increased 58.5% to $691,000 for the first three
months of fiscal 1999 from $436,000 for the first three months of fiscal
1998. This increase was primarily due to increased term debt incurred in
connection with the acquisition of Cartotech in June 1998 and increased
utilization of the Company's lines of credit for working capital.
INCOME TAX EXPENSE. Income tax expense was $1.6 million for the first three
months of fiscal 1999 compared to $1.0 million for the first three months of
fiscal 1998. The Company's effective income tax rate for the first three
months of fiscal 1999 was 41.5%, an increase from 40.0% for the first three
months of fiscal 1998, due to increases in state income taxes and the
nondeductible nature of the Cartotech goodwill.
NET EARNINGS. Due to the factors discussed above, net earnings increased
46.1% to $2.3 million for the first three months of fiscal 1999 from $1.6
million for the first three months of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's principal source of liquidity has consisted of
cash flow from operations supplemented by secured lines of credit. As of
December 31, 1998, the Company's outstanding balance on its lines of credit
was $9.2 million. During 1998, the Company replaced its existing lines of
credit with a three-year, $21.0 million secured working capital line of
credit and the Company refinanced $25.4 million of term debt. Borrowings
under the new credit facilities bear interest at a rate per annum equal to,
at the Company's option, (i) the agent bank's prime rate or (ii) an adjusted
London Interbank Offering Rate (LIBOR) plus a margin ranging from 1.25% to
1.75%. The effective borrowing rate was 6.2842% on December 31, 1998.
The Company's cash flow is significantly affected by three contract-related
accounts: accounts receivable; revenues in excess of billings; and billings
in excess of revenues. Under the percentage of completion method of
accounting, an "account receivable" is created when an amount becomes due
from a customer, which typically occurs when an event specified in the
contract triggers a billing. "Revenues in excess of billings" occur when the
Company has performed under a contract even though a billing event has not
been triggered. "Billings in excess of revenues" occur when the Company
receives an advance or deposit against work yet to be performed. These
accounts, which represent a significant investment by ASI in its business,
affect the Company's cash flow as projects are signed, performed, billed and
collected.
10
<PAGE>
Net cash used by the Company's operating activities was ($1.1) million, and
($3.4) million for first three months of fiscal years 1998 and 1999,
respectively. The change in operating cash flows is primarily attributable to
normal fluctuations in the contract-related accounts described in the
previous paragraph. At December 31, 1998, the working capital in
contract-related accounts was equivalent to 194 days sales outstanding, up
from 182 days at September 30, 1998. The Company believes that this level of
investment is consistent with its normal operating range of days sales
outstanding.
Cash used by investing activities for the first three months of fiscal years
1998 and 1999 was ($774,000) and ($1.2) million, respectively. Such investing
activities principally consisted of payments for purchases of equipment and
leasehold improvements.
Cash provided by financing activities for the first three months of fiscal
years 1998 and 1999 was $1.4 million and $4.5 million, respectively.
Financing activities consisted primarily of net borrowings and payments under
lines of credit for working capital purposes and net borrowings and payments
of long-term debt used for business combinations and the purchase of
equipment and leasehold improvements.
The Company believes that funds available under its lending arrangements and
cash flow from operations are adequate to finance its operations for at least
the next 18 months.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income." This statement requires that changes
in comprehensive income be shown in a financial statement that is displayed
with the same prominence as other financial statements. The statement will be
effective for fiscal years beginning after December 15, 1997 (the Company's
fiscal year beginning October 1, 1998). Reclassification for earlier periods
is required for comparative purposes. The Company adopted this statement
beginning October 1, 1998 with no effect on its financial statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information."
This statement supersedes Statement of Financial Accounting Standards No. 14,
"Financial Reporting for Segments of a Business Enterprise." This statement
includes requirements to report selected segment information quarterly and
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenues. The
statement will be effective for fiscal years beginning after December 15,
1997 (the Company's fiscal year beginning October 1, 1998). Reclassification
for earlier periods is required, unless impracticable, for comparative
purposes. The Company adopted this statement beginning October 1, 1998 with
no effect on its financial statements.
In addition, the Company believes the future adoption of FASB Statements No.
132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits", No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and No. 134, "Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking Enterprise" will not have a material affect on its financial
statements.
YEAR 2000 ISSUES
The "Year 2000" issue is the result of computer programs using two digits,
rather than four, to define the applicable
11
<PAGE>
year. The failure of such programs to recognize the year 2000 as such could
result in systems failures and miscalculations. The Company and the third
parties with which it does business rely on numerous computer programs in
their daily operations.
The Company is currently in the process of assessing the impact of the Year
2000 issues. The Company expects that such assessment and any required action
will be carried out solely by its employees. Accordingly, the Company has not
incurred material costs to date and does not believe that the costs
associated with this process will be material.
The Company has assessed its most critical systems, its proprietary
operations software, and believes such software to be Year 2000 compliant.
The Company is in the process of assessing its other internal systems,
including financial and other operational systems for Year 2000 compliance,
including information technology ("IT") and critical non-IT areas where Year
2000 issues may exist. The majority of the personal computers used by the
Company are running Microsoft's Windows 95 or Windows 98 or Microsoft NT
operating systems, each of which the Company believes will be substantially
Year 2000 compliant before 2000. The Company expects that any personal
computers that are not Year 2000 compliant will be upgraded or replaced prior
to 2000. Although the Company has not completed its assessment of internal
systems readiness for Year 2000, the Company believes that the costs required
to remedy internal Year 2000 issues will not be material.
The Company has not formally surveyed its relationships with its vendors or
subcontractors. Based on informal inquiries, the Company does not believe
that any of its significant vendors or subcontractors is or is likely to
present any significant exposure due to the Year 2000 issues. If any such
vendors or subcontractors or their products are not Year 2000 compliant and
they suffer significant business interruptions or use of their products
interfere with the Company's operations, the Company believes that
alternative vendors and subcontractors will be available to provide the
services and products provided by the Company's current vendors and
subcontractors at comparable costs.
The Company's customer contracts specify database designs, including date
fields, and the Company's delivery of data conforms to such specifications.
Accordingly, the Company has not formally evaluated the Year 2000 issue as it
relates to the computer systems used by its customers and potential
customers. The Company faces risk to the extent its major customers do not
comply with Year 2000 requirements in their own operations and suffer
business disruptions as a result. To the extent Year 2000 issues cause
significant delays or cancellation of customer's GIS projects, the Company's
financial position and results of operations could be materially adversely
affected.
Based on currently available information, the Company believes that it does
not have material exposure to significant business interruption as a result
of Year 2000 compliance issues. However, the Company is planning to undertake
a more formal review of its internal operational systems and its significant
vendors and subcontractors, which it expects to complete by March 31, 1999.
However, there can be no assurances that the Company will not experience
serious unanticipated negative consequences and/or material costs caused by
undetected errors or defects in the systems used by the Company in its
internal operations.
12
<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: February 12, 1999 /s/ Sidney V. Corder
------------------------
Sidney V, Corder, Chairman
and Chief Executive Officer
Date: February 12, 1999 /s/ Scott C. Benger
------------------------
Scott C. Benger, Secretary/Treasurer
(principal financial officer and
principal accounting officer)
Date: February 12, 1999 /s/ Brian J. Yates
------------------------
Brian J. Yates, Controller
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,158
<SECURITIES> 0
<RECEIVABLES> 62,281
<ALLOWANCES> 155
<INVENTORY> 0
<CURRENT-ASSETS> 65,862
<PP&E> 17,108
<DEPRECIATION> 8,256
<TOTAL-ASSETS> 99,800
<CURRENT-LIABILITIES> 19,212
<BONDS> 0
0
0
<COMMON> 29,565
<OTHER-SE> 18,066
<TOTAL-LIABILITY-AND-EQUITY> 99,800
<SALES> 0
<TOTAL-REVENUES> 28,229
<CGS> 0
<TOTAL-COSTS> 23,710
<OTHER-EXPENSES> (58)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 691
<INCOME-PRETAX> 3,886
<INCOME-TAX> 1,613
<INCOME-CONTINUING> 2,273
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,273
<EPS-PRIMARY> .34
<EPS-DILUTED> .32
</TABLE>
