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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission File Number: 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-
March 31, 1996 and December 31, 1995 3-4
Condensed Consolidated Statements of Income-
Three Months ended March 31, 1996 and March 31, 1995 5
Condensed Consolidated Statements of Cash Flows-
Three Months ended March 31, 1996 and March 31, 1995 6
Condensed Consolidated Statement of Stockholders' Equity-
March 31, 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(Dollar amounts in thousands)
MAR.31, 1996 DEC.31, 1995
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 504 $ 936
Accounts receivable:
Billed 7,594 8,687
Unbilled 3,356 2,366
Prepaid expenses and inventories 1,488 1,320
Other current assets 349 606
Net assets held for sale 348 983
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Total current assets 13,639 14,898
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PROPERTY AND EQUIPMENT, NET 3,026 3,127
RECEIVABLE FROM SALE OF ASSETS 500 500
PREPAID PENSION COSTS 943 943
DEFERRED INCOME TAXES 3,363 3,398
OTHER ASSETS 1,908 2,021
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TOTAL ASSETS $23,379 $24,887
======= =======
See notes to condensed consolidated financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
MAR. 31, 1996 DEC. 31, 1995
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(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank debt $ 1,265 $ 1,200
Accounts payable and accrued expenses 4,336 4,877
Accrued payroll and bonuses 990 1,917
Customer billings in excess of revenues earned 4,008 4,282
Income taxes payable 106 --
Current portion of long-term debt 616 658
Current portion of capital lease obligations 79 75
-------- --------
Total current liabilities 11,400 13,009
LONG-TERM DEBT - Net of current portion 2,352 2,647
CAPITAL LEASE OBLIGATIONS - Net of current portion 206 222
DEFERRED INCOME TAX LIABILITIES 405 405
OTHER LIABILITIES 1,861 1,977
-------- --------
Total liabilities 16,224 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 March 31, 1996;
and 13,094,755 shares issued at December 31, 1995 131 131
Additional paid-in capital 4,369 4,486
Retained earnings 2,623 2,014
Cumulative foreign currency translation adjustment 32 (4)
-------- --------
Total stockholders' equity 7,155 6,627
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,379 $ 24,887
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
(Dollar amounts in thousands except for per share data)
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
------------ ------------
REVENUES $ 14,403 $ 13,313
------------ ------------
COSTS AND EXPENSES:
Direct costs 6,677 6,358
Selling, general and administrative expenses 6,175 5,674
Incentive bonuses 490 464
Interest expense 81 60
Other(income) - net (136) (172)
------------ ------------
TOTAL COSTS AND EXPENSES 13,287 12,384
------------ ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,116 929
PROVISION FOR INCOME TAXES 507 362
------------ ------------
NET INCOME $ 609 $ 567
============ ============
NET INCOME PER SHARE $ .05 $ .05
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 13,099,103 10,679,500
============ ============
See notes to condensed consolidated financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 609 $ 567
Adjustments to reconcile net income to net cash (used in) operating activities:
Depreciation and amortization 163 120
Deferred income taxes 68 (59)
Deferred compensation 8 8
Amortization of deferred charges 6 8
Increase (decrease) in cash surrender value of officers' life insurance 8 (34)
Accrued rent (3) (3)
Minority Interest -- (7)
Changes in operating assets and liabilities:
Accounts receivable 103 583
Prepaid expenses and inventories (167) (221)
Other current assets (75) 73
Other assets -- (956)
Income taxes payable 405 (173)
Accounts payable and accrued expenses (541) 1,079
Accrued payroll and bonuses (927) (2,220)
Customer billings in excess of revenues earned (274) (880)
Net assets held for sale (14) --
Other (23) --
------- -------
Net cash (used in) operating activities (654) (2,115)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (62) (65)
Payment of merger costs (124) (142)
Proceeds from sale of assets 650 --
Cash received from Triangle merger -- 1,090
------- -------
Net cash provided by investing activities 464 883
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings 1,800 1,200
Principal payments of notes payable to officers/stockholders -- (234)
Principal payments of debt (2,072) (91)
Principal payments of capital lease obligations (13) (1)
Issuance of common stock 7 --
------- -------
Net cash (used in) provided by financing activities (278) 874
------- -------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH 36 4
------- -------
NET (DECREASE) IN CASH (432) (354)
CASH, BEGINNING OF PERIOD 936 754
------- -------
CASH, END OF PERIOD $ 504 $ 400
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest $ 58 $ 31
======= =======
Income Taxes $ 32 $ 711
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
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 609 609
Employee stock bonus 4,348 7 7
Revaluation of assets
acquired in merger (124) (124)
Foreign Currency
Translation Adjustment 36 36
-----------------------------------------------------------------------------------
BALANCE
MARCH 31, 1996 13,099,103 $ 131 $ 4,369 $ 2,623 $ 32 $ 7,155
===================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
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"), its
majority owned subsidiary, Audits & Surveys Europe Ltd. ("A&SE") and
two small entities acquired in the merger with The Triangle
Corporation ("Triangle"). All significant intercompany transactions
and balances have been eliminated.
On March 24, 1995, Audits and Surveys, Inc. (A&S) and 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 period ended March 31, 1996
are not necessarily indicative of the results to be expected for any
other interim period or for the entire year.
2. 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 within the 1996 annual financial
statements.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996
WITH THE QUARTER ENDED MARCH 31, 1995
Revenues for the first quarter of 1996 increased $1.1 million ( 8.3% ) to $14.4
million compared with $13.3 million in the first quarter of 1995. The net
increase in revenues was principally attributable to higher revenues from
international consumer tracking studies.
Direct costs increased $.3 million ( 5% ) in the first quarter of 1996 compared
with 1995, primarily as a result of the increase in revenues. As a percentage of
revenues, direct costs were 46.4% in 1996 compared with 47.8% in 1995. The
decrease in direct costs as a percentage of revenues represented an improvement
in the overall mix of research studies in the first quarter of 1996 compared
with the same period of 1995.
Selling, general and administrative ( SG&A ) expenses increased $.5 million
(8.8%) in the first quarter of 1996. Approximately 60% of the SG&A increase was
in payroll and related costs and resulted from the addition of personnel as well
as normal salary adjustments. The remainder of the increase in SG&A expenses was
spread over various expenses such as rent, utilities, depreciation and computer
costs.
Income taxes for the first quarter of 1996 have been provided at approximately
45% of reported pretax income compared with 39% provided in the first quarter of
1995. The tax provision is based on the effective tax rate estimated for the
full year.
FINANCIAL CONDITION AND LIQUIDITY
At March 31, 1995, the Company had working capital of $2.2 million and a current
ratio 1.20 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 March 11, 1996,
the Company received a commitment from its bank to refinance an existing term
loan and its $5,000,000 short-term credit facility into a $2,500,000 term loan
and a $2,500,000 secured line of credit. At March 31, 1996 the Company
reclassified its outstanding bank indebtedness to reflect the commitment. The
term loan and the line of credit will contain customary affirmative and negative
covenants including those requiring the Company to maintain certain financial
ratios.
Net cash used in operating activities was $654,000, consisting primarily of net
income of $609,000 plus non-cash expenses of $250,000, offset primarily by
decreases in accounts payable and accrued expenses of $541,000 and decreases in
accrued payroll and bonuses of $927,000.
-9-
<PAGE>
Net cash provided by investing activities was $464,000 primarily from the sale
of a portion of Triangle's former operating assets.
Net cash used by financing activities was $278,000 consisting primarily of
proceeds from bank borrowings of $1,800,000 offset by repayments of $2,072,000
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.
-10-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.*
a. Exhibits:
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 March 31, 1996.
- --------
* 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.
MAY 13, 1996 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
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARCH 31,1996 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 504
<SECURITIES> 0
<RECEIVABLES> 10,950
<ALLOWANCES> (123)
<INVENTORY> 1,488
<CURRENT-ASSETS> 13,639
<PP&E> 5,916
<DEPRECIATION> (2,890)
<TOTAL-ASSETS> 23,379
<CURRENT-LIABILITIES> 11,400
<BONDS> 2,558
0
0
<COMMON> 131
<OTHER-SE> 7,024
<TOTAL-LIABILITY-AND-EQUITY> 23,379
<SALES> 0
<TOTAL-REVENUES> 14,403
<CGS> 0
<TOTAL-COSTS> 6,677
<OTHER-EXPENSES> 6,665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 1,116
<INCOME-TAX> 507
<INCOME-CONTINUING> 609
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 609
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
