<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended: March 31, 1995 Commission File Number: O-14741
-------------- -------
ASA International Ltd.
-----------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 02-0398205
- - - - - - - - -------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10 Speen Street, Framingham, MA 01701
- - - - - - - - ---------------------------------------- -----------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 508-626-2727
------------
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.
X
Yes: ----- No: -----
As of March 31, 1995, there were 3,787,469 shares of Common Stock of
the Registrant outstanding.
<PAGE> 2
<TABLE>
PART I
Item 1
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 376,099 $ 10,381
Receivables - net 4,677,177 5,228,384
Computer hardware held for resale 260,942 313,836
Other current assets 997,060 901,642
----------- -----------
TOTAL CURRENT ASSETS 6,311,278 6,454,243
PROPERTY AND EQUIPMENT (less
depreciation of $4,358,512 and
$4,226,580, respectively) 4,757,707 4,813,453
SOFTWARE (less amortization of
$6,701,339 and $6,342,913,
respectively) 6,321,692 6,485,771
COST EXCEEDING NET ASSETS ACQUIRED
(less amortization of $1,169,424
and $1,104,704, respectively) 1,730,998 1,795,718
OTHER ASSETS 555,353 581,745
----------- -----------
$19,677,028 $20,130,930
=========== ===========
</TABLE>
See notes to Condensed Consolidated Financial Statements.
<PAGE> 3
<TABLE>
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit and bank note $ 1,025,000 $ 975,000
Accounts payable 1,667,757 1,994,103
Accrued expenses 2,104,744 2,368,444
Income taxes 95,982 -
Other current liabilities 1,960,264 1,912,243
----------- -----------
TOTAL CURRENT LIABILITIES 6,853,747 7,249,790
LONG-TERM OBLIGATIONS, NET OF CURRENT
MATURITIES 3,012,842 3,111,905
DEFERRED TAXES 117,000 117,000
COMMITMENTS
SHAREHOLDERS' EQUITY:
Common stock 39,173 39,173
Additional paid-in capital 7,681,632 7,681,632
Retained earnings 2,393,076 2,351,872
----------- -----------
10,113,881 10,072,677
Less: treasury stock, at cost 420,442 420,442
----------- -----------
9,693,439 9,652,235
----------- -----------
$19,677,028 $20,130,930
=========== ===========
</TABLE>
See notes to Condensed Consolidated Financial Statements.
<PAGE> 4
<TABLE>
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
<CAPTION>
Three Months Ended
March 31,
----------------------------
1995 1994
----------------------------
(Unaudited)
<S> <C> <C>
REVENUE
Computer and add-on hardware $ 1,114,115 $ 1,177,817
Services 4,140,881 4,054,669
Product licenses 1,253,890 1,137,978
----------- ------------
GROSS REVENUE 6,508,886 6,370,464
COST OF COMPUTER AND ADD-ON HARDWARE 863,972 1,043,940
----------- ------------
REVENUE NET OF HARDWARE COSTS 5,644,914 5,326,524
EXPENSES
Cost of services 2,721,138 2,674,059
Cost of product licensing and development 691,357 247,501
Marketing and sales 1,076,088 1,215,468
General and administrative 844,365 971,196
Amortization of goodwill 65,553 65,553
------------ ------------
TOTAL EXPENSES 5,398,501 5,173,777
EARNINGS FROM OPERATIONS 246,413 152,747
INTEREST EXPENSE - NET (107,209) (102,202)
------------ ------------
EARNINGS BEFORE INCOME TAXES 139,204 50,545
INCOME TAXES 98,000 25,019
------------ ------------
NET EARNINGS $ 41,204 $ 25,526
============ ============
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE:
NET EARNINGS $.01 $.01
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 4,387,467 4,181,213
============ ============
</TABLE>
See notes to Condensed Consolidated Financial Statements.
<PAGE> 5
<TABLE>
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
----------------------------
1995 1994
----------------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 41,204 $ 25,526
Adjustments to reconcile net earnings
to net cash provided by (used for)
operating activities:
Depreciation and amortization 555,077 454,182
Changes in assets and liabilities,
net of effects of acquisitions/
dispositions 116,196 293,585
------------ ------------
Total adjustments 671,273 747,767
------------ ------------
Net cash provided by operating activities 712,477 773,293
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (8,434) (35,184)
Additions to software (194,346) (787,022)
Reduction in sales-type leases 93,161 25,418
Other assets (83,146) 17,500
------------ ------------
Net cash used for investing activities (192,765) (779,288)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (reduction) in bank and
other notes 50,000 150,000
Reduction in long-term debt (203,994) (93,156)
------------ ------------
Net cash provided by (used for)
financing activities (153,994) 56,844
------------ ------------
CASH AND CASH EQUIVALENTS:
Net increase 365,718 50,849
Balance, beginning of year 10,381 365,146
------------ ------------
Balance, end of period $ 376,099 $ 415,995
============ ============
</TABLE>
See notes to Condensed Consolidated Financial Statements.
<PAGE> 6
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
- - - - - - - - ------------------------------
As permitted by the rules of the Securities and Exchange Commission applicable
to quarterly reports on Form 10-Q, these notes are condensed and do not contain
all disclosures required by generally accepted accounting principles. Reference
should be made to the financial statements and related notes included in the
Company's Annual Report on Form 10-K.
In the opinion of management, the accompanying financial statements reflect all
adjustments which were of a normal recurring nature necessary for a fair
presentation of the Company's results of operations for the three months ended
March 31, 1995 and March 31, 1994.
The results disclosed in the Condensed Consolidated Income Statement for the
three months ended March 31, 1995 are not necessarily indicative of the results
to be expected for the full year.
<PAGE> 7
Item 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------
<TABLE>
Results of Operations
First Quarter of 1995
compared to
First Quarter of 1994
<CAPTION>
(000's omitted)
--------------- --------------------
Revenue Increase/(Decrease)
--------------- --------------------
1995 1994 Amount Percentage
---- ---- ------ ----------
<S> <C> <C> <C> <C>
Computer and add-on
hardware $1,114 $1,178 $(64) (5%)
Services 4,141 4,055 86 2%
Product licenses 1,254 1,138 116 10%
------ ------ ---- ---
Gross revenue $6,509 $6,371 $138 2%
====== ====== ==== ===
Revenue net of
hardware costs $5,645 $5,327 $318 6%
====== ====== ==== ===
</TABLE>
The decrease of approximately $64,000 in computer and add-on hardware revenue
for the first quarter of 1995, compared to the first quarter of 1994, resulted
primarily from decreases in revenue from the legal and tire systems product
lines, partially offset by an increase in revenue from the international trade,
electronic time recording, and direct marketing systems product lines.
Hardware margins increased to approximately 22% in the first quarter of 1995,
from approximately 11% in the same period in 1994. However, based upon the mix
of hardware products sold, gross margin on total hardware will fluctuate as
there are certain hardware products sold with computer hardware which have
different gross margins. Accordingly, hardware gross margins in the future will
continue to fluctuate. The Company continues to direct its efforts toward
building service and product license revenue to offset the historical decline in
hardware revenue and margins.
Product license revenue increased by approximately $116,000 or 10% in the first
quarter of 1995 compared to the same period in 1994. The change was a result of
revenue increases from all Company product lines except tire systems.
Revenue from services increased by approximately $86,000 or 2%. The change
resulted from increases in virtually all of the Company's product lines. Gross
margin from services remained constant at approximately 34%. The Company's
revenue and margin from services fluctuate from period to period due to its
existing mix of contracts and projects.
<PAGE> 8
Item 2
- continued -
Revenue net of hardware cost increased by approximately $318,000 or 6%, in the
three months ended March 31, 1995 compared to the same period in the prior year,
with all product lines improving for the period except for tire systems.
Cost of product licensing and development increased for all Company product
lines for the first quarter of 1995. The change resulted from increases in
third party license and capitalized software amortization costs, coupled with a
lower level of capitalization of the internal costs of software product
development.
Marketing and sales expenses decreased by approximately $139,000 or 11%.
General and administrative expenses decreased by approximately $127,000 or 13%,
compared to the first quarter of 1994. These changes reflect the cost
reductions and controls enacted by the Company in the last four quarters.
Pretax earnings from operations were approximately $246,000 for the first
quarter of 1995, compared to pretax earnings from operations of approximately
$153,000 for the first quarter of 1994. The increase in earnings resulted from
an increase in contribution from the Company's international trade, electronic
time recording, and direct marketing systems product lines. This increase was
partially offset by decreases in contribution from the Company's legal and tire
systems product lines.
Net earnings for the first quarter of 1995 were approximately $41,000, as
compared to net earnings of approximately $26,000 for the comparable period in
1994. The change resulted from an increase in earnings from operations of
approximately $93,000, which was partially offset by an increase in net interest
expense of approximately $5,000 and an increase in income tax expense of
approximately $73,000.
In recent years due to several recurring permanent book-tax differences, the
Company has recorded effective tax expense well in excess of statutory rates.
<PAGE> 9
Liquidity and Capital Resources
The Company had total cash and cash equivalents at March 31, 1995 of
approximately $376,000, an increase of approximately $366,000 from December 31,
1994. Its working capital position as of March 31, 1995, was slightly
negative. However, the Company and its subsidiaries currently have a maximum
line of credit totaling $2,350,000, of which approximately $608,000 was
available at March 31, 1995. This line is scheduled to expire in June 1995.
The Company expects to renew the line under substantially the sames terms.
Over the past two years, the Company has expended signficant working capital on
the development of a new generation of software products. The level of these
expenditures has decreased in the current period. However, with the revolution
in software technology, the Company will have to continue to fund product
development in order to retain existing clients and to attract new clients. The
Company intends, as it has in the past, to fund this development from its cash
from operations.
The Company expects to continue to pursue strategic acquisitions. These
acquisitions have been and are expected to continue to be financed in a number
of ways. Management believes, subject to the conditions of the financial
markets, that it should be able to continue its program of acquisitions.
The Company's hardware and software license revenues can fluctuate as a result
of a number of factors, particularly trends in the overall economy, client
buying patterns, and hardware and software technological developments.
Consequently, the Company could be subject to material variation in operating
results. As the uncertainties of the economy are incalculable, the Company
acknowledges the potential adverse impact that economic uncertainty could have
on its ability to maintain liquidity, raise additional capital, and continue its
program of acquisitions. Subject to the foregoing, the Company believes that
based on the level of operating revenue, cash on hand, and available bank debt,
it has sufficient capital to finance its ongoing business.
<PAGE> 10
PART II
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASA International Ltd.
------------------------------
(Registrant)
5/12/95 /s/ Alfred C. Angelone
- - - - - - - - ------------ ------------------------------
(Date) (Signature)
Alfred C. Angelone
Chief Executive Officer
5/12/95 /s/ Terrence C. McCarthy
- - - - - - - - ------------ ------------------------------
(Date) (Signature)
Terrence C. McCarthy
Vice President and Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995 AND THE CONDENSED
CONSOLIDATED INCOME STATEMENT OF ASA INTERNATIONAL LTD. FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 376,099
<SECURITIES> 0
<RECEIVABLES> 4,805,069
<ALLOWANCES> 127,892
<INVENTORY> 260,942
<CURRENT-ASSETS> 6,311,278
<PP&E> 9,116,219
<DEPRECIATION> 4,358,512
<TOTAL-ASSETS> 19,677,028
<CURRENT-LIABILITIES> 6,853,747
<BONDS> 3,012,842
<COMMON> 39,173
0
0
<OTHER-SE> 9,654,266
<TOTAL-LIABILITY-AND-EQUITY> 19,677,028
<SALES> 6,508,886
<TOTAL-REVENUES> 6,508,886
<CGS> 863,972
<TOTAL-COSTS> 4,276,467
<OTHER-EXPENSES> 1,986,006
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,209
<INCOME-PRETAX> 139,204
<INCOME-TAX> 98,000
<INCOME-CONTINUING> 41,204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,204
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
