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 AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 33-44510
CTA INCORPORATED
(Exact name of registrant as specified in its charter)
Colorado 84-0797618
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6116 Executive Boulevard, Suite 800, Rockville, Maryland 20852
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (301) 816-1200.
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 or No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 1996.
Common Stock $.01 par value 4,382,686
Class Number of Shares
CTA INCORPORATED
FORM 10-Q
For The Quarter Ended March 31, 1996
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Income
Three months ended March 31, 1996 and March 31, 1995
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and March 31, 1995
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
<TABLE>
I. FINANCIAL INFORMATION
Item 1. Financial Statements
CTA INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
($000's Except for Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
________________________
<S> <C> <C>
Contract Revenues 61,651 42,642
Costs and Expenses:
Costs of Contract Revenues 63,361 38,883
Selling, General and Administrative Exp 2,185 2,021
Interest 1,094 832
Other Expenses 167 255
___ ___
Total Costs and Expenses 66,807 41,991
Income Before Income Taxes (5,156) 651
Provision for Income Taxes (2,217) 264
______ ___
Net Income (2,939) 387
_______ ____
Earnings per Share (0.64) 0.08
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding During the Period 4,567,843 4,827,701
<FN>
See Accompanying Notes to the Unaudited Consolidated Financial Statements
</TABLE>
<TABLE>
CTA INCORPORATED
CONSOLIDATED BALANCE SHEETS
($000)
ASSETS
<CAPTION>
March 31, 1996 December 31, 1995
(Unaudited)
_________________________________
<S> <C> <C>
Current Assets
Cash and Cash Equivalents 115 235
Accounts Receivable (Note 2) 65,247 58,586
Prepaid Expenses and Other 7,374 6,218
Inventory Constructed for Resale 7,262 7,262
Total Current Assets 79,998 72,301
Furniture and Equipment, Net 6,870 6,784
Other Assets 6,480 6,812
Cost in Excess of Net Assets Acquired 5,487 5,633
98,835 91,530
</TABLE>
<TABLE>
CTA INCORPORATED
CONSOLIDATED BALANCE SHEETS
($000)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
March 31, 1996 December 31, 1995
(Unaudited)
__________________________________
<S> <C> <C>
Current Liabilities
Accounts Payable 10,851 13,910
Note Payable 19,863 16,324
Accrued Expenses 12,308 4,804
Excess of Billing Over Cost and
Contract Prepayments 7,124 4,603
Acquisition Notes Payable Current 266 750
Deferred Income Taxes 4,642 4,642
Other Current Liabilities 286 293
___ ___
Total Current Liabilities 55,340 45,326
Subordinated Notes Payable 15,000 15,000
Other Long Term Liabilities 2,935 2,431
_____ _____
Total Liabilities 73,275 62,757
Stockholders' Equity
Common Stock, $.01 Par Value,
5,000,000 Shares Issued 50 50
Capital in Excess of Par Value 8,798 9,023
Retained Earnings 22,650 25,587
______ ______
31,498 34,660
Less Notes Receivable (362) -
Treasury Stock, at Cost (617,314
Shares in 1996, 660,554 Shares
in 1995) (5,576) (5,887)
Total Stockholders' Equity 25,560 28,773
______ ______
98,835 91,530
_______ _______
</TABLE>
<TABLE>
CTA INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
_______________________________
<S> <C> <C>
Cash Used in Operating Activities (2,533) (2,260)
Investing Activities:
Purchase of Furniture and Equipment (711) (745)
Financing Activities:
Net Borrowings(Repayments) Under Bank
Line-of-Credit Agreement 3,539 (148)
Repayment of Acquisition Notes (464) -
Proceeds From Deferred Lease Incentives 315 -
Purchase of Treasury Stock (Net) (266) (120)
_____ _____
3,124 (268)
Increase/(Decrease) in Cash (120) (3,273)
_____ _______
</TABLE>
CTA INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments except for a $5.0 million reduction to profit in the quarter
necessary to present fairly the Company's financial position as of
March 31, 1996 and the results of its operations and its cash flows for the
periods ended March 31, 1996 and 1995. The results of operations presented are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
The accompanying financial statements should be read in conjunction with the
audited financial statements for the year ended December 31, 1995 which are
contained in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
NOTE 2. Allowance for Accounts Receivable
Accounts receivable balances are presented net of allowances of $2.8 million in
1996 and $3.1 million in 1995.
NOTE 3. Stockholders' Equity
The change in stockholders' equity during the three month period ended
March 31, 1996 consists of the issuance of 49,000 shares of treasury stock
pursuant to the Company's stock option plan, 39,515 shares in settlement of
acquisition debt, 526 shares in lieu of cash payment for certain Director's
fees, and the purchase of 45,801 shares under its existing Board of Director
approved stock repurchase plan.
NOTE 4. Income Taxes
The provision for income taxes in the statements of income has been computed
using the estimated annual effective tax rate expected to be applicable for the
full year.
Item 2. Management's Discussion and Analysis
Results of Operations
Contract revenues for the Company for the first three months of 1996 increased
44.6 percent over the equivalent 1995 period. This increase is attributable to
the Company's Indostar program which accounted for $24.6 million of revenue
during the first quarter of 1996 compared with $5.5 million during the
equivalent 1995 period.
Revenues related to the Company's other activities remained virtually unchanged
during the first quarter of 1996 compared to the first quarter of 1995.
During the quarter, the Company reviewed and revised its estimates of costs at
completion on two major programs, Indostar and the Eastern Zone contract with
the General Services Administration.
As a result of the reviews, the Company reduced its profit rate on the Indostar
program. The change in estimate resulted in a $2.8 million reduction of
inception-to-date program profit in the Company's first quarter 1996 results of
operations. The Company attributes the cost growth on Indostar to changes in
the engineering design to meet weight requirements, ensure longer operational
life and to reduce operational risk. Additionally, the program schedule has
been extended to allow for additional testing beyond that originally estimated.
On the Eastern Zone contract, the Company recognized a loss of $2.2 million in
the first quarter of 1996. Previously, the Company was recording this contract
at a break even level of profit. This program was bid aggressively and
required a greater than expected transition cost from the previous contractor.
While the Company has had some success in increasing revenues and decreasing
costs on the contract, management's current estimates indicate future
improvements now may not be sufficient to recover all costs over the contract
term. Additionally, based on discussions with the customer during this quarter,
the Company no longer anticipates the full contract value upon which previous
estimates were based to be funded.
In addition to the profit reductions on these two major programs, the Company
continued expenditures on the development of its commercial mobile
communications services. The Company charged $649 thousand against operations
during the first quarter of 1996 on the development of this new business. No
resultant revenue is anticipated from these expenditures during 1996.
Operating income, reflective of the items discussed above, was ($3.9) million
for the quarter compared to $1.7 million during the equivalent 1995 period.
Interest expense increased 31.2 percent from $832 thousand during the first
quarter of 1995 to $1.09 million for the equivalent 1996 period. This increase
stems primarily from higher average loan balances on the Company's bank
line-of-credit.
Net income for the quarter was ($2.94) million, a decline of $3.33 million from
the equivalent 1995 period.
The Company recorded $63.4 million in new orders during the quarter including a
$33.0 million order in the Avionics and Range Systems Group and $20.7 million
related to Indostar. Total backlog was $504.5 million at March 31, 1996, which
represents a 15 percent increase over the equivalent 1995 period. Of the total
backlog $50.0 million is funded.
Liquidity and Capital Resources
Operations used $2.5 million of cash during the first quarter of 1996. While
the operating loss during the quarter did not require current use of cash, the
Company's operating cash flow was adversely affected by a $6.6 million increase
in receivables, due mainly to delay in payment on the Indostar program. The
Company expects receipt of $13.0 million related to this program during the
second quarter of 1996.
Due to the adjustments to profit recorded in the first quarter of 1996, the
Company sought and received 90 day waivers to three of its restrictive debt
covenants from its debt holders effective March 31, 1996. The Company is
currently negotiating permanent changes to its existing covenants concurrent
with negotiations for an expanded credit facility. The Company expects to
complete these negotiations prior to June 30, 1996.
The Company considers that its cash flows from operations and borrowing
capacity will be sufficient to provide adequate funds for continued operations.
However, to continue its strategic initiatives of expanding its Mobile
Communication Services and Space Systems segments, the Company anticipates the
need for additional sources of capital. The Company has begun preliminary
discussions with advisors regarding the identification of additional financing
sources and potential capital markets.
PART II. OTHER INFORMATION
CTA INCORPORATED
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1996.
SIGNATURE
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.
CTA INCORPORATED
Registrant
5/15/96 Gregory H. Wagner
Date Gregory H. Wagner
Executive Vice President &
Chief Financial Officer
Signing on behalf of the
registrant and as principal
financial officer.
