<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[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
[ ] 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 0-16284
NATIONAL TECHTEAM, INC.
(Name of issuer in its charter)
DELAWARE 38-2774613
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
835 Mason Avenue, Dearborn, MI 48124
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (313) 277-2277
---------------
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
The number of shares of the registrant's only class of common stock outstanding
at May 7, 1997 was 15,212,813.
<PAGE> 2
FORWARD LOOKING STATEMENTS
This Report contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Actual results could differ from those projected in the
forward-looking statements as a result of certain factors described
herein and in other documents. Readers should pay particular
attention to the portion of this report describing the amendment of
the report to address the restatement of the Company's financial
statements and should also carefully review the risk factors that are
described in the documents the Company has filed and files, from time
to time, with the Securities and Exchange Commission.
AMENDED FILING OF FORM 10-Q FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1997
RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION
On November 14, 1997 and on November 21, 1997, the Company announced
that it was restating its results of operations for the fourth quarter 1996
and for the first two quarters of 1997 to (1) defer certain revenue previously
recorded in those periods and to recognize that revenue as income in future
periods when the expenses of certain related contemporaneous purchase/sale
transactions are recognized; (2) address the impact of those restatements on
subsequent quarters; (3) address certain compensation-related and other
adjustments dealing with the accrual of payroll expenses and revenues; and (4)
to include the accounts of Compuflex Systems, Inc., a company that was acquired
by the Company in July, 1997 in a pooling-of-interests transaction. The
financial statements included in this Form 10-Q/A do not include the accounts
of Compuflex System, Inc.
General information in the original Form 10-Q was presented as of the
original filing date, or earlier, as indicated. Unless otherwise stated, such
information has not been updated in this amended filing.
Financial statement and related disclosures contained in this amended
filing reflect, where appropriate, changes to conform to the restatement.
<PAGE> 3
NATIONAL TECHTEAM, INC.
FORM 10-Q/A
INDEX
-----
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1.
Consolidated Statements of Operations (Unaudited)
Three Months Ended
March 31, 1997 and 1996 3
Consolidated Statements of Financial Position (Unaudited)
March 31, 1997 and December 31, 1996 4-5
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31, 1997 and 1996 6
Notes to the Consolidated Financial Statements
(Unaudited) - March 31, 1997 7-8
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II - OTHER INFORMATION
ITEM 1.
Legal Proceedings 12
ITEM 6.
Exhibits and Reports on Form 8-K 12
SIGNATURES 12
</TABLE>
2
<PAGE> 4
PART 1-- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1997 1996
-------- ----------
(Restated -
Note C)
REVENUES
<S> <C> <C>
Call Center Services........................ $ 9,074,422 $ 6,828,350
----------- -----------
Corporate Computer Services
Technical staffing........................ 4,339,286 3,856,580
Systems integration....................... 2,372,788 2,491,852
Training programs......................... 1,443,196 1,224,776
----------- -----------
Total Corporate Computer Services........... 8,155,270 7,573,208
----------- -----------
TOTAL REVENUES................................. 17,229,692 14,401,558
COST OF SERVICES DELIVERED..................... 15,108,284 11,246,884
----------- -----------
GROSS PROFIT................................... 2,121,408 3,154,674
----------- -----------
OTHER EXPENSES/(INCOME)
Selling, general and administrative......... 3,197,269 1,647,884
Interest expense............................ -- 24,390
Interest income............................. (723,598) (9,331)
----------- -----------
2,473,671 1,662,943
----------- -----------
INCOME/(LOSS) BEFORE TAX PROVISIONS............ (352,263) 1,491,731
TAX PROVISIONS................................. 17,200 626,000
----------- -----------
NET INCOME/(LOSS).............................. $ (369,463) $ 865,731
=========== ===========
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE $ (0.02) $ 0.08
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON SHARE EQUIVALENTS OUTSTANDING
Primary..................................... 15,475,000 11,339,612
Fully diluted............................... 15,475,000 11,339,612
</TABLE>
See accompanying notes.
3
<PAGE> 5
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
UNAUDITED
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1997 1996
---------- ------------
<S> <C> <C>
CURRENT ASSETS (Restated - Note C)
Cash and cash equivalents......................................... $ 46,736,449 $ 46,771,797
Securities available-for-sale..................................... 23,309,753 27,169,703
Accounts receivable (less allowances of $292,253 at
March 31, 1997 and $225,000 at December 31, 1996)............... 22,586,220 22,269,087
Refundable income tax............................................. 359,061 1,413,461
Inventories....................................................... 690,981 647,565
Advances to vendors............................................... 2,300,000 500,000
Other............................................................. 524,425 622,865
------------ ------------
96,506,889 99,394,478
------------ ------------
PROPERTY, EQUIPMENT AND PURCHASED SOFTWARE
Office furniture and equipment.................................... 14,205,987 12,214,673
Purchased software................................................ 1,914,809 1,742,007
Leasehold improvements............................................ 1,582,125 1,380,140
Transportation equipment.......................................... 213,591 192,907
------------ ------------
17,916,512 15,529,727
Less -- Accumulated depreciation and amortization................. 6,102,976 5,101,211
------------ ------------
11,813,536 10,428,516
------------ ------------
OTHER ASSETS
Goodwill (less accumulated amortization of $920,693 at
March 31, 1997 and $551,081 at December 31, 1996)............... 6,793,356 1,509,437
Investment in WebCentric.......................................... -- 804,516
Deferred income taxes............................................. 1,794,387 609,187
Accounts receivable -- long term.................................. 1,977,566 --
Other............................................................. 309,513 319,171
------------ ------------
10,874,822 3,167,334
------------ ------------
TOTAL ASSETS........................................................ $119,195,247 $113,065,305
============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 6
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
UNAUDITED
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
--------- ------------
CURRENT LIABILITIES (Restated - Note C)
<S> <C> <C>
Accounts payable.................................... $ 3,685,911 $ 4,074,363
Accrued payroll, related taxes and withholdings 2,280,803 3,554,512
Deferred income tax................................. 189,343 189,343
Deferred revenues and unapplied receipts............ 808,416 255,940
Accrued expenses and taxes.......................... 708,543 874,329
Other............................................... -- 141,072
------------ ------------
7,673,016 9,089,559
------------ ------------
LONG-TERM LIABILITIES
Deferred Foundation Platform license fees.......... 5,535,990 2,050,000
Minority interest.................................. 46,723 74,647
------------ ------------
5,582,713 2,124,647
------------ ------------
SHAREHOLDERS' EQUITY
Preferred stock, par value $.01
Authorized -- 5,000,000 shares
None issued
Common stock, par value $.01
Authorized -- 45,000,000 shares
Issued:
15,331,039 shares at March 31, 1997........ 153,310
15,008,291 shares at December 31, 1996..... 150,083
Additional paid-in capital......................... 97,838,964 93,415,402
Retained earnings.................................. 8,653,898 9,023,362
------------ ------------
Total.............................................. 106,646,172 102,588,847
Less -- Treasury stock (154,986 shares at
March 31, 1997 and 161,983 shares at
December 31, 1996)............................... 706,654 737,748
------------ ------------
Total shareholders' equity......................... 105,939,518 101,851,099
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........... $119,195,247 $113,065,305
============ ============
</TABLE>
See accompanying notes.
5
<PAGE> 7
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1997 1996
----------- ----------
OPERATING ACTIVITIES (Restated - Note C)
<S> <C> <C>
Net income/(Loss)........................................................... $(369,464) $ 865,731
Adjustments to reconcile net income to net cash provided by/(used in)
operating activities:
Depreciation and amortization............................................. 1,554,445 577,001
Provision for uncollectible accounts receivable........................... 67,253 48,165
Provision for deferred income taxes....................................... (1,185,200) --
Deferred Foundation Platform license fees................................. 3,485,990 --
Long-term accounts receivable from customer............................... (1,977,566) --
Treasury stock contributed to 401(k) plan................................. 31,094 63,579
Minority interest in net loss of subsidiary............................... (27,924) --
Changes in current assets and liabilities:
Accounts receivable..................................................... (379,921) (2,490,925)
Inventories............................................................. (43,416) 341,211
Advances to vendors..................................................... (1,800,000) --
Other current assets.................................................... 122,818 (46,573)
Accounts payable........................................................ (450,162) (66,687)
Accrued payroll, related taxes and withholdings......................... (1,300,807) (637,778)
Federal income tax...................................................... 1,054,400 308,000
Deferred revenues and unapplied receipts................................ 552,476 756,574
Accrued expenses and taxes.............................................. (165,786) --
Other current liabilities............................................... (141,072) 31,757
----------- -----------
Net cash (used in) operating activities................................... (972,842) (249,945)
----------- -----------
INVESTING ACTIVITIES
Purchases of property, equipment and software.............................. (1,680,043) (1,144,235)
Development of training manuals............................................ (246,547) (68,074)
Proceeds from sale of securities available-for-sale........................ 3,859,950 --
Cash paid in conjunction with purchase of WebCentric, net
of cash acquired ........................................................ (1,445,086) --
Other assets -- net........................................................ 17,614 (62,655)
----------- -----------
Net cash provided by/(used in) investing activities....................... 505,888 (1,274,964)
----------- -----------
FINANCING ACTIVITIES
Proceeds from long-term borrowings......................................... -- 480,212
Proceeds from issuance of common stock..................................... 431,606 2,319
Payments on long-term borrowings........................................... -- (36,264
----------- -----------
Net cash provided by financing activities................................. 431,606 446,267
----------- -----------
Increase/(decrease) in cash and cash equivalents.......................... (35,348) (1,078,642)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............................. 46,771,797 1,717,543
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................... $46,736,449 $ 638,901
=========== ===========
</TABLE>
See accompanying notes.
6
<PAGE> 8
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The financial statements included herein have been restated to reflect the
correction of previously issued financial statements discussed in Note C. The
financial statements included herein do not reflect the acquisition of
Compuflex Systems, Inc. which was acquired on July 30, 1997 in a transaction
accounted for as a pooling of interests. Accordingly, the accompanying
financial statements (pre pooling) are no longer considered to be prepared in
conformity with generally accepted accounting principles. The Company's
September 30, 1997 Form 10-Q included unaudited financial statements (post
pooling) of the combined entity for the three-month and nine-month periods
ended September 30, 1997 and 1996. The financial statements for the year
ended December 31, 1996 (pre-pooling) included in this Annual Report of this
Company on Form 10-K/A and the financial statements for the year ended December
31, 1996 (post pooling) included in Form 8-K filed December 19, 1997 contain
additional information and should be read in conjunction with this report.
The consolidated financial statements included herein have been prepared by
National TechTeam, Inc. ("TechTeam" or "Company") without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations.
The information provided in this report reflects all adjustments consisting of
normal recurring accruals which are, in the opinion of management, necessary to
present fairly the results of operations for these periods. The results of
operations for these periods are not necessarily indicative of the results
expected for the full year.
NOTE A -- EARNINGS PER SHARE
Earnings per share is computed using the weighted average number of common
shares and common share equivalents outstanding. Common share equivalents
consists of stock options and are calculated using the treasury stock method.
NOTE B -- REVENUES FROM MAJOR CLIENTS
Revenues from major clients were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
Amount Percent of Total Amount Percent of Total
------ ---------------- ------ ----------------
Three Months Ended March 31
<S> <C> <C> <C> <C>
Hewlett-Packard Company $5,096,036 29.6% $4,458,713 31.0%
Ford Motor Company 3,760,760 21.8 4,534,356 31.5
Chrysler Corporation 2,136,844 12.4 1,190,982 8.3
United Parcel Service 1,336,317 7.8 -- --
</TABLE>
7
<PAGE> 9
NOTE C -- RESTATEMENTS
Correction of Previously Issued Financial Statements
The Company has restated the previously issued fourth quarter 1996 and first
and second quarter 1997 financial statements. The restatements relate to: (1)
Certain license fee revenues related to contemporaneous purchase/sale
transactions between the Company and the licensees of its software products
occurring in the fourth quarter 1996 and first quarter 1997. Those revenues
have now been deferred and will be recognized as income in future periods when
the expenses of the related contemporaneous purchase/sale transactions are
recognized. (2) The impact of the restatements described in (1) on subsequent
quarters. (3) Certain other adjustments. The following summarizes the net
effect of these adjustments on the three-month period ended March 31, 1997:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
<S> <C>
Revenues:
As previously reported $20,715,682
As restated 17,229,692
Net income/(loss):
As previously reported $ 1,817,827
As restated (369,463)
Net income/(loss) per share:
As previously reported $ 0.12
As restated (0.02)
</TABLE>
NOTE D -- RECENT PRONOUNCEMENT OF THE FINANCIAL ACCOUNTING STANDARDS BOARD
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of earnings per share for the quarters ended March 31, 1997 and 1996 is not
expected to be material.
8
<PAGE> 10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Overview
The Company originally commenced operations as a value added reseller of
computer hardware and software that also provided training for its computer
products. During the late 1980's, the Company added IT staffing and systems
integration services as a complement to its existing training business. In
1993, as a result of the Company's growing expertise in providing IT staffing
of on-site help desks, TechTeam entered the call center industry. Today, the
Company's IT outsourcing services cover a broad range of IT, including
planning, design, implementation and support. Although the Company's services
are complementary, TechTeam has divided its service offerings into two
divisions, Call Center Services and Corporate Computer Services (technical
staffing, systems integration and training programs). Revenues from all service
offerings are recognized as services are performed.
Call Center Services consist of international telephone support for
end-users of computer hardware, software products and services. Call Center
Services are billed on a fee per call, fee per time spent on calls or per agent
basis, each as negotiated with clients. Under the terms of certain Call Center
Services contracts, clients are required to pay certain amounts at the
commencement of the contract, which payments are non-refundable and as to which
the Company has no further service obligation. Amounts billed under this
provision of such contracts aggregated $618,100 for the three and nine month
periods ended September 30, 1996. The Company has recognized these amounts as
revenues when they are billed. Absent unusual circumstances, in the future the
Company expects to negotiate these contracts so that the revenues are
recognized over the life of the contract. The Company has also licensed
customers to use its Foundation Platform, a software product developed by the
Company's wholly-owned subsidiary, WebCentric Communications, Inc. Revenues
from these licenses are recognized either: (1) On a usage basis, when the
licenses are granted in connection with on-going services; or (2) In those
instances where the license was granted in connection with a contemporaneous
purchase, as the expenses of the transaction are recognized.
Technical staffing includes a variety of technical services, including the
placement of computer personnel at client sites to support end-user
applications through on-site help desks, as well as selected programming and
consulting services. Systems integration consists of database design, computer
product sales and networking services. Contracts for technical staffing and
systems integration are generally negotiated on an hourly rate basis or are
priced on a project basis. Training programs consist of instructor-led,
computer-based training for word processing, spreadsheets, graphics, data
bases, desktop publishing, operating systems, and systems administration for
NetWare, JAVA, NT, Windows, OS/2 and UNIX and mainframe operating systems. For
training programs, clients pay a fee per student trained or a fee for classes
offered, in some cases with an advance payment for the cost of the necessary
training materials.
Cost of services delivered consists of direct personnel compensation,
statutory and other benefits associated with such personnel, facility and
computer equipment costs, and other direct costs associated with providing
services to clients. Selling, general and administrative costs consist of
sales, marketing and administrative personnel compensation, statutory and other
benefits associated with such personnel, facility and equipment costs and other
indirect costs associated with the sales, marketing and administrative
functions of the Company.
9
<PAGE> 11
The following table sets forth the percentage relationship to revenues of
certain items in the Company's Consolidated Statements of Operations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1997 1996
---- ----
(Restated -
Revenues Note C)
<S> <C> <C>
Call Center Services.................. 52.7% 47.4%
----- -----
Corporate Computer Services
Technical staffing................. 25.1 26.8
Systems integration................ 13.8 17.3
Training programs.................. 8.4 8.5
----- -----
Total Corporate Computer Services.... 47.3 52.6
----- -----
Total revenues......................... 100.0 100.0
Cost of services delivered............. 87.7 78.1
----- -----
Gross profit........................... 12.3 21.9
----- -----
Other expenses/(income)
Selling, general and administrative 18.5 11.4
Interest expense..................... -- 0.2
Interest income...................... (4.2) (0.1)
----- -----
14.3 11.5
----- -----
Income before tax provisions........... (2.0) 10.4
Tax provisions......................... (0.1) 4.4
----- -----
Net income/(loss)...................... (2.1)% 6.0%
===== =====
</TABLE>
Between 1994 and 1996, TechTeam's revenues increased at a compound annual
rate of 48.9%. The Company believes that its growth has benefited from the
trend among large corporations to outsource much of their information
technology needs and TechTeam's ability to provide services that address a
broad range of those needs. The Company believes that the outsourcing trend
will continue and will provide continuing opportunities for both of its service
lines. TechTeam further believes that its service offerings are influenced
substantially by its clients' desires to focus on their core businesses and to
leave information technology needs to the Company for which information
technology is its core business. TechTeam's training programs have encountered
cyclical enrollment trends, influenced by the timing and extent to which
clients are upgrading desk top software.
Comparative Performance -- First Quarter 1997 versus First Quarter 1996
National TechTeam earned a net loss of $369,463, or $0.02 loss per share,
for the first quarter 1997 as compared to a net income of $865,731 or $0.08 per
share, for the first quarter 1996.
Revenues -- National TechTeam's total revenues increased by $2,828,134 in
the first quarter 1997 to $17,229,692, a 19.6% increase over revenues in the
first quarter 1996. Changes in revenues resulted from the following:
Call Center Services -- Revenues from Call Center Services increased
by $2,246,072 in the first quarter 1997. This was a 32.9% increase over
Call Center Services revenues in the first quarter 1996. The increase
was due to an increase to 41 contracts in place at March 31, 1997
compared to the 18 contracts at March 31, 1996.
10
<PAGE> 12
Technical staffing -- Revenues from technical staffing increased by
$482,706 in the first quarter 1997. This was a 12.5% increase over
technical staffing revenues in the first quarter 1996. The increase was
due to continued client demand for TechTeam's help desk and computer
services personnel at major accounts.
Systems integration -- Revenues from systems integration decreased
by $119,064 in the first quarter 1997. This was a 4.8% decrease over
systems integration revenues in the first quarter 1996. The decrease was
due principally to the conclusion in late 1996 of three projects.
Training programs -- Revenues from training programs increased by
$218,420 in the first quarter 1997. This was a 17.8% increase over
training revenues in the first quarter 1996. The increase was due to
increased enrollments in the Company's training programs.
Cost of services delivered -- The cost of services delivered increased by
$3,861,400 in the first quarter 1997. This was a 34.3% increase over the cost
of services delivered in the first quarter 1996. The increase was due
principally to compensation costs for an increased number of technical
personnel, statutory and other benefits associated with such personnel,
facility and computer equipment costs, and other direct costs associated with
providing an increased volume of services to clients. These costs were 87.7%
and 78.1% of revenues in 1997 and 1996, respectively. The increase of these
rates is attributable to costs incurred in the development of the Company's
Foundation Platform and increased costs associated with establishing
infrastructure to support the expected future growth of the Company.
Selling, general and administrative -- Selling, general and administrative
expenses increased by $1,549,385 in the first quarter 1997. This was a 94.0%
increase over selling, general and administrative expenses in the first quarter
1996. The increase was due principally to compensation costs for an increased
number of sales and administrative personnel, statutory and other benefits
associated with such personnel, facility and equipment costs, and other
indirect costs needed to support the growth of the Company. These expenses were
18.5% of revenues in 1997 compared with 11.4% of revenues in 1996. This
increase was due primarily to expansion of National TechTeam's sales and
internal management information systems staffs to support the growth of the
Company.
Interest income -- Commencing in October 1996, National TechTeam began
earning significant amounts of interest income on cash generated by the 1996
public stock offering. For the first three months of 1997, interest income was
$723,598, which reduced the pre-tax loss to $(352,263).
Tax provisions -- TechTeam recognized $143,800 of Federal income tax
benefit in the first quarter 1997, resulting in an effective tax rate
of 28.0% compared to an effective tax rate of 35.1% for 1996. This benefit is
less than the statutory rate of 34% due to the amortization of goodwill.
The Michigan Single Business Tax in the first quarter 1997 was
$161,000, with an effective tax rate of 45.7% compared to an effective tax rate
of 10.5% in the first quarter 1996. These taxes are tied more closely to
revenues than net income. This inflates the effective tax rate when income is
lower.
LIQUIDITY AND CAPITAL RESOURCES
Indicators of the Company's financial strength are summarized below:
<TABLE>
MARCH 31, DECEMBER 31,
1997 1996
<S> <C> <C>
Working capital............................. $ 88,833,873 $ 90,304,919
Current ratio............................... 12.6 10.9
Debt as a percentage of total capitalization 0.0% 0.0%
Shareholders' equity........................ $105,939,518 $101,851,099
</TABLE>
TechTeam has a line-of-credit agreement with NBD Bank which provides for
short-term borrowings of up to $25,000,000; the credit is unsecured. Borrowings
in excess of $10,000,000 are limited to 75% of eligible accounts receivable and
100% of cash and cash equivalents. The line of credit is at the prime rate or
more favorable rates, depending on the term of any loans. There were no
borrowings under the credit agreement at March 31, 1997.
11
<PAGE> 13
In the first quarter 1997, National TechTeam signed an agreement with
Capricorn Capital Group, Inc., a major distributor, to supply to TechTeam $28
million of computer hardware and related services under a long-term contract.
The key provisions of the contract are: (1) TechTeam may acquire the computer
hardware and services at the vendor's cost plus 15%. The margin is payable
annually at the beginning of each of the three contract years. (2) Purchase
obligations not met in any of the first three years may be carried over to
subsequent years up to a total of seven years. Management believes that this
arrangement will permit the Company to obtain favorable pricing under a
long-term arrangement for hardware and related services, which will further the
Company's goal of offering its customers a life cycle management program which
will include the providing of hardware, software, training and upgrades for a
flat monthly fee.
PART II
ITEM 1 - Legal Proceedings
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
11. Computation of Earnings Per Share
27. Financial Data Schedule
(b) Reports on Form 8-K:
A Form 8-K report was filed by the Company on January 17, 1997
covering the Company's acquisition of WebCentric Communications,
Inc..
The financial statements for the year ended December 31, 1996
(pre-pooling) included in this Annual Report of this Company on Form 10-K/A and
the financial statements for the year ended December 31, 1996 (post pooling)
included in Form 8-K filed December 19, 1997, contain additional information
and should be read in conjunction with this report.
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.
National TechTeam, Inc.
-----------------------
(Registrant)
Date: December 19, 1997 By: /s/William F. Coyro Jr.
-----------------------
William F. Coyro Jr.
Chairman of the Board and
Chief Executive Officer
Date: December 19, 1997 By: /s/Lawrence A. Mills
---------------------
Lawrence A. Mills
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
12
<PAGE> 14
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
11 Computation of Earnings per share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1996
---------- ----------
<S> <C> <C>
PRIMARY
Average shares outstanding................................. 15,125,581 11,245,078
Net effect of dilutive stock options --
based on the treasury stock method using
average market price....................................... 349,419 94,534
----------- -----------
Total...................................................... 15,475,000 11,339,612
----------- -----------
Net income................................................. $(369,463) $865,731
=========== ===========
Per share amount........................................... $(0.02) $ 0.08
=========== ===========
FULLY DILUTED
Average shares outstanding................................. 15,125,581 11,245,078
Net effect of dilutive stock options -- based on the
treasury stock method using the quarter-end market price if
higher than average market price........................... 349,419 94,534
Total...................................................... 15,475,000 11,339,612
=========== ===========
Net income................................................. $(369,463) $865,731
=========== ===========
Per share amount........................................... $(0.02) $ 0.08
=========== ===========
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 46,736,449
<SECURITIES> 23,309,753
<RECEIVABLES> 23,602,006
<ALLOWANCES> 292,253
<INVENTORY> 690,981
<CURRENT-ASSETS> 96,506,889
<PP&E> 17,916,512
<DEPRECIATION> 6,102,976
<TOTAL-ASSETS> 119,195,247
<CURRENT-LIABILITIES> 7,673,016
<BONDS> 0
0
0
<COMMON> 153,310
<OTHER-SE> 105,786,208
<TOTAL-LIABILITY-AND-EQUITY> 119,195,247
<SALES> 1,069,006
<TOTAL-REVENUES> 17,229,692
<CGS> 1,004,856
<TOTAL-COSTS> 15,108,284
<OTHER-EXPENSES> 2,473,671
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (352,263)
<INCOME-TAX> 17,200
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (369,463)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
