<PAGE>
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 the Quarter Ended June 30, 1995 Commission File Number 0-9669
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TECHNALYSIS CORPORATION
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(Exact Name of Registrant as specified in its charter)
Minnesota 41-0918564
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6700 France Avenue South
Minneapolis, Minnesota 55435
- ----------------------------------- -----------------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (612) 925-5900
-----------------------
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last year)
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, and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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2,197,303 Common Shares were outstanding as of June 30, 1995.
<PAGE>
TECHNALYSIS CORPORATION
INDEX
PAGE
PART I. FINANCIAL INFORMATION NO.
Item 1. Financial Statements
Condensed Balance Sheet 3
June 30, 1995 (Unaudited) and
December 31, 1994
Condensed Statement of Earnings 4
Three months and six months ended
June 30, 1995 and 1994 (Unaudited)
Condensed Statement of Cash Flows 5
Six months ended June 30, 1995
and 1994 (Unaudited)
Notes to Condensed Financial 6
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
TECHNALYSIS CORPORATION
CONDENSED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DEC. 31,
1995 1994
----------- -----------
ASSETS (Unaudited) Note
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $3,074,952 $4,156,239
Investment in Available-For-Sale Securities 1,102,073 1,057,255
Trade Accounts Receivable 2,670,613 2,254,825
Unbilled Work on Contracts in Process 1,961,359 1,056,513
Other Current Assets 93,528 237,146
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TOTAL CURRENT ASSETS $8,902,525 $8,761,978
EQUIPMENT AND OFFICE FURNITURE:
At cost less accumulated depreciation
of 695,000 & 658,955 respectively 176,570 157,789
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$9,079,095 $8,919,767
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---------- ----------
LIABILITIES & STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Trade Accounts Payable $ 298,874 $ 210,757
Salaries, Wages and Commissions 167,082 105,462
Accrued Vacation Pay 88,581 80,482
Income Taxes 89,491 0
Dividends Payable 637,218 637,218
Advance Billings on Contracts 47,461 154,273
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TOTAL CURRENT LIABILITIES $1,328,707 $1,188,192
STOCKHOLDER'S EQUITY:
Common Stock, Par Value $.10 a Share;
Authorized 5,000,000 Shares
Issued and outstanding 2,197,303
& 2,197,303 shares, respectively $ 219,730 $ 219,730
Additional Paid-In Capital 973,446 973,446
Retained Earnings 6,583,409 6,591,746
Unrealized Loss on Available-For-Sale
Securities (26,197) (53,347)
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$7,750,388 $7,731,575
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$9,079,095 $8,919,767
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---------- ----------
<FN>
NOTE: The balance sheet at December 31, 1994 has been taken from the audited
financial statements at that date, and condensed.
</TABLE>
<PAGE>
TECHNALYSIS CORPORATION
CONDENSED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-----------------------------------------------
1995 1994 1995 1994
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Sales and Reimbursed Expenses $5,097,813 $4,356,519 $10,036,164 $8,586,441
EXPENSES:
Salaries, Contracted Services
and Reimbursed Expenses $3,032,322 $2,485,481 $ 5,959,268 $4,970,525
Selling, Administrative
and Other Operating Costs 842,412 782,260 1,821,954 1,494,997
Employee Benefits 634,886 516,982 1,340,948 1,065,571
---------- ---------- ----------- ----------
TOTAL EXPENSES $4,500,620 $3,784,723 $ 9,122,170 $7,531,093
---------- ---------- ----------- ----------
OTHER INCOME:
Interest Income 68,592 59,131 141,887 113,799
---------- ---------- ----------- ----------
EARNINGS BEFORE INCOME TAXES $ 665,785 $ 630,927 $ 1,055,881 $1,169,147
INCOME TAXES 269,000 255,000 427,000 473,000
---------- ---------- ----------- ----------
NET EARNINGS $ 396,785 $ 375,927 $ 628,881 $ 696,147
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
PER COMMON SHARE
Net Earnings:
Primary $0.18 $0.17 $0.29 $0.32
Fully Diluted $0.18 $0.17 $0.29 $0.32
Cash Dividends:
Current Year (Semi-Annual) $0.29 $0.28 $0.29 $0.28
</TABLE>
<PAGE>
TECHNALYSIS CORPORATION
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-------------------------
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $8,608,718 $8,308,084
Cash paid for salaries, wages & benefits (7,231,492) (6,125,558)
Cash paid for selling, administrative &
other operating costs (1,651,359) (1,529,575)
Interest Received 152,554 88,560
Income Taxes Paid (249,994) (466,380)
----------- ----------
Net cash provided by operating activities (371,573) 275,131
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (54,828) (22,495)
Purchases of Available-For-Sale Securities (17,668) 0
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(72,496) (22,495)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (637,218) (614,965)
Proceeds from issuance of common stock 0 52,990
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Net cash used by financing activities (637,218) (561,975)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: (1,081,287) (309,339)
CASH AND CASH EQUIVALENTS:
At beginning of period 4,156,239 6,371,620
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At end of period $3,074,952 $6,062,281
---------- ----------
---------- ----------
RECONCILIATION OF NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net earnings $ 628,881 $ 696,147
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 36,047 13,088
(Increase) decrease in trade A/R (415,788) 572,606
(Increase) decrease in unbilled
work on contracts in process (904,846) (672,057)
(Increase) decrease in other assets 143,618 (125,902)
Increase (decrease) in accounts payable 88,117 17,701
Increase (decrease) in accrued expenses 69,719 (54,166)
Increase (decrease) in income taxes payable 89,491 6,620
Increase (decrease) in advance
billings on contracts in process (106,812) (178,906)
---------- ----------
Total adjustments (1,000,454) (421,016)
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ (371,573) $ 275,131
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---------- ----------
</TABLE>
<PAGE>
TECHNALYSIS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The condensed balance sheets of June 30, 1995 and December 31, 1994, the
statement of earnings for the three and six-month periods ended June 30,
1995 and 1994, and the condensed statement of cash flows for the six-month
periods then ended have been prepared by the company, without audit. In
the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flows at June 30, 1995 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the company's December 31, 1994
annual report to shareholders. The results of operations for the periods
ended June 30, 1995 are not necessarily indicative of the operating results
for the full year.
2. STOCKHOLDERS' EQUITY
During the six months ended June 30, 1995, stockholder's equity changed
for the following items:
- Cash Dividends declared for $637,218.
- Net Earnings of $628,881.
- $27,150 adjustment in unrealized loss on available-for-sale
securities.
<PAGE>
TECHNALYSIS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REVENUES
Revenue from sales and reimbursed expenses increased 17% for the second quarter
of 1995, ended June 30, compared to 1994 due to a greater volume of business.
The corresponding increase for the six-month period was also 17%. Interest
income increased 16% during the second quarter of 1995 due to higher interest
rates and 25% for the corresponding first six months.
OPERATING COSTS AND EXPENSES
Operating costs were 88% of revenues for the second quarter and 91% of revenues
for the six-month period of 1995. The corresponding %'s for 1994 were 87% and
88% respectively. The increase in operating costs as a percent of revenues was
due primarily to increased expansion costs and higher costs than anticipated
for a large fixed-price contract.
NET EARNINGS
Net earnings and earnings per share both increased 6% for the second quarter
of 1995 compared to and 1994. For the six month periods, net earnings decreased
10% and earnings per share decreased 9%.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 1995, Technalysis had working capital of $7,573,818 versus
$7,573,786 as of December 31, 1994 and $7,828,562 as of June 30, 1994.
Technalysis has neither short nor long term debt. The Company believes it
has adequate cash and cash flow to support its present operations.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(A) Technalysis Corporation held its regular annual
meeting on June 14, 1995.
(B) The following directors were elected to a
one-year term:
1. Victor A. Rocchio
2. Robert S. Erickson
3. Franklin Triplett
4. Edward D. Zimmer
5. Milan L. Elton
6. John M. Schulzetenberg
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibit No. 1: Computations of Net Income per
Common Share.
(B) There were no reports on Form 8-K filed for the
three months ended June 30, 1995.
<PAGE>
Exhibit No. 1
TECHNALYSIS CORPORATION
COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY:
Net Earnings $ 396,785 $ 375,927 $ 628,881 $ 696,147
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding 2,197,303 2,197,303 2,197,303 2,196,684
Dilutive effect of stock
options outstanding after
application of treasury
stock method 7,333 8,148 7,333 7,622
--------- --------- --------- ---------
2,204,636 2,205,451 2,204,636 2,204,306
Net earnings per common
equivalent share, based
upon weighted average
number of shares
outstanding $0.18 $0.17 $0.29 $0.32
FULLY DILUTED:
Net Earnings $ 396,785 $ 375,927 $ 628,881 $ 696,147
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding 2,197,303 2,197,303 2,197,303 2,196,684
Dilutive effect of stock
options outstanding after
application of treasury
stock6 method 7,333 8,148 7,333 7,853
--------- --------- --------- ---------
2,204,636 2,205,451 2,204,636 2,204,537
Net earnings per common
equivalent share, based
upon weighted average
number of shares
outstanding $0.18 $0.17 $0.29 $0.32
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<PAGE>
TECHNALYSIS CORPORATION
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Technalysis Corporation
-------------------------------
Registrant
Date July 31, 1995 /S/ Victor A. Rocchio
-------------------------- -------------------------------
Victor A. Rocchio
President
Date July 31, 1995 /S/ Milan L. Elton
-------------------------- -------------------------------
Milan L. Elton
Vice President,
Administration
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3074952
<SECURITIES> 1102073
<RECEIVABLES> 2670613
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8902525
<PP&E> 871570
<DEPRECIATION> 695000
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<COMMON> 219730
0
0
<OTHER-SE> 7530658
<TOTAL-LIABILITY-AND-EQUITY> 9079095
<SALES> 0
<TOTAL-REVENUES> 10036164
<CGS> 0
<TOTAL-COSTS> 9122170
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<NET-INCOME> 628881
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
