-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F0IvzwwMyhP/pC++r9glqKhq66qqhDiSRBRcS4ipnP9TyJMmWJX5xuKIr7oUfGXI V7kmA4N3LNfFz0VOK9qG5g== 0000912057-97-003931.txt : 19970221 0000912057-97-003931.hdr.sgml : 19970221 ACCESSION NUMBER: 0000912057-97-003931 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970211 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANALYSTS INTERNATIONAL CORP CENTRAL INDEX KEY: 0000006292 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 410905498 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04090 FILM NUMBER: 97523227 BUSINESS ADDRESS: STREET 1: 7615 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439 BUSINESS PHONE: 6128974506 MAIL ADDRESS: STREET 1: 7615 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-4090 ANALYSTS INTERNATIONAL CORPORATION Minnesota 41-0905408 7615 Metro Boulevard Minneapolis, MN 55439 (612) 835-5900 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of January 31, 1997, 14,765,301 shares of the Registrant's Common Stock were outstanding. ANALYSTS INTERNATIONAL CORPORATION INDEX Page Number ------ PART I. FINANCIAL INFORMATION: Item 1. Condensed Consolidated Balance Sheets December 31, 1996 (Unaudited) and June 30, 1996 1 Condensed Consolidated Statements of Income Three and six months ended December 31, 1996 and 1995 (Unaudited) 2 Condensed Consolidated Statements of Cash Flows Six months ended December 31, 1996 and 1995 (Unaudited) 3 Notes to Condensed Consolidated Financial Statements (Unaudited) 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-6 ANALYSTS INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS December 31, June 30, (In thousands) 1996 1996 ------------ -------- (Unaudited) Current assets: Cash and cash equivalents $ 14,511 $ 17,018 Accounts receivable, less allowance for doubtful accounts 53,240 49,494 Other current assets 2,607 2,567 -------- -------- Total current assets 70,358 69,079 Property and equipment, net 5,937 5,715 Other assets 11,060 6,651 -------- -------- $ 87,355 $ 81,445 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,806 $ 11,049 Dividend payable 1,321 1,099 Salaries and vacations 6,027 7,524 Other, primarily self-insured health care reserves 2,334 1,677 Income taxes payable 500 382 -------- -------- Total current liabilities 21,988 21,731 Long-term liabilities 6,297 5,996 Shareholders' equity (Note 2) 59,070 53,718 -------- -------- $ 89,355 $ 81,445 -------- -------- -------- -------- Note: The balance sheet at June 30, 1996 has been taken from the audited financial statements at that date, and condensed. See notes to condensed consolidated financial statements. 1 ANALYSTS INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands Three Months Ended Six Months Ended except per share amounts) December 31 December 31 - ------------------------- ----------------------- ---------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Revenues $101,847 $78,786 $199,869 $151,857 Expenses: Salaries, contracted services and direct charges 78,354 60,198 154,007 115,510 Selling, administrative and other operating costs 17,229 14,086 33,349 27,459 ---------- ---------- ---------- ---------- Total expenses 95,583 74,284 187,356 142,969 ---------- ---------- ---------- ---------- Operating income 6,264 4,502 12,513 8,888 Other income 262 262 516 520 ---------- ---------- ---------- ---------- Income before income taxes 6,526 4,764 13,029 9,408 Income taxes 2,621 1,882 5,256 3,717 ---------- ---------- ---------- ---------- Net income $ 3,905 $ 2,882 $ 7,773 $ 5,691 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Per common share:* - ------------------ Net income $ .26 $ .19 $ .52 $ .38 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Dividends paid $ .09 $ .075 $ .165 $ .14 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Average common and common equivalent shares outstanding* 15,040,000 14,784,000 14,968,000 14,772,000 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
*Adjusted to reflect the 2 for 1 common stock split in the form of a stock dividend distributed September 30, 1996. See notes to condensed consolidated financial statements. 2 ANALYSTS INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended December 31 ----------------- (In thousands) 1996 1995 - -------------- ------- ------- Net cash provided by operating activities $ 6,384 $ 4,383 Cash flows from investing activities: Property and equipment additions (1,359) (1,715) Increase in annuities and cash surrender values (180) (144) Payments for acquisitions (5,153) ------- ------- Net cash used in investing activities (6,692) (1,859) Cash flows from financing activities: Cash dividends (2,421) (2,035) Proceeds from exercise of stock options 222 84 ------- ------- Net cash used in financing activities (2,199) (1,951) ------- ------- Net change in cash and equivalents (2,507) 573 Cash and equivalents at beginning of period 17,018 12,615 ------- ------- Cash and equivalents at end of period $ 14,511 $13,188 ------- ------- ------- ------- See notes to condensed consolidated financial statements. 3 ANALYSTS INTERNATIONAL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Condensed Consolidated Financial Statements - The condensed consolidated balance sheet as of December 31, 1996, the condensed consolidated statements of income for the three month and six month periods ended December 31, 1996 and 1995 and the condensed consolidated statements of cash flows for the six month periods then ended have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and the cash flows at December 31, 1996 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 1996 annual report to shareholders. 2. SHAREHOLDERS' EQUITY Six Months Ended December 31, 1996 ----------------- (In thousands) Balance at beginning of period $53,718 Cash dividends declared: August 15, 1996 at $.09 per share (1,319) December 19, 1996 at $.09 per share (1,324) Proceeds upon exercise of stock options 222 Net income 7,773 ------- Balance at end of period $59,070 ------- ------- 4 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Six Months Ended December 31, 1996 and 1995 CHANGES IN FINANCIAL CONDITION On July 1, 1996, the Company acquired specific assets and assumed certain liabilities of DPI, Inc. and DPI Services, Inc., its wholly owned subsidiary, both of which were primarily engaged in the business of providing software services in the San Jose (California) market. At the closing, the company paid $5.2 million of the $5.7 million adjusted purchase price in cash, with the remaining $.5 million, subject to certain deductions, being payable in cash in one year. Assets acquired included approximately $1.5 million of current assets (accounts receivable) net of current liabilities assumed in the transaction. Other assets acquired in the transaction (including goodwill, reflecting the excess of the adjusted purchase price over the fair value of the assets acquired) are shown on the balance sheet as long term assets. The reduction in the Company's cash from $17.0 million to $14.5 million is the consequence of this acquisition. On December 19, 1996 the Board of Directors declared the regular quarterly dividend of $.09 per share payable February 15, 1997 to shareholders of record on January 31, 1997. The Company's primary need for working capital is to support accounts receivable resulting from the growth in its business and to fund the time lag between payroll disbursement and receipt of fees billed to clients. Over the past years, the Company has been able to support the growth in its business with internally generated funds. The Company's outsourcing contracts with two major customers are not expected to burden working capital. The Company believes funds generated from its business and current cash balances are adequate to meet demands placed upon its resources by its operations and the payment of quarterly dividends. 5 RESULTS OF OPERATIONS Revenues for the six months ended December 31, 1996 and for the quarter then ended were $200 million and $102 million, respectively. This represents increases of 31.6% and 29.3% over the same periods a year ago. These revenue increases resulted primarily from increases in billable hours of service rendered to clients and increases in the pass-through billings on the Company's two major outsourcing contracts. For the six month period and quarter ended December 31, 1996, these pass-through billings approximated $40.5 million and $20.5 million, respectively, compared with $26.7 million and $14.3 million for the same periods a year ago. Rate increases have not contributed significantly to the revenue increase because prevailing competitive conditions in the industry have made it difficult for the Company to increase the hourly rates it charges for services. Personnel totalled 4,175 at December 31, 1996, compared to 3,550 at December 31, 1995, an increase of 17.6%. Substantially all of the increase consists of billable technical staff. Salaries, contracted services and direct charges, which represent primarily the Company's direct labor cost, were 77.1% of revenues for the six months ended December 31, 1996 compared to 76.1% for the same period a year ago. These costs as a percentage of revenues for the quarters ended December 31, 1996 and 1995 were 76.9% and 76.4%, respectively. By comparison, these costs were 77.2% of revenues for the first quarter of fiscal 1997 and 77.4% of revenues for the fourth quarter of fiscal 1996. This category of expense also includes the fees for the contracted services of subcontractors who are necessary to support the Company with the major outsourcing contracts referred to above and these fees typically are higher per hour than the labor costs for its own employees. The Company's efforts to control these costs involve controlling labor costs, passing on labor cost increases through increased billing rates where possible, and maintaining productivity levels of its billable technical staff. Labor costs, however, are difficult to control because the highly skilled technical personnel the Company seeks to hire and retain are in great demand and intense competition in the industry makes it difficult to pass cost increases on to customers, while unfavorable economic conditions could adversely affect productivity. Although the Company has taken steps to control this category of expense, there can be no assurance the Company will be able to maintain or improve this level. Selling, administrative and other operating costs, which include commissions, employee fringe benefits and location costs, represented 16.7% of revenues for the six months ended December 31, 1996 compared to 18.1% for the same period a year ago. For the quarter ended December 31, 1996 these costs were 16.9% of revenue compared to 17.9% for the same quarter last year. While the Company has been successful in controlling selling, administrative and other operating costs and is committed to careful cost management, there can be no assurance the Company will be able to maintain these costs at their current relationship to revenues. 6 PART II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual meeting of shareholders held October 17, 1996, the following action was taken: (a) Election of directors. The following nominees, all of whom were listed in the company's proxy statement prepared in accordance with Regulation 14(a), were elected: Nominee Votes for Authority withheld ----------- --------- ------------------ V. C. Benda 6,719,246 32,613 W. K. Drake 6,727,448 34,411 F. W. Lang 6,718,512 33,347 M. A. Loftus 6,721,263 30,596 E. M. Mahoney 6,719,287 32,572 R. Prince 6,724,875 26,984 (b) Ratification of auditors. The shareholders voted their shares to ratify the appointment of Deloitte & Touche LLP by the following vote: In favor 6,706,814 Against 14,190 Abstain 30,404 (c) Increase in authorized common shares. The shareholders voted their shares to increase the number of authorized common shares to 40,000,000 by the following vote: In favor 6,472,081 Against 211,996 Abstain 32,294 (d) 1996 Stock Option Plan for Non-Employee Directors. The shareholders voted their shares to ratify the creation of the 1996 Stock Option Plan for Non-Employee Directors by the following vote: In favor 6,414,302 Against 185,409 Abstain 110,929 There were no broker non-votes. 7 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 11 - Computation of Net Income Per Share. Exhibit 27 - Financial Data Schedule (b) There were no reports on Form 8-K filed for the six months ended December 31, 1996. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. ANALYSTS INTERNATIONAL CORPORATION ---------------------------------- (Registrant) Date February 10, 1997 By /s/ Gerald M. McGrath ----------------- -------------------------------- Gerald M. McGrath Treasurer and Chief Financial Officer Date February 10, 1997 By /s/ Marti R. Charpentier ----------------- -------------------------------- Marti R. Charpentier Controller and Assistant Treasurer (Chief Accounting Officer) 9 EXHIBIT INDEX Exhibit Number Exhibit Page No.* - -------------- ------- --------- 11 Computation of Net Income Per Share 14 27 Financial Data Schedule 16 * Page numbers in the sequential numbering system of the manually signed original report. EX-11 2 EXHIBIT 11 Exhibit No. 11 Exhibit No. 11 Analysts International Corporation Computation of Net Income per Share
THREE MONTHS ENDED SIX MONTHS ENDED (IN THOUSANDS EXCEPT DECEMBER 31 DECEMBER 31 PER SHARE AMOUNTS) ------------------ ---------------- 1996 1995 1996 1995 ------- ------- ------- ------- Primary: Weighted average number of common shares outstanding 14,676 14,548 14,664 14,538 Dilutive stock options after application of treasury stock method 364 236 304 234 ------- ------- ------- ------- Weighted average number of common and common equivalent shares outstanding 15,040 14,784 14,968 14,772 ------- ------- ------- ------- ------- ------- ------- ------- Net income $ 3,905 $ 2,882 $ 7,773 $ 5,691 ------- ------- ------- ------- ------- ------- ------- ------- Per share amount $ .26 $ .19 $ .52 $ .38 ------- ------- ------- ------- ------- ------- ------- ------- Fully diluted: Weighted average number of common shares outstanding 14,676 14,548 14,664 14,538 Dilutive stock options based on the treasury stock method using the end of the period market price, if higher than average market price 393 236 358 252 ------- ------- ------- ------- Weighted average number of common and common equivalent shares outstanding 15,069 14,548 15,022 14,790 ------- ------- ------- ------- ------- ------- ------- ------- Net income $ 3.905 $ 2,882 $ 7,773 $ 5,691 ------- ------- ------- ------- ------- ------- ------- ------- Per share amount $ .26 $ .19 $ .52 $ .38 ------- ------- ------- ------- ------- ------- ------- -------
EX-27 3 EXHIBIT 27
5 1,000 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 14,511 0 53,640 400 0 70,358 16,741 10,804 87,355 21,988 6,297 0 0 1,468 57,602 89,355 199,869 199,869 154,007 154,007 33,229 120 0 13,029 5,256 7,773 0 0 0 7,773 .52 .52
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