<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
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 0-21958
QUICKRESPONSE SERVICES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 68-0102251
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1400 MARINA WAY SOUTH, RICHMOND, CA 94804
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(510) 215-5000
- -------------------------------------------------------------------------------
(Registrant's phone 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. X YES NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Classes of Common Stock Outstanding at June 30, 1997
- ----------------------- ----------------------------
Common Stock, no par value 8,483,670
This document contains 14 pages.
The Exhibit listing appears on Page 10.
<PAGE>
QUICKRESPONSE SERVICES, INC.
FORM 10-Q
INDEX
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets as of June 30, 1997 and December 31, 1996 . . 3
Condensed Statements of Earnings for the Three and Six Months
Ended June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . 4
Condensed Statement of Shareholders' Equity for the Six Months
Ended June 30, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Financial Statements. . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . 10
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . 10
A. Exhibits
B. Reports on Form 8-K
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2
<PAGE>
PART I . FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
QUICKRESPONSE SERVICES, INC.
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,255 $16,022
Marketable securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,667 8,605
Accounts receivable - net of allowance for doubtful accounts of $610 in 1997 and $763 in 1996. . 11,384 9,294
Deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,939 4,130
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,820 1,141
------- -------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,065 39,192
Property and equipment:
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,836 1,322
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,949 2,993
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,499 1,344
------- -------
8,284 5,659
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,131 2,572
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,153 3,087
Marketable securities available-for-sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,503 9,985
Deferred income tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,468 2,308
Other assets 1,636 1,374
------- -------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,825 $55,946
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,813 $5,480
Other accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,059 3,435
Current portion of sublease loss reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . 861 861
------- -------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,733 9,776
------- -------
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813 923
Sublease loss reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,425 1,677
------- -------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,971 12,376
------- -------
Shareholders' equity :
Preferred stock - $.01 par value; 10,000,000 shares authorized; none issued and outstanding -- --
Common stock - no par value; 20,000,000 shares authorized; 8,483,670 shares outstanding
in 1997 and 8,365,805 shares in 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,700 61,394
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) --
Unrealized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 42
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,846) (17,866)
------- -------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,854 43,750
------- -------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,825 $55,946
------- -------
------- -------
</TABLE>
See notes to condensed financial statements.
3
<PAGE>
QUICKRESPONSE SERVICES, INC.
CONDENSED STATEMENTS OF EARNINGS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . . . . . . . . . . $17,003 $13,607 $33,357 $26,324
Cost of revenues. . . . . . . . . . . . . . . . . . . 9,614 8,288 18,737 16,064
--------- --------- --------- ---------
Gross profit. . . . . . . . . . . . . . . . . . . . . 7,389 5,319 14,620 10,260
Operating expenses:
Sales and marketing. . . . . . . . . . . . . . . 1,983 1,635 4,276 3,172
Product development. . . . . . . . . . . . . . . 1,210 658 2,211 1,331
General and administrative . . . . . . . . . . . 1,209 866 2,378 1,667
--------- --------- --------- ---------
Total operating expenses. . . . . . . . . . 4,402 3,159 8,865 6,170
--------- --------- --------- ---------
Operating earnings. . . . . . . . . . . . . . . . . . 2,987 2,160 5,755 4,090
Interest income . . . . . . . . . . . . . . . . . . . 504 360 945 717
--------- --------- --------- ---------
Earnings before income taxes. . . . . . . . . . . . . 3,491 2,520 6,700 4,807
Income taxes. . . . . . . . . . . . . . . . . . . . . 1,396 1,009 2,680 1,925
--------- --------- --------- ---------
Net earnings. . . . . . . . . . . . . . . . . . . . . $2,095 $1,511 $4,020 $2,882
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common and common equivalent share . . . $0.24 $0.18 $0.46 $0.34
Shares used to compute per share amounts. . . . . . .8,717,000 8,624,000 8,684,000 8,582,000
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to condensed financial statements.
4
<PAGE>
QUICKRESPONSE SERVICES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1996
------- --------
<S> <C> <C>
Operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,020 $2,882
Adjustment to reconcile net earnings to net cash provided by (used in)
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 657 509
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . (110) (109)
Stock option compensation . . . . . . . . . . . . . . . . . . . . . . 18 18
Changes in:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . (2,090) (200)
Prepaid expenses and other. . . . . . . . . . . . . . . . . . . . . . (679) 226
Deferred income tax assets. . . . . . . . . . . . . . . . . . . . . . 2,680 1,886
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (142) (4)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 333 (643)
Sublease loss reserve (net) . . . . . . . . . . . . . . . . . . . . . (252) (279)
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . (377) (486)
------- -------
Net cash provided by operating activities. . . . . . . . . . . . 4,058 3,800
------- -------
Investing activities:
Sale (purchase) of marketable securities-available for sale (net). . . . . (4,586) 7,907
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . (2,625) (341)
Capitalization of product development costs. . . . . . . . . . . . . . . . (218) (423)
------- -------
Net cash provided by (used in) investing activities . . . . . . . . . (7,429) 7,143
------- -------
Financing activities:
Exercise of stock options. . . . . . . . . . . . . . . . . . . . . . . . . 626 264
Exercise of stock warrant. . . . . . . . . . . . . . . . . . . . . . . . . 13 5
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . (35) --
------- -------
Net cash provided by financing activities . . . . . . . . . . . . . . 604 269
------- -------
Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . (2,767) 11,212
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . 16,022 6,460
------ ------
Cash and cash equivalents at end of period. . . . . . . . . . . . . . . . . . .$13,255 $17,672
------- -------
------- -------
Other cash flow information:
Taxes paid during the period . . . . . . . . . . . . . . . . . . . . . . . $537 $37
------- -------
------- -------
Noncash financing activities:
Tax benefit from non-qualified stock options exercised . . . . . . . . . . $649 $327
------- -------
------- -------
</TABLE>
See notes to condensed financial statements.
5
<PAGE>
QUICKRESPONSE SERVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
QuickResponse Services, Inc. (the Company) provides a centralized
product information database (The QRS Catalog), Inventory Management
Services (QRS Catalyst, a sales analysis tool, QRS Replenishment and QRS
Forecasting), network services including electronic data interchange
services (EDI services), and QRS Logistics Management Systems to
retailers and merchandise suppliers and carriers, to automate and
improve their merchandise and logistics management.
The balance sheet as of June 30, 1997, the statements of earnings for
the three and six months ended June 30, 1997 and 1996, and the
statements of cash flows for the six months ended June 30, 1997 and 1996
have been prepared by the Company without audit. In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position, results
of operations and cash flows at June 30, 1997 and for all periods
presented have been made. The balance sheet as of December 31, 1996 is
derived from the Company's audited financial statements as of that date.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as permitted by
regulations of the Securities and Exchange Commission. Certain
previously furnished amounts have been reclassified to conform with
presentations made during the current periods. It is suggested that
these interim condensed financial statements be read in conjunction with
the annual audited financial statements and notes thereto included in
the Company's Form 10-K for the year ended December 31, 1996.
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles necessarily requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the balance sheet dates and the reported amounts of
revenues and expenses for the periods presented. Actual amounts may
differ from such estimates.
The results of operations for the periods ended June 30, 1997 and 1996
are not necessarily indicative of the operating results anticipated for
the full year.
Certain prior year amounts have been reclassified to conform with the
1997 presentation.
2. STOCK OPTIONS
During the first six months of 1997, the Company granted 180,000 options
to purchase shares of the Company's common stock at prices of $28.38 to
$37.75 based on quoted market prices at the dates of the grant under the
Company's incentive compensation and automatic grant plans. During the
first six months of 1997, options to purchase 72,750 shares of common
stock and 5,000 warrants to purchase shares of common stock were
exercised. At June 30, 1997, 923,846 shares are subject to outstanding
options, of which 205,033 options are exercisable. Options to purchase
approximately 343,746 shares of common stock are available for future
grants under plans. During the six months ended June 30, 1997,
compensation expense recognized pursuant to the granting of stock
options totaled $18,000 as a result of amendments to certain options.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS 128). The Company is required to adopt SFAS 128 in the
fourth quarter of fiscal 1997 and will restate at that time earnings per
share (EPS) data for prior periods to conform with SFAS 128. Earlier
application is not permitted.
SFAS 128 replaces current EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS excludes dilution and
is computed by dividing net income by the weighted average of common
shares outstanding for the period. Diluted EPS reflects the potential
6
<PAGE>
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock.
If SFAS 128 had been in effect during the current and prior year period,
basic EPS would have been $0.25 and $0.18 for the quarters ended June
30, 1997 and 1996, respectively, and $0.48 and $0.35 for the six months
ended June 30, 1997 and 1996.respectively. Diluted EPS under SFAS 128
would not have been significantly different than primary or
fully-diluted EPS currently reported for the periods.
7
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM
THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
CERTAIN OF THE RISK FACTORS SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996.
GENERAL
QuickResponse Services, Inc. is the leading provider of merchandise logistics
solutions throughout the entire retail demand chain. The Company works with
its customers and partners to facilitate and optimize the flow of
information, goods and services throughout the retail industry. The
Company's products include: a centralized product information database (The
QRS Catalog); Network Services, which include electronic data interchange
(EDI) and related network services, QRS EConnect and Internet Services;
transportation and logistics services, including QRS Logistics Management
Services; and QRS Inventory Management Services, which includes sales
analysis, replenishment and forecasting service offerings. In addition to
these network centric applications, the Company also provides consulting
services. The Company derives revenues from five principal and related
sources: the transmission of standard business documents over a network;
monthly charges for accessing The QRS Catalog; Inventory Management Services
fees based upon the number of products and retail outlets under management;
and Logistics Management Services fees based on the number of loads tendered;
and consulting fees. Network Services pricing is based primarily on the
volume of characters transmitted and the type of network access utilized, and
also incorporates discounts based on volume.
RESULTS OF OPERATIONS
The Company's revenues increased by 25% to $17.0 million for the second
quarter of 1997, from $13.6 million for the second quarter of 1996. The
Company's revenues increased by 27% to $33.4 million during the first six
months of 1997 from $26.3 million for the same period of 1996. These
increases were primarily attributable to three factors. First, the number of
customers increased from 195 retailers and 4,917 vendors and carriers as of
June 30, 1996 to 225 retailers and 5,453 vendors and carriers as of June 30,
1997. Second, the number of catalog trading partnerships increased as a
result of the increase in the number of customers and their trading links
with each other. Second, customers increased the number, type and size of
transactions transmitted over the network, as well as the utilization of The
QRS Catalog and Logistics Management Services. Revenues associated with the
Company's other products did not contribute a significant amount of revenue
to the Company during the first six months of 1997. However, Inventory
Management Services revenue did grow as a result of the increase in the
number of products managed from 160,000 at June 30, 1996 to 5 million at June
30, 1997.
Cost of sales consists primarily of the cost of purchasing network services
and the cost of the Company's data center and technical customer support
services. Cost of sales increased by 16% to $9.6 million for the second
quarter of 1997, from $8.3 million for the second quarter of 1996. Cost of
sales increased by 17% to $18.7 million during the first six months of 1997
from $16.1 million for the same period of 1996. The increase was principally
due to increases in purchased network services, reflecting growth in EDI
services, and expanded customer support, technical support groups and data
center operations, reflecting growth in the Company's value-added
applications. The gross profit margin was 43% for the second quarter of 1997
compared to 39% for the second quarter of 1996. This improved margin is
primarily due to network service margins which were favorably impacted as a
result of certain negotiated discount adjustments, announced and implemented
in the fourth quarter of 1997, with the IBM International Global Network, the
Company's primary provider of network services. Furthermore, the Company
experienced increases in higher margin revenue from The QRS Catalog and
increased operating efficiencies in data center operations, which were
partially offset by increased sales of certain lower margin network services
and volume discounts earned by larger customers.
8
<PAGE>
Sales and marketing expenses consist primarily of personnel and
personnel-related costs in the Company's sales and marketing organizations,
as well as the costs of various marketing programs. Sales and marketing
expenses increased 21% to $2.0 million for the second quarter of 1997, from
$1.6 million for the second quarter of 1996. Sales and marketing expenses
increased by 35% to $4.3 million for the first six months of 1997, compared
to $3.2 million for the same period of 1996. This increase reflects
additional sales staff, product branding activities and incremental trade
show activities to support the increase in the number of customers and the
size of the Company's operations.
Product development expenses consist primarily of personnel and equipment
costs related to new product development and upgrade of existing service
offerings. Product development costs increased by 84% to $1.2 million for the
second quarter of 1997, from $658,000 for the second quarter of 1996. Product
development costs increased by 66% to $2.2 million for the first six months
of 1997 compared to $1.3 million for the same period in 1996. The increase
primarily resulted from additional employees and consultants working on
product development projects.
General and administrative expenses consist primarily of the personnel and
related costs of the Company's finance and administrative organizations, as
well as professional fees and other costs, such as directors and officers'
liability insurance. General and administrative expenses increased 40% to
$1.2 million for the second quarter of 1997, compared to $866,000 for the
second quarter of 1996. General and administrative expenses increased by 43%
to $2.4 million for the first six months of 1997 compared to $1.7 million for
the same period in 1996. The increase was primarily due to increased payroll
and professional fees and also includes certain costs associated with hiring
a new President and Chief Executive Officer in February 1997.
Interest income consists primarily of interest earned on cash, cash
equivalents and investment securities. Interest income increased to $505,000
for the second quarter of 1997, compared to $360,000 for the second quarter
of 1996 as a result of higher invested balances offset partially by a lower
yield on investments. Interest income was $946,000 for the first six months
of 1997 and $717,000 for the same period in 1996.
Income tax was $1.4 and $1.0 million for the second quarter of 1997 and 1996,
respectively. Income taxes were $2.7 million for the first six months of 1997
compared to $1.9 million for the same period in 1996. The 1997 and 1996
income tax rates of 40% approximate the combined effective federal and state
income tax rates.
As a result of the foregoing, net earnings increased 39% to $2.1 million for
the second quarter of 1997, compared to $1.5 million for the second quarter
of 1996. Net earnings for the first six months of 1997 was $4.0 million
compared to $2.9 million for the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased from $29.4 million at December 31,
1996 to $30.3 million at June 30, 1997 related primarily due to the increase
in accounts receivable, as well as the decrease in the sublease loss reserve.
Deferred income tax assets decreased as the Company continued to use tax Net
Operating Losses (NOLs) to defer the Company's cash requirements for tax
payments. The Company expects to have utilized all such NOLs during 1997,
and expects an increase in the use of cash for payment of taxes thereafter.
Cash, cash equivalents and marketable securities available-for-sale increased
from $34.6 million at December 31, 1996 to $36.4 million at June 30, 1997.
Total assets increased from $55.9 million at December 31, 1996 to $60.8
million at June 30, 1997, while total liabilities decreased from $12.4
million to $12.0 million.
The $2.8 million decrease in cash and cash equivalents from December 31, 1996
to June 30, 1997 results primarily from the $4.6 million increase in the
Company's marketable securities available-for-sale. A larger portion of the
Company's cash not required for operating activities was invested during the
quarter in securities with maturities over 90 days, which are reported as
marketable securities available-for-sale.
On April 22, 1997, the Company announced that its Board of Directors has
authorized the repurchase from time to time of up to $5 million of its Common
Stock in both open market and block transactions.
9
<PAGE>
Shares purchased under this program will be held in the corporate treasury
for future use including employee stock option grants and the employee stock
purchase plan. The Company may discontinue purchases of its Common Stock at
any time that management determines additional purchases are not warranted.
During the second quarter of 1997, the Company repurchased 1,300 shares of
common stock for $35,000.
Management believes that the cash resources available at March 31, 1997, and
cash anticipated to be generated from future operations will be sufficient
for the Company to meet its working capital needs, capital expenditures and
Common Stock repurchases for the next year. The Company does not intend to
pay cash dividends with respect to common stock in the foreseeable future.
10
<PAGE>
II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of shareholders was held on May 30, 1997.
The following actions were taken at this meeting:
<TABLE>
<CAPTION>
Affirmative votes Negative votes Votes withheld Broker Non-votes
----------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
a. Election of Directors:
Tania Amochaev 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
Steven D. Brooks 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
John P. Dougall 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
Peter R. Johnson 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
Lynn Hazlett 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
Garth Saloner 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
Philip Schlein 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
Garen K. Staglin 7,153,829 -- 251,644 --
----------------- -------------- -------------- ----------------
b. Reincorporation of the
Company from the State of
California to the State of
Delaware 4,734,874 2,001,111 2,309 667,179
----------------- -------------- -------------- ----------------
c. Ratification of Deloitte &
Touche LLP as independent
auditors 7,402,929 1,150 1,394 --
----------------- -------------- -------------- ----------------
</TABLE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
11.1 Computation of Earnings Per Share - Primary
11.2 Computation of Earnings Per Share - Fully Diluted
11
<PAGE>
B. REPORTS ON FORM 8-K
None
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 and in the capacity indicated.
QUICKRESPONSE SERVICES, INC.
----------------------------
(Registrant)
\s\ H. Lynn Hazlett
----------------------------
August 14, 1997 H. Lynn Hazlett
President and Chief Executive Officer
\s\ Shawn M. O'Connor
----------------------------
August 14, 1997 Shawn M. O'Connor
Vice President and Chief Financial Officer
(Principal Financial Officer)
13
<PAGE>
EXHIBIT 11.1
QUICKRESPONSE SERVICES, INC.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PRIMARY SHARES
Weighted average common shares outstanding. . . 8,451,324 8,336,529 8,431,332 8,324,683
Common equivalent shares outstanding. . . . . . 265,860 287,226 253,091 257,231
--------- --------- --------- ---------
8,717,184 8,623,755 8,684,423 8,581,914
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings. . . . . . . . . . . . . . . . . . $2,095 $1,511 $4,020 $2,882
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common and common equivalent share $0.24 $0.18 $0.46 $0.34
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
14
<PAGE>
EXHIBIT 11.2
QUICKRESPONSE SERVICES, INC.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
FULLY-DILUTED SHARES
Weighted average common shares outstanding. . . 8,451,324 8,336,529 8,431,332 8,324,683
Common equivalent shares outstanding. . . . . . 305,409 287,318 312,976 273,292
--------- --------- --------- ---------
8,756,733 8,623,847 8,744,308 8,597,975
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings. . . . . . . . . . . . . . . . . . $2,095 $1,511 $4,020 $2,882
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common and common equivalent share: $0.24 $0.18 $0.46 $0.34
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,255
<SECURITIES> 23,170
<RECEIVABLES> 11,277
<ALLOWANCES> (610)
<INVENTORY> 0
<CURRENT-ASSETS> 40,065
<PP&E> 8,284
<DEPRECIATION> 3,131
<TOTAL-ASSETS> 60,825
<CURRENT-LIABILITIES> 9,733
<BONDS> 0
0
0
<COMMON> 62,700
<OTHER-SE> (13,846)
<TOTAL-LIABILITY-AND-EQUITY> 60,825
<SALES> 0
<TOTAL-REVENUES> 17,003
<CGS> 0
<TOTAL-COSTS> 9,614
<OTHER-EXPENSES> 4,402
<LOSS-PROVISION> 137
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,491
<INCOME-TAX> 1,396
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,095
<EPS-PRIMARY> $0.24
<EPS-DILUTED> $0.24
</TABLE>
