FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended: September 1, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From _______________ to ______________
Commission File Number: 0-15034
GEODYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
California 95-2502865
- --------------------------------- ----------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
21171 Western Avenue, Suite 110, Torrance, California 90501
-----------------------------------------------------------
(Address of principal executive office)
(310) 782-7277
---------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 90 days.
Yes X No
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding as of September 30, 1995
- --------------- ------------------------------------
Common Stock 2,662,414
This document is comprised of 11 pages.
GEODYNAMICS CORPORATION AND SUBSIDIARIES
FORM 10-Q
September 1, 1995
INDEX
Part I: FINANCIAL INFORMATION
Item 1: Financial Statements
Condensed Consolidated Balance Sheets as of September 1, 1995
(unaudited) and June 2, 1995
Condensed Consolidated Statements of Income (unaudited) for the
three months ended September 1, 1995 and September 2, 1994
Condensed Consolidated Statements of Cash Flows (unaudited) for the
three months ended September 1, 1995 and September 2, 1994
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
Signatures
Part I. Financial Information
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 1, June 2,
1995 1995
----------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash $2,723,000 $2,310,000
Short-term investments 3,676,000 5,862,000
Receivables:
Billed 14,131,000 12,614,000
Unbilled 1,656,000 1,910,000
Prepaid expenses and other 1,156,000 1,354,000
----------- -----------
Total current assets 23,342,000 24,050,000
----------- -----------
Equipment and Leasehold Improvements, at cost
Equipment and leasehold improvements 28,403,000 28,098,000
Less accumulated depreciation and amortization (17,091,000) (16,615,000)
----------- -----------
Net equipment and leasehold improvements 11,312,000 11,483,000
----------- -----------
Other Assets
Noncurrent unbilled contract receivables 920,000 920,000
Investments 1,277,000 1,277,000
Goodwill, net of amortization of $94,000 at
September 1, 1995 and $75,000 at June 2, 1995 1,406,000 1,425,000
Intangible assets, net of amortization of
$992,000 at September 1, 1995 and $916,000 at
June 2, 1995 1,004,000 1,080,000
Other assets 314,000 405,000
----------- -----------
Total other assets 4,921,000 5,107,000
----------- -----------
$39,575,000 $40,640,000
=========== ===========
LIABILITIES AND SHAREHOLDERS'EQUITY
Current Liabilities
Accounts payable $1,385,000 $2,907,000
Accrued expenses 3,396,000 3,229,000
Line of credit 597,000 747,000
Other current liabilities 1,306,000 1,429,000
----------- -----------
Total current liabilities 6,684,000 8,312,000
----------- -----------
Long-Term Liabilities
Long-term debt, net of current portion 150,000 163,000
Other liabilities 1,705,000 1,709,000
----------- -----------
Total long-term liabilities 1,855,000 1,872,000
----------- -----------
Shareholders' Equity
Common stock, without par value:
Authorized - 10,000,000 shares
Outstanding - 2,648,000 at September 1, 1995
and 2,605,000 shares at June 2, 1995 12,148,000 11,910,000
Retained earnings 18,893,000 18,542,000
Foreign currency translation (5,000) 4,000
----------- -----------
Total shareholders' equity 31,036,000 30,456,000
----------- -----------
$39,575,000 $40,640,000
=========== ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
For the Three Months Ended:
----------------------------
September 1, September 2,
1995 1994
------------ ------------
<S> <C> <C>
REVENUES $15,998,000 $13,144,000
COSTS AND EXPENSES 15,178,000 12,332,000
----------- -----------
Income from operations 820,000 812,000
----------- -----------
OTHER INCOME / (EXPENSE):
Interest income 67,000 69,000
Interest expense (23,000) (22,000)
----------- -----------
Net other 44,000 47,000
----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 864,000 859,000
PROVISION FOR TAXES 333,000 331,000
----------- -----------
NET INCOME $531,000 $528,000
=========== ===========
EARNINGS PER COMMON SHARE $0.18 $0.21
=========== ===========
Weighted average number of common shares
outstanding (Note 3) 2,875,000 2,513,000
=========== ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Three Months Ended:
---------------------------
September 1, September 2,
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $531,000 $528,000
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 775,000 643,000
Deferred income taxes 139,000 (167,000)
Nonqualified stock options, charged to
operations 16,000 18,000
(Increase) decrease in:
Contract receivables (1,409,000) 2,025,000
Prepaid expenses and other 63,000 294,000
Other noncurrent assets 82,000 102,000
Increase (decrease) in:
Accounts payable (1,522,000) (451,000)
Accrued expenses 167,000 (109,000)
Other current liabilities 23,000 116,000
Other liabilities (15,000) 47,000
---------- ----------
Net cash provided by (used in) operating activities (1,150,000) 3,046,000
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments ----- (2,000,000)
Sales of short-term investments 2,186,000 2,445,000
Purchase of LCT, net of acquired cash of $1,319,000 ----- (1,419,000)
Employee loans, net 16,000 12,000
Purchases of property and equipment (509,000) (130,000)
---------- ----------
Net cash provided by (used in) investing activities 1,693,000 (1,092,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit (150,000) -----
Proceeds from exercise of common stock options and
tax benefits related to stock options 191,000 36,000
Repurchases of common stock (13,000) -----
Cash dividends paid (180,000) (179,000)
Foreign currency translation (9,000) (5,000)
Long term subordinated debt (13,000) (584,000)
Payments on notes receivable from sale of stock ---- 3,000
Proceeds from employee stock purchase plan 44,000 58,000
---------- ----------
Net cash used in financing activities (130,000) (671,000)
---------- ----------
Net increase in cash 413,000 1,283,000
Cash at beginning of period 2,310,000 1,237,000
---------- ----------
Cash at end of period $2,723,000 $2,520,000
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period - income taxes $150,000 $33,000
Cash paid during the period - interest $23,000 $30,000
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Accounting Policies
The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have either been condensed or omitted pursuant
to those rules and regulations. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations and cash flows for
the periods presented are not necessarily indicative of the results that may
be expected for the full fiscal year. For further information, refer to the
financial statements and notes thereto for the year ended June 2, 1995 included
in the 1995 Annual Report on Form 10-K. The Condensed Consolidated Balance
Sheets at June 2, 1995 have been taken from the audited financial statements
at that date and condensed. Certain reclassifications have been made to the
prior years' financial statements to conform to the current year presentation.
Note 2 - Investments
The Company's short-term investments are stated at market, which equals cost,
and consist of money market funds.
Note 3 - Earnings Per Common Share
The following schedule summarizes the information used to compute earnings per
common share. Fully diluted earnings per share did not vary significantly from
primary earnings per share.
<TABLE>
<CAPTION>
Three Months Ended:
----------------------------
September 1, September 2,
1995 1994
------------ ------------
<S> <C> <C>
Net income $531,000 $528,000
========= =========
Weighted average common shares outstanding 2,624,000 2,479,000
Dilutive effect of stock options 251,000 34,000
--------- ---------
Weighted average shares used to compute earnings
to compute earnings per common share 2,875,000 2,513,000
========= =========
</TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the first quarter of fiscal year 1996 rose to $16.0 million,
representing a 21.7% increase from the $13.1 million reported in the
corresponding fiscal year 1995 period. The increase was primarily due to a
net increase of approximately $500,000 from marine and airborne survey
activities in the Company's LCT subsidiary, and approximately $2.3 million
from new DoD-related initiatives.
Costs and expenses increased $2.9 million, or 23.1%, to $15.2 million from
$12.3 million in the first quarter of fiscal 1995. This resulted in a
decrease in the operating margin to 5.1% in the current quarter from 6.2% in
the first quarter of fiscal 1995. The decline in operating margin was
primarily the result of the termination for convenience of a program at less
than the anticipated margin, a decision to delay recognition of royalty
income under one contract until the royalties are received, and costs related
to the possible sale of the Company.
Although net income was slightly higher than in the comparative quarter of a
year ago, earnings per share declined from $0.21 to $0.18. This decline is
attributable to a higher weighted average number of shares outstanding in
fiscal 1996, plus an increase in the dilutive effect of stock options due to
higher market prices per share in the current quarter (see Note 3).
CAPITAL RESOURCES AND LIQUIDITY
Cash and short-term investments decreased to $6.4 million at September 1, 1995
from $8.2 million at June 2, 1995. The decrease is due in large part to
uncollected contract receivables; contract receivables increased to $16.0
million from $14.5 million at June 2, 1995. In addition, accounts payable
decreased substantially from $2.9 million at June 2, 1995 to $1.4 million at
the end of the current quarter.
Accounts receivable aging at September 1, 1995 was 96 days, increasing from 93
days at June 2, 1995. The balance sheet remains strong, with working capital
up approximately $1.0 million to a total of $16.7 million and a current ratio
of 3.5 to 1 at September 1, 1995, compared with 2.9 to 1 at June 2, 1995.
The Company maintains an $8.0 million line of credit with a bank; at September
1, 1995, borrowings were $597,000 under this line, down from $747,000 at June 2,
1995. Borrowings under the line of credit, which are guaranteed by the parent
company, were to provide working capital for the Company's LCT subsidiary.
GEODYNAMICS CORPORATION AND SUBSIDIARIES
Part II. Other Information
Items 1 through 5 have been omitted because the related information is
either inapplicable or has been previously reported.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
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 thereto duly authorized.
GEODYNAMICS CORPORATION
DATE: October 13, 1995 By: /s/ David P. Nelson
------------------------------------------------
David P. Nelson, Vice-President, Chief Financial
Officer, and duly authorized to sign on behalf
of registrant
DATE: October 13, 1995 By: /s/ Robert G. Cook
------------------------------------------------
Robert G. Cook, Corporate Controller and Chief
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> SEP-01-1995
<CASH> 2,723,000
<SECURITIES> 3,676,000
<RECEIVABLES> 15,787,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,342,000
<PP&E> 28,403,000
<DEPRECIATION> (17,091,000)
<TOTAL-ASSETS> 39,575,000
<CURRENT-LIABILITIES> 6,684,000
<BONDS> 0
<COMMON> 12,148,000
0
0
<OTHER-SE> 18,888,000
<TOTAL-LIABILITY-AND-EQUITY> 39,575,000
<SALES> 15,998,000
<TOTAL-REVENUES> 15,998,000
<CGS> 15,178,000
<TOTAL-COSTS> 15,178,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,000
<INCOME-PRETAX> 864,000
<INCOME-TAX> 333,000
<INCOME-CONTINUING> 531,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 531,000
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
