SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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: 1-7675
AUDITS & SURVEYS WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-1809586
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
650 Avenue of the Americas, New York, NY 10011
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (212) 627-9700
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 reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X NO
---- -----
The number of shares outstanding of each of the issuer's classes of
common stock, as of November 10, 1995 was:
Class Number of Shares
Common Stock, $0.01 par value 13,094,755
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
INDEX
Part I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
September 30, 1995 and December 31, 1994 3-4
Condensed Consolidated Statements of Income-
Three Months and Nine Months ended September 30, 1995
and October 2, 1994 5
Condensed Consolidated Statements of Cash Flows-
Nine Months ended September 30, 1995 and October 2, 1994 6
Condensed Consolidated Statement of Stockholder's Equity-
September 30, 1995 7
Notes to Condensed Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-13
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
-2-<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Sept. 30, 1995 Dec. 31, 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ - 754
Accounts receivable:
Billed 6,671 7,413
Unbilled 3,787 1,948
Deferred income taxes -current portion 219 196
Prepaid income taxes 403 -
Prepaid expenses and other current assets 1,141 1,004
Net assets held for sale 2,045 -
------ ------
Total current assets 14,266 11,315
------ ------
Property and Equipment, net 3,279 2,524
------ ------
Receivable from sale of assets 500 -
Prepaid pension costs 879 -
Cash surrender value of officers'
life insurance 280 293
Deferred income taxes 932 793
Other assets and deferred costs 1,220 1,553
------ ------
TOTAL ASSETS $ 21,356 $ 16,478
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
-3-<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Sept. 30, 1995 Dec. 31, 1994
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Cash overdraft $ 426 $ -
Notes payable -bank 3,700 -
Accounts payable and accrued expenses 4,485 2,940
Accrued payroll and bonuses 1,710 3,433
Notes payable to officers/stockholders 516 1,500
Customer billings in excess of revenues earned 4,015 4,613
Income taxes payable - 595
Current portion of long-term debt 527 411
------ ------
Total current liabilities 15,379 13,492
------ ------
Long-term debt, net of current portion 769 544
Other liabilities 1,494 1,310
------ ------
Total liabilities 17,642 15,346
------ ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 30,000,000 shares
authorized; 13,094,755 shares issued at
September 30, 1995; and 10,475,804 shares
issued at December 31,1994 131 14
Additional paid-in capital 2,012 334
Retained earnings 1,536 1,168
Cumulative foreign currency translation
adjustment 35 (4)
------- ------
3,714 1,512
Treasury stock, at cost - (380)
------- -------
Total Stockholders' Equity 3,714 1,132
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,356 $16,478
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
-4-<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollar amounts in thousands except for per-share data)
<TABLE>
Three Months Ended Nine Months Ended
Sept.30, 1995 Oct.2, 1994 Sept.30, 1995 Oct.2, 1994
<S> <C> <C> <C> <C>
REVENUES $12,783 $12,109 $40,615 $31,814
------ ------ ------ ------
COSTS AND EXPENSES:
Direct costs 6,670 5,319 20,623 12,892
Selling, general and
administrative expenses 6,348 5,024 18,073 15,251
Incentive bonuses 450 1,281 1,199 2,726
Interest expense 121 48 285 148
Other expense (income) -net 119 (96) (188) (255)
Stock bonus - 779 - 779
_____ _____ _____ _____
TOTAL COSTS AND EXPENSES 13,708 12,355 39,992 31,541
------ ------ ------ ------
(LOSS) INCOME BEFORE
(CREDIT) PROVISION FOR
INCOME TAXES (925) (246) 623 273
(CREDIT) PROVISION FOR
INCOME TAXES (435) (88) 255 240
------ ------ ------ ------
NET (LOSS) INCOME $(490) $(158) $368 $33
====== ====== ====== ======
NET (LOSS) INCOME PER
SHARE $(.04) $(.02) $.03 $.00
====== ====== ====== ======
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 13,094,755 10,475,804 12,298,517 10,475,804
========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
-5-<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
Sept. 30, 1995 Oct. 2, 1994
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 368 $ 33
-------- --------
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 406 382
Deferred income taxes (163) 27
Amortization of deferred charges 60 28
Accrued rent 167 (237)
Other non-cash items 29 54
Stock Bonuses to Officers - 469
Changes in operating assets and liabilities:
Accounts receivable (1,097) (2,338)
Prepaid expenses and deferred charges 72 176
Net assets held for sale (96) 0
Other current assets (75) 18
Other noncurrent assets (627) (125)
Income taxes payable (998) 208
Accounts payable and accrued expenses 363 1,035
Accrued payroll and bonuses (1,723) 236
Customer billings in excess of
revenues earned (598) 785
-------- ---------
Total adjustments (4,280) 718
-------- ---------
Net cash used by operating activities (3,912) 751
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to officers/stockholders (48) (95)
Repayment of loans from officers/stockholders 47 21
Repayment of loans from affiliates - 56
Purchases of property and equipment (589) (241)
Investment in subsidiary - (5)
Payment of deferred merger costs (191) (505)
Cash received from Triangle merger 1,090 -
Net cash provided (used) by investing
activities (309) (769)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings-bank 3,700 750
Principal payments on notes payable-
officers/stockholders (984) (391)
Principal payments on long-term debt (211) (317)
Principal payments on capital lease obligations (99) (31)
Principal payments on financing of capital
expenditures (22) 0
Distribution to stockholders 0 (510)
-------- ---------
Net cash provided (used) by financing
activities 2,384 (499)
-------- ---------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH 39 13
-------- ---------
NET DECREASE IN CASH (1,180) (504)
CASH, BEGINNING OF PERIOD 754 720
--------- ---------
(CASH OVERDRAFT) CASH, END OF PERIOD (426) 216
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during
the year for: Interest 204 121
========= =========
Income Taxes $1,335 $0
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligation incurred for
purchase of equipment $250
====
Financing of capital improvements $332
====
The Company issued common stock in
order to effect the merger with Triangle.
Such stock aggregated $2,235 (net of
$1,254 of related merger costs).
In conjunction with the acquisition,
liabilities were assumed as follows:
Fair value of assets acquired
(includes $1,090 of cash acquired) $2,707
Value of common stock issued
(net of $1,254 of related merger costs) 2,235
------
Liabilities assumed $472
======
</TABLE>
See notes to condensed consolidated financial statements.
-7-<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TREASURY STOCK
PAID-IN
EARNINGS
SHARES AMOUNT CAPITAL SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
BALANCE, 14,075,650 $14 $334 $1,168 3,601 $380
DECEMBER 31,
1994
Net Income
Effects of (980,895) 117 1,678 - (3,601) (380)
Triangle ----------- ---- ----- ------- ------- -----
merger
BALANCE, 13,094,755 $131 $2,012 $1,536 - $ -
SEPTEMBER, ========== ==== ====== ====== ==== ======
30, 1995
</TABLE>
See notes to condensed consolidated financial statements.
-8-<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying financial statements of Audits & Surveys Worldwide, Inc.
("the Company") include the accounts of Audits and Surveys, Inc. and
subsidiaries ("A&S") for the entire period and the accounts of The
Triangle Corporation ("Triangle") as of March 24, 1995, the effective
date of the merger (the Merger) described in Note 3.
2. The 1995 and 1994 consolidated financial statements have been prepared by
the Company and are unaudited. In the opinion of the Company's
m a n agement all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position, results
of operations and cash flows for the interim periods have been made.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the
consolidated financial statements pursuant to the rules and regulations
of the Securities and Exchange Commission. The consolidated financial
statements presented herein should be read in conjunction with the
year-end consolidated financial statements and notes thereto included in
Triangle's Annual Report on Form 10-K for the year ended December 31,
1994, and the historical financial statements and notes thereto of A&S
for the year ended December 31, 1994 included in the Company's Form 8K/A
filed with the Securities and Exchange Commission on May 15, 1995. The
results of operations for the three month and nine month periods ended
September 30, 1995 and October 2, 1994 are not necessarily indicative of
the results to be expected for any other interim period or for the entire
year.
3. Merger
On March 24, 1995, the Company completed a Merger between Triangle and
A&S. In accordance with the terms of the Merger Agreement, each share of
Triangle's common stock outstanding prior to the consummation of the
M e rger remained outstanding. Each share of A&S's common stock
outstanding prior to the Merger was exchanged for 1,407.565 shares of
Triangle's common stock. Upon consummation of the Merger, the holders of
Triangle's common stock immediately prior to the Merger owned 20% of the
combined company's common stock and the holders of A&S's common stock
immediately prior to the Merger owned 80% of the combined company's
common stock. For accounting and financial reporting purposes, the
Merger has been treated as a reverse acquisition in accordance with
generally accepted accounting principles, with A&S being deemed to have
acquired Triangle's net assets in return for a 20% equity interest in
A&S. The name of the combined company was changed to Audits & Surveys
Worldwide, Inc. Triangle's results of operations have been included in
the consolidated financial statements of the Company subsequent to the
effective date of the Merger. The purchase price has been allocated among
the fair value of Triangle's net assets acquired. Any excess purchase
price, including approximately $1,254,000 of Merger related expenses, has
been charged to paid-in capital. Accordingly, no goodwill has been
recorded in connection with this transaction.
The following unaudited pro forma summary presents the consolidated
results of operations as if the Merger had occurred at the beginning of
each period presented and does not purport to be indicative of what would
have occurred had the Merger been completed as of those dates or of
results which may occur in the future.
-9-<PAGE>
Nine Months Ended
-----------------
Sept. 30, 1995 Oct. 2, 1994
------------- -----------
Revenues $40,615,000 $31,814,000
============ ===========
Net income $187,000 $407,000
============ ===========
Net income per share $.01 $.03
=========== ==========
4. Commitments and Contingencies
On March 24, 1995, the Company entered into employment and compensation
agreements with its Chief Executive Officer ("CEO"), its President and
two of its Executive Vice-Presidents and on September 13, 1995 entered
into an employment and compensation agreement with its Controller. The
agreement with the CEO provides that he will be employed for a period of
five years at a base salary of $350,000 per annum, plus discretionary
bonuses as may be determined by the Board of Directors. At any time
after March 24, 1998, the CEO may elect to terminate his status as a
full-time employee and become a consultant to the Company for the balance
of the term of his employment agreement and receive a consulting fee
e q u a l to $175,000 per annum. The President, two Executive
V i c e-Presidents and the Controller have entered into employment
agreements, each for a term of three years at a salary of $300,000,
$250,000, $195,000 and $120,000 per annum, respectively, as well as
discretionary bonuses as may be determined by the Board of Directors.
On February 6, 1995, the Company entered into a five year agreement with
a supplier whereby the Company will pay $1,500,000 for retail sales data
and other rights as specified in the agreement. In the event of
termination, the amounts owed to the supplier would be prorated based on
the proportion of sales data received during the period prior to
termination. As of September 30, the Company has paid the supplier
$1,000,000. The balance of $500,000 is to be paid at a rate of $100,000
a year over the five year period.
On August 4, 1993, Triangle completed the sale of substantially all of
the assets and properties constituting its mechanics' hand tool,
h o r seshoe and farrier tool business to Cooper Industries, Inc.
("Cooper"). On February 3, 1995, Triangle was notified by Cooper that
Triangle had allegedly breached certain representations and warranties
made to Cooper in the agreement pertaining to such sale (the Cooper
Agreement). The alleged breaches pertained to a representation that
Triangle had no knowledge of the existence of any undisclosed underground
storage tanks ("USTs"). In such notice, Cooper advised Triangle that its
damages arising from this breach could be in excess of $1,000,000, and
that Cooper would therefore withhold a deferred payment of $1,000,000,
plus interest, due to Triangle by February 10, 1995, until the matter was
resolved. On March 9, 1995, Mobil Oil Corporation ("Mobil") notified
Cooper that Mobil believed the USTs in question were left from a former
Mobil service station operation on the same premises, and that Mobil
w o u l d , subject to a reservation of its rights, assume lead
responsibilities for investigative and/or remedial activities at the
site. Based in part upon the receipt of this letter from Mobil, Cooper
paid to Triangle the aforesaid $1,000,000, plus interest, on March 17,
1995, and notified Triangle that Cooper would hold its claim against
Triangle in abeyance pending final resolution of the matter. Based upon
both Mobil's commitment and the Company's investigation of the removal
-10-<PAGE>
and remedial costs likely to be incurred with respect to the existence of
these USTs, the Company does not believe that a payment, if any, to
Cooper by the Company of any damages that may be suffered by Cooper with
respect to the alleged breach would be likely to have a material effect
on the Company's consolidated results of operations or financial
position. Furthermore, the Company believes that it has valid defenses
to any potential Cooper claims.
Triangle's former subsidiary Diamond Tool and Horseshoe Co., now known as
Tri-North, Inc., is one of a large number of third-party defendants in an
action brought by the U.S. Environmental Protection Agency. The action
involves the cleanup of the Arrowhead Refinery Superfund site in
Minnesota and the defendants are seeking the right to reimbursement of a
portion of their costs from the third-party defendants. In prior years,
Triangle expensed $100,000, excluding legal costs, relating to this
action. Any further liability with respect to this action would
constitute an Assumed Liability (as defined) under the terms of the
Cooper Agreement described above. Cooper is obligated to indemnify the
Company against any such liability (including the cost of obtaining a
s e t tlement or consent order releasing the Company from further
liability). However, the final conditional payment due from Cooper of
$500,000 (plus interest thereon) is due when and if the Company obtains a
satisfactory settlement or consent order releasing it from further
liability with respect to this action in accordance with the Cooper
Agreement, and which $500,000 is to be reduced by the amount paid in
obtaining such a settlement or consent order. Notwithstanding the fact
that the Company's maximum exposure from this litigation is therefore in
effect limited to the loss of this $500,000 conditional payment, a range
of possible loss cannot be reasonably estimated. The Company's ultimate
liability in this matter is not, however, expected to have a material
effect on the Company's consolidated results of operations or financial
position.
-11-<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of
Operations
Comparison of the Third Quarter and Nine Months ended September 30, 1995 with
the Third Quarter and Nine Months ended October 2, 1994
Results of Operations
As previously reported, on March 24, 1995, the Company completed a Merger
between the former Triangle Corporation (Triangle) and the former Audits and
Surveys, Inc. (A&S). For accounting and financial reporting purposes, the
Merger has been treated as a reverse acquisition in accordance with generally
accepted accounting principles, with A&S being deemed to have acquired
Triangle's assets in return for a 20% equity interest in A&S. The name of the
combined company was changed to Audits & Surveys Worldwide, Inc. Triangle's
results of operations have been included in the consolidated financial
statements of the Company subsequent to the effective date of the Merger.
Triangle's operations for the period March 24, 1995 to March 31, 1995 are not
significant. For convenience, the acquisition has been recorded as of March
31, 1995 for accounting purposes.
Revenues increased by $674,000 (5.6%) and $8,801,000 (27.7%) in the third
quarter and nine month period, respectively, of 1995 when compared with the
same periods of 1994. The Customer Satisfaction division had increased
revenues of $670,000 in the third quarter and $3,688,000 for the nine month
period principally from two major mystery shopping customer satisfaction
surveys which had not been initiated in 1994. Revenues of the International
division increased $63,000 and $3,059,000 in the third quarter and nine months,
respectively, as a result of a major consumer products study.
Direct costs increased $1,351,000 (25.4%) in the third quarter and $7,731,000
(60%) in the nine month period of 1995 compared with the same periods of 1994.
As a percentage of revenues, direct costs were 52.2% in the third quarter of
1995 compared with 43.9% in 1994 and for the nine months were 50.8% in 1995
compared with 40.5% in 1994. The increases in direct costs stemmed primarily
from the higher revenues. The increases in direct costs as a percentage of
revenues reflect the impact of the studies which generated the increased
revenues having significantly higher costs than the Company's historical mix of
survey studies. Direct costs as a percentage of revenues were also impacted by
expenses incurred related to the development of new research services.
-11-<PAGE>
Selling, general and administrative (SG&A) expenses increased approximately
$1,324,000 (26.4%) and $2,822,000 (18.5%) in the third quarter and nine month
period, respectively, of 1995 compared with 1994. Approximately $874,000 of
the third quarter increase and $1,962,000 of the increase for the nine month
period resulted from higher base compensation for several key employees upon
implementation of new compensation agreements (see Incentive bonuses discussion
below) and additional salaries of new personnel related to generation of the
increased revenues previously discussed. Other SG&A expenses increased
$450,000 in the third quarter and $860,000 for the nine month period.
Approximately half of these increases stemmed from higher professional and
consulting fees and other expenses incurred in connection with the Company
making the transition from a private to a publicly owned corporation (which
expenses were not directly related to the merger) and for improvements to the
Company's information system. In addition, increases in rent, utilities,
telephone and associated costs were incurred to accommodate the new personnel
described above.
Incentive bonuses decreased $831,000 in the third quarter and $1,527,000 in the
nine months period, respectively, of 1995 when compared with the same periods
of 1994. The decrease resulted from a decline in the operating income on which
the incentive bonuses are calculated as well as the implementation of new
compensation agreements with several key employees which increased base
salaries (see SG&A above) and simultaneously reduced incentive bonuses.
Results for the third quarter and nine month period of 1995 were adversely
impacted by a nonrecurring charge of $175,000 to "Other expense." The charge
was the result of the termination of a sublease with a subtenant and the
occupancy of the space by the Company.
Liquidity and Capital Resources
Cash flow from operations and borrowings under its credit facilities are the
Company's primary sources of funds. The Company's operating cash flow and
borrowings have been sufficient to provide funds for working capital, capital
expenditures and payment of principal and interest on indebtedness. Working
capital deficiency as of September 30, 1995 was $1,113,000 compared with
$2,177,000 as of December 31, 1994. The improvement in the Company's working
capital deficiency as of September 30, 1995 was due to the additional working
capital provided as a result of the merger with Triangle and to an increase of
$1,097,000 in accounts receivable accompanied by a decrease of $598,000 in the
a m o u nts billed to customers prior to revenue recognition on
percentage-of-completion contracts.
Approximately $1,090,000 in cash was provided through the Triangle merger and
offset purchases of various production, computer system and telephone system
capital assets aggregating $589,000.
During the nine months ended September 30, 1995, short-term bank borrowings
were offset, in part, by payments on long-term bank borrowings and on
short-term borrowings from officers of the Company. The Company has a credit
facility with a bank of $4,000,000 and had loans outstanding under this bank
line of $3,700,000 at September 30, 1995. The loans were needed to fund
significant cash payments such as the merger related expenses, payment of
estimated income taxes arising from the change in the Company's tax status from
a Subchapter S Corporation and the payment of $1,000,000 to a supplier for
retail sales data (see Note 4). The credit facility expires on December 31,
1995. The Company believes it will be successful in negotiating with the bank
for a renewal of the credit facility and that it will be able to obtain
adequate funds to finance its operations and meet its debt obligations for the
next twelve months through funds generated by its operations and borrowings
under such credit facility.
-12-<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K*
a. Exhibits:
10. Employment Agreement, dated September 13, 1998 between the Company
and Alan J. Ritter.
27. Financial Data Schedule.
b. Reports on Form 8-K:
The Company has not filed any reports on Form 8-K during the quarterly
period ended September 30, 1995.
- ----------------------
* There is no instrument defining the right of holders of long-term debt of
the Company or of any of its subsidiaries other than where the total amount
of securities authorized thereunder does not exceed 10% of the total assets
of the Company and its subsidiaries on a consolidated basis. In accordance
with paragraph (b)(4)(iii) of Item 601 of Regulation S-K, the Company
agrees to furnish to the Securities and Exchange Commission, upon request,
copies of any such instrument.
-15-<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AUDITS & SURVEYS WORLDWIDE, INC.
November 14, 1995 By: /s/H. Arthur Bellows, Jr.
Date H. Arthur Bellows, Jr.
President
By: /s/Alan J. Ritter
Alan J. Ritter
Senior Vice President
Corporate Controller
-16-<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000099703
<NAME> AUDITS & SURVEYS WORLDWIDE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> (426)
<SECURITIES> 0
<RECEIVABLES> 10,458
<ALLOWANCES> (149)
<INVENTORY> 0
<CURRENT-ASSETS> 14,266
<PP&E> 5,969
<DEPRECIATION> (2,690)
<TOTAL-ASSETS> 21,356
<CURRENT-LIABILITIES> 15,379
<BONDS> 895
<COMMON> 131
0
0
<OTHER-SE> 3,583
<TOTAL-LIABILITY-AND-EQUITY> 21,356
<SALES> 0
<TOTAL-REVENUES> 40,615
<CGS> 0
<TOTAL-COSTS> 20,623
<OTHER-EXPENSES> 18,073
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 285
<INCOME-PRETAX> 623
<INCOME-TAX> 255
<INCOME-CONTINUING> 368
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as
of September 13, 1995 between AUDITS & SURVEYS WORLDWIDE, INC., a Delaware
corporation, having an address at 650 Avenue of the Americas, New York, New
York 10011 (the "Company"), and ALAN J. RITTER, an individual residing at 87
Blueberry Lane, Fairfield, Connecticut 06432.
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Employee
and the Employee desires to be employed by the Company and to render services
to the Company, all upon the terms and subject to the conditions contained
herein.
N O W, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. Employment. Subject to and upon the terms and
conditions contained in this Agreement, the Company hereby agrees to employ
Employee and Employee agrees to be employed by the Company, for the period set
forth in Paragraph 2 hereof, to render to the Company, its affiliates and/or
subsidiaries the services described in Paragraph 3 hereof.
2. Effectiveness and Term. This Agreement shall
become effective upon the approval of the Board of Directors of the Company
(the "Board Approval"). Employee's term of employment under this Agreement
shall commence on the date of Board Approval and end three (3) years
thereafter, unless extended in writing as hereinbelow provided or earlier
terminated pursuant to the terms and conditions set forth herein (the
"Employment Term"). Such term shall be extended for successive one (1) year
terms unless either party hereto gives written notice to the other of its
desire to terminate this Agreement at least ninety (90) days prior to the
commencement of any such extension.
3. Duties. (a) Employee shall serve as the Senior
Vice President, Controller and Chief Accounting Officer of the Company, subject
to the authority of the Board of Directors and the President of the Company.
Employee shall perform all duties and services incident to the positions held
by him as reasonably requested, from time to time, by the Board of Directors
and/or the President of the Company including, without limitation, duties and
services related to (i) supervision of the accounting department; (ii)
f i n ancial information systems and controls; (iii) financial statement
preparation; (iv) cash management, forecasting and control; and (v) merger and
acquisition matters.
(b) Employee agrees to abide by all By-laws
and policies of the Company promulgated from time to time by the Company.
<PAGE>
4. Exclusive Services and Best Efforts. Employee
agrees to devote his best efforts, energies and skill to the discharge of the
duties and responsibilities attributable to his position, and to this end, he
will devote his full time and attention during regular business hours to the
business and affairs of the Company, subject to the provisions of the last
sentence of subparagraph 10(b) hereof.
5. Compensation. As compensation for his services
and covenants hereunder, Employee shall receive a salary ("Salary"), payable
pursuant to the Company's normal payroll procedures in place from time to time,
at the rate of $120,000 per annum less all necessary and required federal,
state and local payroll deductions, and such bonuses as may be determined from
time to time by the Board of Directors of the Company.
6. Business Expenses. Employee shall be reimbursed
for, and entitled to advances (subject to repayment to the Company if not
actually incurred by Employee) with respect to, only those business expenses
incurred by him (a) which are reasonable and necessary for Employee to perform
his duties under this Agreement in accordance with policies established from
time to time by the Company and (b) for which Employee has submitted vouchers
and/or receipts.
7. Employee Benefits. (a) During the Employment
Term, Employee shall be entitled to such insurance, disability and health and
medical benefits and be entitled to participate in such retirement plans or
programs as are from time to time generally made available to executive
employees of the Company pursuant to the policies of the Company; provided that
Employee shall be required to comply with the conditions attendant to coverage
by such plans and shall comply with and be entitled to benefits only in
accordance with the terms and conditions of such plans. The Company may
withhold from any benefits payable to Employee all federal, state, local and
other taxes and amounts as shall be permitted or required to be withheld
pursuant to any applicable law, rule or regulation.
(b) Employee shall be entitled to vacation in
accordance with the Company's policy in effect for executive staff, which shall
be taken at such time or times as shall be mutually agreed upon with the
Company.
8. Death and Disability. (a) The Employment Term
shall terminate on the date of Employee's death, in which event Employee's
Salary, reimbursable expenses and benefits owing to Employee through the date
of Employee's death shall be paid to his estate. Employee's estate will not be
entitled to any other compensation upon termination of this Agreement pursuant
to this subparagraph 8(a).
(b) If, during the Employment Term, in the
opinion of a duly licensed physician selected by the Company, Employee, because
of physical or mental illness or incapacity, shall become substantially unable
to perform the duties and services required of him under this Agreement for a
period of 120 consecutive days or 180 days in the aggregate during any nine-
month period, the Company may, upon at least ten (10) days' prior written
notice given at any time after the expiration of such 120 or 180-day period, as
the case may be, to Employee of its intention to do so, terminate his
employment as of such date as may be set forth in the notice. In case of such
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termination, Employee shall be entitled to receive his Salary, reimbursable
expenses and benefits owing to Employee through the date of termination.
Employee will not be entitled to any other compensation upon termination of his
employment pursuant to this subparagraph 8(b).
9. Termination. The Company may terminate the
employment of Employee for cause, as such term is interpreted by the courts of
New York. Upon such termination, the Company shall be released from any and all
further obligations under this Agreement, except that the Company shall be
obligated to pay Employee his Salary, reimbursable expenses and benefits owing
to Employee through the day on which Employee is terminated. Employee will not
be entitled to any other compensation upon termination of this Agreement
pursuant to this Paragraph 9.
10. D i s closure of Information and Restrictive
Covenant. Employee acknowledges that, by his employment, he has been and will
be in a confidential relationship with the Company and will have access to
confidential information and trade secrets of the Company, its subsidiaries and
affiliates. Confidential information and trade secrets include, but are not
limited to, customer, supplier and client lists, panels and interviewers, price
lists, marketing, strategies and procedures, operational techniques, business
plans and systems, quality control procedures and systems, special projects and
survey and market research, including projects, research and reports for any
entity or client, and any other records, files, drawings, discoveries,
applications, data and information concerning the business of the Company and
its customers and clients which are not in the public domain. Employee agrees
that in consideration of the execution of this Agreement by the Company:
(a) Employee will not, during the term of this
Agreement or at any time thereafter, use, or disclose to any third party, trade
secrets or confidential information of the Company, including, but not limited
to, confidential information or trade secrets belonging or relating to the
Company, its subsidiaries, affiliates, customers and clients or proprietary
procedures of the Company, its subsidiaries, affiliates customers and clients.
Proprietary procedures shall include, but shall not be limited to, all
information which is known or intended to be known only by employees of the
C o mpany, its subsidiaries and affiliates or others in a confidential
relationship with the Company or its subsidiaries and affiliates which relates
to business matters.
(b) Employee will not, during the term of this
Agreement, directly or indirectly, under any circumstance other than at the
direction and for the benefit of the Company, engage in or participate in any
business activity, including, but not limited to, acting as a director,
officer, employee, agent, independent contractor, partner, consultant, licensor
o r l icensee, franchisor or franchisee, proprietor, syndicate member,
shareholder or creditor or with a person having any other relationship with any
other business, company, firm, occupation or business activity, that is,
directly or indirectly, competitive with any business carried on by the Company
or any of its subsidiaries or affiliates during the term of this Agreement.
The ownership by Employee of 3% or less of the issued and outstanding shares of
a class of securities which is traded on a national securities exchange or in
the over-the-counter market, shall not cause Employee to be deemed a
shareholder under this subparagraph 10(b) or constitute a breach of Paragraph 4
hereof.
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(c) Employee will not, during the term of this
Agreement and for a period of three (3) years thereafter, on his behalf or on
behalf of any other business enterprise, directly or indirectly, under any
circumstance other than at the direction and for the benefit of the Company,
solicit or induce any creditor, customer, client, supplier, officer, employee
or agent of the Company or any of its subsidiaries or affiliates to sever his
or its relationship with or leave the employ of any of such entities.
(d) Nothing contained in this Paragraph 10
shall be construed as prohibiting Employee from being engaged by a client or
customer of the Company upon his termination of employment by the Company.
(e) It is expressly agreed by Employee that
the nature and scope of each of the provisions set forth above in this
Paragraph 10 are reasonable and necessary. If, for any reason, any aspect of
the above provisions as it applies to Employee is determined by a court of
competent jurisdiction to be unreasonable or unenforceable, the provisions
shall only be modified to the minimum extent required to make the provisions
reasonable and/or enforceable, as the case may be. Employee acknowledges and
agrees that his services are of unique character and expressly grants to the
Company or any subsidiary or affiliate of the Company or any successor of any
of them, the right to enforce the above provisions through the use of all reme-
dies available at law or in equity, including, but not limited to, injunctive
relief.
(f) This Paragraph 10 and Paragraphs 11, 12
and 13 hereof shall survive the expiration or termination of this Agreement for
any reason.
11. Company Property. (a) Any patents, inventions,
discoveries, applications or processes designed, devised, planned, applied,
created, discovered or invented by Employee in the course of Employee's
employment under this Agreement and which pertain to any aspect of the
Company's or its subsidiaries' or affiliates' business shall be the sole and
absolute property of the Company, and Employee shall promptly report the same
to the Company and promptly execute any and all documents reasonably requested
to assure the Company the full and complete ownership thereof.
(b) A l l records, files, lists, including
computer generated lists, drawings, documents, equipment and similar items
relating to the Company's business which Employee shall prepare or receive from
the Company shall remain the Company's sole and exclusive property. Upon
termination of this Agreement, Employee shall promptly return to the Company
all property of the Company in his possession. Employee further represents
that he will not copy or cause to be copied, print out or cause to be printed
out any software, documents or other materials originating with or belonging to
the Company. Employee additionally represents that, upon termination of his
employment with the Company, he will not retain in his possession any such
software, documents or other materials.
12. Remedy. It is mutually understood and agreed
that Employee's services are special, unique, unusual, extraordinary and of an
intellectual character giving them a peculiar value, the loss of which cannot
be reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this Agreement by Employee,
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i n c l u d ing, but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses under Paragraph 10 hereof, the Company
shall be entitled to equitable relief by way of injunction or otherwise in
addition to any damages which the Company may be entitled to recover. In
addition, the Company shall be entitled to reimbursement from Employee, upon
request, of any and all reasonable attorneys' fees and expenses incurred by it
in enforcing any term or provision of this Agreement.
13. Representations and Warranties of Employee. (a)
In order to induce the Company to enter into this Agreement, Employee hereby
represents and warrants to the Company as follows: (i) Employee has the legal
capacity and unrestricted right to execute and deliver this Agreement and to
perform all of his obligations hereunder; (ii) the execution and delivery of
this Agreement by Employee and the performance of his obligations hereunder
will not violate or be in conflict with any fiduciary or other duty,
instrument, agreement, document, arrangement or other understanding to which
Employee is a party or by which he is or may be bound or subject; and (iii)
Employee is not a party to any instrument, agreement, document, arrangement or
other understanding with any person (other than the Company) requiring or
restricting the use or disclosure of any confidential information or the
provision of any employment, consulting or other services.
(b) Employee hereby agrees to indemnify and
hold harmless the Company from and against any and all losses, costs, damages
and expenses (including, without limitation, its reasonable attorneys' fees)
incurred or suffered by the Company resulting from any breach by Employee of
any of his representations or warranties set forth in subparagraph 13(a)
hereof.
14. Waiver of Jury Trial and Consent to New York
Jurisdiction and Venue. In any action, suit or proceeding in any jurisdiction
brought against the Employee by the Company, or vice versa, the Employee and
the Company each waive trial by jury. The Employee hereby consents and agrees
that the Supreme Court of the State of New York for the County of New York and
the United States District Court for the Southern District of New York each
shall have personal jurisdiction and proper venue with respect to any dispute
between the Employee and the Company. In any dispute with the Company, the
Employee will not raise, and hereby expressly waives, any objection or defense
to any such jurisdiction as an inconvenient forum.
15. Notice. Except as otherwise expressly provided,
any notice, request, demand or other communication permitted or required to be
given under this Agreement shall be in writing, shall be sent by one of the
following means to the Employee at his address set forth on the first page of
this Agreement and to the Company at its address set forth on the first page of
this Agreement, Attention: Mr. Solomon Dutka, Chief Executive Officer, with a
copy to Parker Chapin Flattau & Klimpl, 1211 Avenue of the Americas, New York,
New York 10036, Attention: James Alterbaum, Esq. (or to such other address as
shall be designated hereunder by notice to the other parties and persons
r e ceiving copies, effective upon actual receipt) and shall be deemed
conclusively to have been given: (i) on the first business day following the
day timely deposited with Federal Express (or other equivalent national
overnight courier) or United States Express Mail, with the cost of delivery
prepaid or for the account of the sender; (ii) on the fifth business day
following the day duly sent by certified or registered United States mail,
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postage prepaid and return receipt requested; or (iii) when otherwise actually
received by the addressee on a business day (or on the next business day if
received after the close of normal business hours or on any non-business day).
16. I n terpretation, Headings. The parties
acknowledge and agree that the terms and provisions of this Agreement have been
negotiated, shall be construed fairly as to all parties hereto and shall not be
construed in favor of or against any party. The section headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
17. Successors and Assigns; Assignment; Intended
Beneficiaries. Neither this Agreement nor any of Employee's rights, powers,
duties or obligations hereunder may be assigned by Employee. This Agreement
shall be binding upon and inure to the benefit of Employee and his heirs and
legal representatives and the Company and its successors. Successors of the
Company shall include, without limitation, any corporation or corporations
acquiring, directly or indirectly, all or substantially all of the assets of
the Company, whether by merger, consolidation, purchase, lease or otherwise,
and such successor shall thereafter be deemed "the Company" for the purpose
hereof.
18. No Waiver by Action, Cumulative Rights, Etc.
Any waiver or consent from the Company respecting any term or provision of this
Agreement or any other aspect of the Employee's conduct or employment shall be
effective only in the specific instance and for the specific purpose for which
given and shall not be deemed, regardless of frequency given, to be a further
or continuing waiver or consent. The failure or delay of the Company at any
time or times to require performance of, or to exercise any of its powers,
rights or remedies with respect to, any term or provision of this Agreement or
any other aspect of the Employee's conduct or employment in no manner (except
as otherwise expressly provided herein) shall affect the Company's right at a
later time to enforce any such term or provision.
19. C o u nterparts; New York Governing Law;
Amendments, Entire Agreement. This Agreement may be executed in two
counterpart copies, each of which may be executed by one of the parties hereto,
but all of which, when taken together, shall constitute a single agreement
binding upon all of the parties hereto. This Agreement and all other aspects
of the Employee's employment shall be governed by and construed in accordance
with the applicable laws pertaining in the State of New York (other than those
that would defer to the substantive laws of another jurisdiction). Each and
every modification and amendment of this Agreement shall be in writing and
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signed by the parties hereto, and any waiver of, or consent to any departure
from, any term or provision of this Agreement shall be in writing and signed by
each affected party hereto. This Agreement contains the entire agreement of
t h e parties and supersedes all prior representations, agreements and
understandings, oral or otherwise, between the parties with respect to the
matters contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/H. Arthur Bellows, Jr.
-----------------------------
Name: H. Arthur Bellows, Jr.
Title: President
/s/ Alan J. Ritter
-----------------------------
Alan J. Ritter
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