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, 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: 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 such 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 May 10, 1996 was:
CLASS NUMBER OF SHARES
----- ----------------
Common Stock, $0.01 par value 13,099,103
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets-
September 30, 1996 and December 31, 1995 3-4
Condensed Consolidated Statements of Income-
Three and Nine Months ended September 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows-
Nine Months ended September 30, 1996 and 1995 6
Condensed Consolidated Statement of Stockholders' Equity-
September 30, 1996 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 9-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 11
Signatures 12
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
================================================================================
(Dollar amounts in thousands)
SEPT. 30, 1996 DEC. 31,1995
------- -------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 2,093 $ 936
Accounts receivable:
Billed 5,876 8,687
Unbilled 4,289 2,366
Prepaid expenses and inventories 1,587 1,320
Other current assets 417 606
Net assets held for sale 300 983
------- -------
Total current assets 14,562 14,898
PROPERTY AND EQUIPMENT, NET 3,005 3,127
RECEIVABLE FROM SALE OF ASSETS 500 500
PREPAID PENSION COSTS 943 943
DEFERRED INCOME TAX ASSET 3,363 3,398
OTHER ASSETS 1,717 2,021
------- -------
TOTAL ASSETS $24,090 $24,887
======= =======
See notes to condensed consolidated
financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
================================================================================
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
SEPT. 30, 1996 DEC. 31,1995
-------------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank debt $ -- $ 1,200
Accounts payable and accrued expenses 4,109 4,877
Accrued payroll and bonuses 2,298 1,917
Customer billings in excess of revenues earned 3,266 4,282
Income taxes payable 829 --
Current portion of long-term debt 554 658
Current portion of capital lease obligations 91 75
-------- --------
Total current liabilities 11,147 13,009
LONG-TERM DEBT-Net of current portion 2,083 2,647
CAPITAL LEASE OBLIGATIONS - Net of current portion 171 222
DEFERRED INCOME TAX LIABILITY 405 405
OTHER LIABILITIES 1,835 1,977
-------- --------
Total liabilities 15,641 18,260
-------- --------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 1,000,000 shares
authorized and unissued -- --
Common stock, $.01 par value, 30,000,000 shares
authorized; 13,099,103 shares issued at Sept. 30, 1996
and 13,094,755 shares issued at Dec. 31, 1995 131 131
Additional paid-in capital 4,369 4,486
Retained earnings 3,918 2,014
Cumulative foreign currency translation adjustment 31 (4)
-------- --------
Total stockholders' equity 8,449 6,627
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,090 $ 24,887
======== ========
</TABLE>
See notes to condensed consolidated
financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
================================================================================
(Dollar amounts in thousands except for per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES $ 14,697 $ 12,783 $ 44,997 $ 40,615
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Direct costs 6,643 6,670 21,091 20,623
Selling, general and
administrative expenses 6,447 6,348 18,778 18,073
Incentive bonuses 514 450 1,727 1,199
Interest expense 68 121 245 285
Other expenses (income) - net (88) 119 (314) (188)
------------ ------------ ------------ ------------
TOTAL COSTS AND EXPENSES 13,584 13,708 41,527 39,992
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
PROVISION (CREDIT)
FOR INCOME TAXES 1,113 (925) 3,470 623
PROVISION (CREDIT) FOR
INCOME TAXES 501 (435) 1,566 255
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 612 $ (490) $ 1,904 $ 368
------------ ------------ ------------ ------------
NET INCOME (LOSS) PER SHARE $ .05 $ (.04) $ .15 $ .03
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 13,099,103 13,094,755 13,099,103 12,298,517
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated
financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
================================================================================
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1996 1995
------- -------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 1,904 $ 368
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 541 406
Deferred income taxes 68 (163)
Amortization of deferred charges 19 60
Accrued rent (13) 167
Changes in operating assets and liabilities:
Accounts receivable 888 (1,097)
Prepaid expenses and inventories (267) 72
Other current assets (143) (75)
Other assets 275 (627)
Income taxes payable 1,128 (998)
Accounts payable and accrued expenses (767) 363
Accrued payroll and bonuses 381 (1,723)
Customer billings in excess of revenues earned (1,016) (598)
Net assets held for sale 32 (96)
Other (121) 28
------- -------
Net cash provided by (used in) operating activities 2,909 (3,913)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (418) (589)
Payment of merger costs (124) (191)
Proceeds from sale of assets 650 --
Cash received from Triangle merger -- 1,090
------- -------
Net cash provided by investing activities 108 310
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings 1,931 3,700
Principal payments of notes payable to officers/stockholders -- (984)
Principal payments of debt (3,799) (211)
Principal payments of capital lease obligations (35) (121)
Issuance of common stock 7 --
------- -------
Net cash (used in) provided by financing activities (1,896) 2,384
------- -------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH 36 39
------- -------
NET INCREASE (DECREASE) IN CASH 1,157 (1,180)
CASH, BEGINNING OF PERIOD 936 754
------- -------
CASH (CASH OVERDRAFT), END OF PERIOD $ 2,093 $ (426)
------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest $ 319 $ 204
------- -------
Income taxes $ 366 $ 1,335
------- -------
</TABLE>
See notes to condensed consolidated
financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
================================================================================
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
ADDITIONAL CURRENCY
COMMON STOCK PAID-IN RETAINED TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT TOTAL
------ ------ ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE
DECEMBER 31, 1995 13,094,755 $ 131 $ 4,486 $ 2,014 $ (4) $ 6,627
Net income 1,904 1,904
Employee stock bonus 4,348 7 7
Revaluation of assets
acquired in merger (124) (124)
Foreign Currency
Translation Adjustment 35 35
-----------------------------------------------------------------------------------
BALANCE
SEPTEMBER 30, 1996 13,099,103 $ 131 $ 4,369 $ 3,918 $ 31 $ 8,449
-----------------------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated
financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of Audits & Surveys Worldwide, Inc. (the "Company") and its majority
owned subsidiary, Audits & Surveys Europe, Ltd. All significant intercompany
transactions and balances have been eliminated.
On March 24, 1995, Audits & Surveys, Inc. (A&S) and The Triangle Corporation
("Triangle") consummated a merger pursuant to which A&S was merged with and into
Triangle. Triangle was the surviving corporation and the separate existence of
A&S ceased. The name of the merged corporation was changed to "Audits & Surveys
Worldwide, Inc."
The 1996 and 1995 condensed consolidated financial statements have been prepared
by the Company and are unaudited. In the opinion of the Company's management 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 condensed
consolidated financial statements presented herein should be read in conjunction
with the year-end consolidated financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1995. The results of operations for the three-month and nine-month periods ended
September 30, 1996 are not necessarily indicative of the results to be expected
for any other interim period or for the entire year.
2. REFINANCING OF BANK DEBT
On June 5, 1996 the Company refinanced an existing term loan and its $5,000,000
short-term credit facility into a new $2,610,000 term loan and a $2,500,000
secured line of credit. The new term loan is repayable in twenty quarterly
installments of $130,500 which began on June 30,1996. The term loan and the line
of credit contain customary affirmative and negative covenants including those
requiring the Company to maintain certain financial ratios and restricting the
annual payment of cash dividends to an amount not in excess of 50% of the
previous year's net income.
3. NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," which became effective for the Company beginning January 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25, which
recognized compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to its
stock-based compensation awards to employees and will disclose the required pro
forma effect on net income and earnings per share in the 1996 annual financial
statements.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THIRD QUARTER AND NINE-MONTH
PERIODS ENDED SEPTEMBER 30, 1996 WITH THE THIRD QUARTER AND NINE-MONTH PERIODS
ENDED SEPTEMBER 30, 1995
Revenues for the third quarter of 1996 increased $1.9 million (15%) to $14.7
million compared with $12.8 million in the third quarter of 1995. Revenues for
the first nine months of 1996 increased $4.4 million (11%) to $45 million
compared with $40.6 million in the first nine months of 1995. The net increases
in revenues were principally attributable to higher revenues from international
consumer tracking studies and several custom and syndicated audit research
services.
Direct costs in the third quarters of 1996 and 1995 were approximately the same
and were $.5 million (2%) higher in the first nine months of 1996 compared with
1995, primarily as a result of the increases in revenues. As a percentage of
revenues, direct costs were 45% in the third quarter and 47% in the first nine
months of 1996 compared with 52% and 51%, respectively, in the same periods of
1995. The decreases in direct costs as a percentage of revenues represented an
improvement in the profitability of the overall mix of revenues in 1996 compared
with the same periods of 1995. Direct costs also include expenses related to the
development of new research services and such development expenses were lower in
the third quarter and nine month periods of 1996 than in the comparable periods
of 1995.
Selling, general and administrative (SG&A) expenses increased $.1 million (2%)
in the third quarter and $.7 million (4%) in the first nine months of 1996.
Approximately 75% of the SG&A increases in the nine month period were in payroll
and related costs and resulted from the addition of personnel as well as normal
salary adjustments. The remainder of the increases in SG&A expenses was spread
over various expenses such as rent, utilities, depreciation and computer costs.
The provision for incentive bonuses was marginally higher in the third quarter
and $.5 million higher in the first nine months of 1996 compared with the same
periods of 1995. The higher provisions resulted from the increases in
year-to-date operating income on which the incentive bonuses are calculated.
Income taxes for the third quarter of 1996 have been provided at approximately
45% of reported pretax income compared with a credit for income taxes of 47% of
the pretax loss in the third quarter of 1995. Income taxes for the nine month
period of 1996 have been provided at approximately 45% compared with 41% in the
nine month period of 1995. The interim tax provisions are based on estimates of
the effective tax rate anticipated for the full year.
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<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 1996, the Company had working capital of $3.4 million and a
current ratio of 1.30 to 1 compared with working capital of $1.9 million and a
current ratio of 1.15 to 1 at December 31, 1995.
Cash flow from operations and borrowings under its credit facilities with its
bank are the Company's principal sources of funds. The Company's cash flow and
borrowings have historically been sufficient to provide funds for working
capital, capital expenditures and payment of indebtedness. On June 5, 1996 the
Company refinanced an existing term loan and its $5,000,000 short-term credit
facility into a new $2,610,000 term loan and a $2,500,000 secured line of
credit. The new term loan is repayable in twenty quarterly installments of
$130,500 which began on June 30, 1996. The term loan and the line of credit
contain customary affirmative and negative covenants including those requiring
the Company to maintain certain financial ratios and restricting the annual
payment of cash dividends to an amount not in excess of 50% of the preceding
year's net income.
Net cash provided by operating activities was $2,909,000, consisting primarily
of net income of $1,904,000 plus non-cash expenses of $615,000, and decreases in
accounts receivable of $888,000 and increases in income taxes payable of
$1,128,000 offset primarily by decreases in accounts payable of $767,000 and
decreases in customer billings in excess of revenue earned of $1,016,000.
Net cash provided by investing activities was $108,000 primarily from the sale
of a portion of Triangle's former operating assets for $650,000 offset by
purchases of property and equipment of $418,000.
Net cash used by financing activities was $1,896,000 consisting primarily of
proceeds from bank borrowings of $1,931,000 offset by repayments of $3,799,000
of bank borrowings and other debt.
The Company believes that its recently revised credit arrangements with its bank
combined with funds generated by its operations will be adequate to fund its
planned capital expenditures, meet its debt obligations and finance its
operations for at least the next twelve months.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.*
a. EXHIBITS:
10.18 Employment Agreement between the Company and Joseph T.
Plummer dated August 8, 1996
27.01 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, 1996.
- ------------------------
* Except for the Term Loan Agreement previously filed, 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.
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<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 8, 1996 By: /s/ H. Arthur Bellows, Jr.
- ---------------- ------------------------------
Date H. Arthur Bellows, Jr.
President
By: /s/ Alan J. Ritter
------------------------------
Alan J. Ritter
Senior Vice President
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
10.18 Employment Agreement between the Company and Joseph T.
Plummer dated August 8, 1996
27.01 Financial Data Schedule
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT dated as of August 8, 1996, 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 Joseph T.
Plummer, an individual residing at Cedar Street, P.O. Box 304, Cold Spring, New
York 10516 ("EMPLOYEE").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Employee, and Employee is
willing to enter into the employ of, and to render services to the Company, all
upon the terms and subject to the conditions contained herein.
NOW, 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 enter into the employ of the Company, for the period set forth in
Paragraph 2 hereof and to render to the Company, its affiliates and/or
subsidiaries the services described in Paragraph 3 hereof.
2. TERM. Employee's term of employment under this Agreement shall be
two (2) years, commencing on August 8, 1996 and shall continue for a period
through and including August 8, 1998, 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 six (6) months prior to the
commencement of any such extension.
3. DUTIES. (a) Employee shall serve as Vice Chairman of the Company
subject to the authority of the Board of Directors and Chief Executive Officer
of the Company. The Employee shall have supervisory responsibility for all
research groups and divisions including but not limited to the Audit Division,
Groups 1, 3, 4, 6 and 7, the Customer Satisfaction Division, the International
Division, the Media and Communications Division, the San Francisco Division and
the Mid-West Division. The Employee will be responsible for the maintenance of
high quality research standards for the existing businesses of the Company and
for the development of new business including the development of new products
and services and new clients. He will also have
<PAGE>
responsibility for the direction and development of the Company's research
business, including but not limited to supervision of all research groups and
divisions, major client presentations, analytical solutions and study designs
and new products and services. The Employee will represent the Company at
industry functions, including membership in industry associations, speaking
before industry conferences and submission of white papers to industry groups.
Employee shall perform all duties and services incident to the position held by
him and to the responsibilities described above.
(b) Employee agrees to abide by all By-laws and policies
of the Company promulgated from time to time by the Company.
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 11(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
$325,000 per annum, additional compensation determined as hereinafter provided,
and such bonuses as may be determined from time to time by the Board of
Directors of the Company, in each case less all necessary and required federal,
state and local payroll deductions. The Employee shall be entitled to receive
annual additional compensation in an amount equal to 50% of the Company's
profits arising out of sales to new customers and/or sales of new products
and/or services to existing customers directly attributable to Employee's
efforts; provided, however, that the maximum annual amount of additional
compensation that Employee shall be entitled to receive shall be $100,000. For
purposes of this Agreement, profits shall be determined by the Company on the
same basis as it determines profits for research groups/divisions and any
additional compensation shall be paid at the same time as payments of additional
compensation are payable to other executives 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 and (b) for which Employee has submitted vouchers and/or receipts in
accordance with policies established from time to time by the Company.
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
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<PAGE>
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. STOCK OPTIONS. Subject to approval by the Compensation and Stock
Option Committee of the Board of Directors of the Company (the "STOCK OPTION
COMMITTEE"), the Employee will be granted an option to purchase 50,000 shares of
Common Stock of the Company at the market price of the Common Stock of the
Company on the date of grant, which option will vest at the rate of 50% on each
of the first and second anniversary dates of his employment. In addition,
subject to the approval of the Stock Option Committee and its evaluation of
Employee's performance, Employee shall be entitled to receive options to
purchase up to 50,000 additional shares of Common Stock of the Company at the
market price of the Common Stock of the Company on the date of grant on each of
the second, third and fourth anniversary dates of Employee's employment. Such
options, if granted, will vest at the rate of 50% on each of the first and
second anniversaries of the respective dates of grant. All options referred to
in this paragraph will be granted under the Company's 1995 Stock Option Plan (or
any subsequent plan adopted by the Company) and will be subject to all of the
terms and conditions of such plan.
9. DEATH AND DISABILITY. (a) The Employment Term shall terminate on
the date of Employee's death, in which event Employee's Salary, additional
compensation, 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 9(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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<PAGE>
termination, Employee shall be entitled to receive his Salary, additional
compensation, 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 9(b).
10. 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, additional compensation, 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 10.
11. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT. Employee
acknowledges that, by his employment, he 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 Company, 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 or
licensee, 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,
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<PAGE>
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 1% 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 11(b) or constitute a breach of Paragraph 4 hereof.
(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 11 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 11 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 remedies available at law or in
equity, including, but not limited to, injunctive relief.
(f) This Paragraph 11 and Paragraphs 12, 13 and 14 hereof
shall survive the expiration or termination of this Agreement for any reason.
12. 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.
-5-
<PAGE>
(b) All 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.
13. 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, including, but not limited
to, the breach of the non-disclosure, non-solicitation and non-compete clauses
under Paragraph 11 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.
14. 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 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 14(a) hereof.
15. 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
-6-
<PAGE>
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.
16. 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, LLP, 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 receiving
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, 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).
17. INTERPRETATION, 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.
18. 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.
19. 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
-7-
<PAGE>
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.
20. COUNTERPARTS; 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 juris diction). Each and every modification and amendment of
this Agreement shall be in writing and 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 the 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/ Solomon Dutka
--------------------------------
Name: Solomon Dutka
Title: Chief Executive Officer
/s/ Joseph T. Plummer
--------------------------------
JOSEPH T. PLUMMER
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEPTEMBER 30, 1996 CONSOLIDATED FINANCIAL STATEMENTS OF AUDITS &
SURVEYS WORLDWIDE, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000099703
<NAME> AUDITS & SURVEYS WORLDWIDE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,093
<SECURITIES> 0
<RECEIVABLES> 10,280
<ALLOWANCES> (115)
<INVENTORY> 1,587
<CURRENT-ASSETS> 14,562
<PP&E> 6,261
<DEPRECIATION> (3,256)
<TOTAL-ASSETS> 24,090
<CURRENT-LIABILITIES> 11,147
<BONDS> 2,254
0
0
<COMMON> 131
<OTHER-SE> 8,318
<TOTAL-LIABILITY-AND-EQUITY> 24,090
<SALES> 0
<TOTAL-REVENUES> 44,997
<CGS> 0
<TOTAL-COSTS> 21,091
<OTHER-EXPENSES> 20,505
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<INCOME-PRETAX> 3,470
<INCOME-TAX> 1,566
<INCOME-CONTINUING> 1,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 1,904
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
