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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number: 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
incorporation or organization) Identification No.)
650 Avenue of the Americas, New York, New York 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 (l) 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 9, 1997 was:
Class Number of Shares
----- ----------------
Common Stock, $0.01 par value 13,104,771
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC.
INDEX
Page
----
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 1997 and December 31, 1996 3-4
Condensed Consolidated Statements of Income-
Three Months ended March 31, 1997 and 1996 5
Condensed Consolidated Statements of Cash Flows-
Three Months ended March 31, 1997 and 1996 6
Condensed Consolidated Statement of Stockholders' Equity-
March 31, 1997 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
3
<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, 1997 Dec. 31,1996
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 940 $ 3,827
Accounts receivable:
Billed 8,353 9,161
Unbilled 4,739 2,714
Prepaid expenses and inventories 1,582 1,259
Deferred income taxes 346 346
Other current assets 61 183
Net assets held for sale 300 300
--- ---
Total current assets 16,321 17,790
------ ------
PROPERTY AND EQUIPMENT, NET 3,320 2,962
RECEIVABLE FROM SALE OF ASSETS 500 500
PREPAID PENSION COSTS 1,090 1,090
DEFERRED INCOME TAXES 2.906 2,906
OTHER ASSETS 1,645 1,725
----- -----
TOTAL ASSETS $25,782 $26,973
======= =======
See notes to condensed consolidated financial statements.
3
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Mar. 31, 1997 Dec. 31,1996
------------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Short-term bank debt $1,500 $ -
Accounts payable and accrued expenses 4,421 4,483
Accrued payroll and bonuses 794 2,505
Dividends payable - 655
Customer billings in excess of revenues earned 4,281 5,234
Income taxes payable 269 417
Current portion of long-term debt 617 555
Current portion of capital lease obligations 88 88
-------- -------
Total current liabilities 11,970 13,937
-------- -------
LONG-TERM DEBT-Net of current portion 2,165 1,943
CAPITAL LEASE OBLIGATIONS - Net of current portion 140 153
DEFERRED INCOME TAX LIABILITIES 464 464
OTHER LIABILITIES 1,948 2,009
-------- -------
Total liabilities 16,687 18,506
-------- --------
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, 1997
and December 31, 1996 131 131
Additional paid-in capital 4,374 4,369
Retained earnings 4,563 3,948
Cumulative foreign currency translation adjustment 27 19
--------- --------
Total stockholders' equity 9,095 8,467
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,782 $ 26,973
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- -------------------------------------------------------------------------------
(Dollar amounts in thousands except for per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
<S> <C> <C>
REVENUES $ 16,922 $ 14,403
--------- ---------
COSTS AND EXPENSES:
Direct costs 8,580 6,677
Selling, general and administrative expenses 6,888 6,175
Incentive bonuses 400 490
Interest expense 64 81
Other (income) - net (53) (136)
--------- ---------
TOTAL COSTS AND EXPENSES 15,879 13,287
--------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,043 1,116
PROVISION FOR INCOME TAXES 428 507
--------- ---------
NET INCOME $ 615 $ 609
========== ==========
NET INCOME PER SHARE $ .05 $ .05
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 13,099,103 13,099,103
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
5
<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,
----------------------------
1997 1996
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $615 $609
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 244 163
Deferred income taxes - 68
Amortization of deferred charges 93 6
Accrued rent 33 (3)
Changes in operating assets and liabilities:
Accounts receivable (1,217) 103
Prepaid expenses and inventories (323) (167)
Other current assets 122 (75)
Other assets (22) -
Income taxes payable (148) 405
Accounts payable and accrued expenses (62) (541)
Accrued payroll and bonuses (1,711) (927)
Customer billings in excess of revenues earned (953) (274)
Other (84) (21)
-------- --------
Net cash (used in) operating activities (3,413) (654)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (173) (62)
Payment of merger costs - (124)
Proceeds from sale of assets - 650
-------- --------
Net cash (used in) provided by investing activities (173) 464
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings 1,500 1,800
Dividends to stockholders (655) -
Principal payments of debt (146) (2,072)
Principal payments of capital lease obligations (13) (13)
Issuance of common stock and directors' options 5 7
-------- --------
Net cash provided by (used in) financing activities 691 (278)
-------- --------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH 8 36
-------- --------
NET (DECREASE) IN CASH (2,887) (432)
CASH, BEGINNING OF PERIOD 3,827 936
-------- --------
CASH, END OF PERIOD $ 940 $ 504
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest $ 26 $ 58
======== ========
Income taxes $ 563 $ 32
======== ========
SUPPLEMENTAL DISCLOSURE OF NON CASH
INVESTING AND FINANCING ACTIVITIES:
Financing of capital improvements $ 430 $ -
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
6
<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
----- ------ ------- -------- ---------- -----
BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996 13,099,103 $131 $4,369 $3,948 $19 $8,467
Net income 615 615
Directors' Options 5 5
Foreign Currency
Translation Adjustment 8 8
_______________________________________________________________________________
BALANCE
MARCH 31, 1997 13,099,103 $131 $4,374 $4,563 $27 $9,095
========== ==== ====== ====== === ======
See notes to condensed consolidated financial statements.
</TABLE>
7
<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"), and its
majority owned subsidiary, Audits & Surveys Europe, Ltd. ("A&SE"). All
significant intercompany transactions and balances have been eliminated.
The 1997 and 1996 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, 1996.
The results of operations for the three-month period ended March 31, 1997
are not necessarily indicative of the results to be expected for any other
interim period or for the entire year.
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, 1997
with the Quarter ended March 31, 1996
- --------------------------------------------------------------------------------
Revenues for the first quarter of 1997 increased $2.5 million (17.5%) to $16.9
million compared with $14.4 million in the first quarter of 1996. The net
increase in revenues was principally attributable to higher revenues from
international consumer tracking studies.
Direct costs increased $1.9 million (28.7%) in the first quarter of 1997
compared with 1996, primarily as a result of the increase in revenues. As a
percentage of revenues, direct costs were 50.7% in 1997 compared with 46.3% in
1996. The increase in direct costs as a percentage of revenues resulted from
changes in the overall mix of research studies in the first quarter of 1997
compared with the same period of 1996.
Selling, general and administrative (SG&A) expenses increased $.7 million
(11.5%) in the first quarter of 1997. 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
professional and consulting fees.
Income taxes for the first quarter of 1997 have been provided at approximately
41% of reported pretax income compared with 45% provided in the first quarter of
1996. The tax provision is based on the effective tax rate estimated for the
full year.
Financial Condition and Liquidity
- ---------------------------------
At March 31, 1997, the Company had working capital of $4.4 million and a current
ratio of 1.36 to 1 compared with working capital of $3.9 million and a current
ratio of 1.28 to 1 at December 31, 1996.
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. The Company maintains
a $2,500,000 secured line of credit with its bank which expires on June 5, 1997.
The Company believes it will be successful in renewing such line of credit.
Net cash used in operating activities was $3,413,000, consisting primarily of
net income of $615,000 plus non-cash expenses of $370,000, offset primarily by
increases in accounts receivable of $1,217,000, decreases in customer billings
in excess of revenue earned of $953,000, decreases in accrued payroll and
bonuses of $1,711,000 and increases in prepaid expenses of $323,000.
9
<PAGE>
Net cash used in investing activities was $173,000 resulting from the purchase
of equipment.
Net cash provided by financing activities was $691,000 consisting primarily of
proceeds from short term bank borrowings of $1,500,000 offset by payments of
dividends to stockholders of $655,000 and repayments of bank borrowings and
other debt of $146,000.
The Company believes that its 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, 1997.
- ------------------------
* 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.
11
<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 12, 1997 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
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997 CONSOLIDATED FINANCIAL STATEMENTS OF AUDITS & SURVEYS WORLDWIDE, INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 940
<SECURITIES> 0
<RECEIVABLES> 13,121
<ALLOWANCES> (29)
<INVENTORY> 1,582
<CURRENT-ASSETS> 16,321
<PP&E> 6,628
<DEPRECIATION> (3,308)
<TOTAL-ASSETS> 25,782
<CURRENT-LIABILITIES> 11,970
<BONDS> 2,305
0
0
<COMMON> 131
<OTHER-SE> 8,964
<TOTAL-LIABILITY-AND-EQUITY> 25,782
<SALES> 0
<TOTAL-REVENUES> 16,922
<CGS> 0
<TOTAL-COSTS> 8,580
<OTHER-EXPENSES> 7,288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64
<INCOME-PRETAX> 1,043
<INCOME-TAX> 428
<INCOME-CONTINUING> 615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 615
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
