-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Rm41P2K9yNPuNdfr0er4OUJiO7E77M/e/bV2BiUoLAZZGdNKbXsnz1zukfX+IZ7n 7nTGawsVURmkNGyZKbAoVg== 0000102752-95-000004.txt : 19950516 0000102752-95-000004.hdr.sgml : 19950516 ACCESSION NUMBER: 0000102752-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VSE CORP CENTRAL INDEX KEY: 0000102752 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 540649263 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03676 FILM NUMBER: 95539452 BUSINESS ADDRESS: STREET 1: 2550 HUNTINGTON AVE CITY: ALEXANDRIA STATE: VA ZIP: 22303 BUSINESS PHONE: 7039604600 MAIL ADDRESS: STREET 1: 2550 HUNTINGTON AVENUE CITY: ALEXANDRIA STATE: VA ZIP: 22303-1499 FORMER COMPANY: FORMER CONFORMED NAME: VALUE ENGINEERING CO DATE OF NAME CHANGE: 19790612 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 1995 Commission File Number: 0-3676 VSE CORPORATION (Exact Name of Registrant as Specified in its Charter) DELAWARE 54-0649263 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 2550 Huntington Avenue Alexandria, Virginia 22303-1499 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (703) 960-4600 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.05 per share (Title of Class) 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 [ ] Number of shares of Common Stock outstanding as of May 1, 1995: 863,167. VSE Corporation and Subsidiaries Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets (in thousands, except per share amounts)
March 31, December 31, 1995 1994 _______ _______ Assets Current assets: Cash and cash equivalents . . . . . . . . . . . . $ 4,302 $ 3,124 Accounts receivable, principally U. S. Government . . . . . . . . . . . . . . . . 9,910 10,922 Deferred tax assets . . . . . . . . . . . . . . . 1,332 1,491 Other current assets . . . . . . . . . . . . . . . 901 858 _______ _______ Total current assets . . . . . . . . . . . . . . 16,445 16,395 Property and equipment, net . . . . . . . . . . . . 2,949 3,078 Deferred tax assets . . . . . . . . . . . . . . . . 318 248 Other assets . . . . . . . . . . . . . . . . . . . . 1,710 1,551 _______ _______ Total assets . . . . . . . . . . . . . . . . . . $21,422 $21,272 ======= ======= Liabilities and Stockholders' Investment Current liabilities: Accounts payable and other current liabilities . . $ 1,701 $ 2,485 Accrued expenses . . . . . . . . . . . . . . . . 6,034 5,661 Accrued income taxes . . . . . . . . . . . . . . . 225 70 Dividends payable . . . . . . . . . . . . . . . . 69 69 _______ _______ Total current liabilities . . . . . . . . . . . 8,029 8,285 _______ _______ Deferred compensation . . . . . . . . . . . . . . . 947 886 _______ _______ Total liabilities . . . . . . . . . . . . . . . 8,976 9,171 _______ _______ Commitments and contingencies Stockholders' investment: Common stock, par value $.05 per share, authorized 5,000,000 shares; issued 1,948,044 shares . . . 97 97 Paid-in surplus . . . . . . . . . . . . . . . . . 8,247 8,247 Retained earnings . . . . . . . . . . . . . . . . 20,387 20,042 Treasury stock, at cost (1,084,877 shares) . . . . (16,285) (16,285) _______ _______ Total stockholders' investment . . . . . . . . . 12,446 12,101 _______ _______ Total liabilities and stockholders' investment . $21,422 $21,272 ======= =======
VSE Corporation and Subsidiaries Consolidated Financial Statements (Unaudited) Consolidated Statements of Income For the three months ended March 31, (in thousands, except share amounts)
1995 1994 _______ _______ Revenues, principally from contracts . . . . . . . . . . $16,155 $17,479 Costs and expenses of contracts . . . . . . . . . . . . . 15,277 16,550 _______ _______ Gross profit . . . . . . . . . . . . . . . . . . . . . . 878 929 Selling, general and administrative expenses . . . . . . 213 342 Interest expense . . . . . . . . . . . . . . . . . . . . 4 5 _______ _______ Pretax income . . . . . . . . . . . . . . . . . . . . . . 661 582 Provision for income taxes . . . . . . . . . . . . . . . 247 229 _______ _______ Net income . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ 353 ======= ======= Earnings per common share, based on weighted average shares outstanding: $ .48 $ .41 ======= ======= Weighted average shares outstanding 863,167 863,167 ======= =======
VSE Corporation and Subsidiaries Consolidated Financial Statements (Unaudited) Consolidated Statements of Stockholders' Investment (in thousands)
Common Stock Paid-In Retained Treasury Shares Amount Surplus Earnings Stock ______ ______ _______ _______ ________ Balance at December 31, 1993 . 1,948 $97 $8,247 $18,757 $(16,285) Net income for the year. . . . -- -- -- 1,553 -- Dividends declared ($.31). . . -- -- -- (268) -- _____ ___ ______ _______ ________ Balance at December 31, 1994 . 1,948 97 8,247 20,042 (16,285) Net income for the year. . . . -- -- -- 414 -- Dividends declared ($.08). . . -- -- -- (69) -- _____ ___ ______ _______ ________ Balance at March 31, 1995. . . 1,948 $97 $8,247 $20,387 $(16,285) ===== === ====== ======= ========
VSE Corporation and Subsidiaries Consolidated Financial Statements (Unaudited) Consolidated Statements of Cash Flows For the three months ended March 31, (in thousands)
1995 1994 _______ _______ Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . $ 414 $ 353 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization . . . . . . . . . . . 246 286 (Gain)Loss on sale of property and equipment . . . 3 (1) Deferred compensation plan expense . . . . . . . . 31 15 Change in assets and liabilities - (Increase) decrease in: Accounts receivable . . . . . . . . . . . . . . . 1,012 4,301 Other current assets and noncurrent assets . . . (217) (219) Deferred tax assets . . . . . . . . . . . . . . . 89 (466) Increase (decrease) in: Accounts payable and other current liabilities . . . . . . . . . . . . . . . . . . (784) (1,203) Accrued expenses. . . . . . . . . . . . . . . . . 373 563 Accrued and deferred taxes . . . . . . . . . . . 155 428 _______ _______ Net cash provided by operations . . . . . . . . 1,322 4,057 _______ _______ Cash flows from investing activities: Purchase of property and equipment, (net of dispositions). . . . . . . . . . . . . . . . (105) (63) _______ _______ Net cash used in investing activities . . . . . . . (105) (63) _______ _______ Cash flows from financing activities: Net payments of revolving term loan . . . . . . . . . (97) (2,684) Cash dividends paid . . . . . . . . . . . . . . . . . (69) (65) (Payments of) and proceeds from deferred compensation . . . . . . . . . . . . . . . . . . . 127 (22) _______ _______ Net cash used in financing activities . . . . . . . (39) (2,771) _______ _______ Net increase in cash and cash equivalents . . . . . . . 1,178 1,223 Cash and cash equivalents at beginning of year. . . . 3,124 1,032 _______ _______ Cash and cash equivalents at end of year. . . . . . . $ 4,302 $ 2,255 ======= =======
VSE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Financial Statements Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information refer to the consolidated financial statements and footnotes thereto included in the VSE Corporation annual report on Form 10-K for the year ended December 31, 1994. VSE CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following table sets forth certain items, including consolidated revenues, pretax income, and net income and the amount of changes of such items for the three month periods ended March 31, 1995 and 1994 (in thousands).
1995 Compared to 1995 1994 1994 _______ _______ _______ Revenues, principally from contracts . . . . . $16,155 $17,479 $(1,324) ======= ======= ======= Pretax income . . . . . . . . . . . . . . . . $ 661 $ 582 $ 79 Provision for income taxes . . . . . . . . . . 247 229 18 _______ _______ _______ Net income . . . . . . . . . . . . . . . . . . $ 414 $ 353 $ 61 ======= ======= =======
RESULTS OF OPERATIONS The results of operations includes the operations of VSE Corporation ("VSE" or the "company"), Value Systems Services ("VSS"), Human Resource Systems, Inc. ("HRSI"), Schmoldt Engineering Services Company ("Schmoldt Engineering"), VSE Corona, Inc. ("VCI"), and VSE Services Corporation ("VSES"), all of which operate principally in the engineering, development, testing, and management services industry. Intercompany sales are principally at cost. Revenues for the three month period ended March 31, 1995 decreased by approximately 7.6% compared to the same period of 1994. The decrease in revenues is attributable primarily to decreases in the level of services performed by VSE, VSS and Schmoldt Engineering. Pretax income for the three month period ended March 31, 1995 increased by about 13.6%. The increase in pretax income is attributable primarily to a difference in the timing of award fees received by VSS in 1995 compared to 1994. Pretax income of the remaining operating entities were substantially unchanged from 1994. The largest customer for the engineering services rendered by the company is the U. S. Department of Defense ("Defense"), including agencies of the U. S. Army, Navy, and Air Force. The Defense budget has been restrained by the federal budget deficit in recent years, and as a result of this and increased competition, VSE's engineering services revenues have decreased from the levels attained in prior years. There can be no assurance that future reductions in the Defense budget will not have a materially adverse impact on the company's revenues, results of operations, and financial position. Substantially all of the company's revenues from continuing operations depend on the excercise of option periods and the satisfaction of incremental funding requirements on current contracts, on current contracts not being terminated for the convenience of the Government, and on the incremental funding requirements on current contracts. In 1995 and 1994 the company did not experience any VSE CORPORATION AND SUBSIDIARIES Management Discussion and Analysis termination of contracts for the convenience of the Government or any non-exer- cise of option periods on current contracts which were material to the company's business. VSE Contract. VSE has a contract with the U. S. Navy which accounted for approximately 19% of consolidated revenues for the three month period ended March 31, 1995. This contract was scheduled to expire in September 1992, but has been extended through June 1995. The Navy has announced that it intends to combine the work performed under this contract with other related work, and VSE has submitted a bid for the proposed new contract. The inability to predict whether VSE will obtain further extensions of its current Navy contract or will be awarded other contracts to replace this work, including the proposed con- tract, is a known uncertainty which could have a material adverse effect on future revenues, profits, and financial position. VSS Subcontract. In October 1991 VSS was awarded a subcontract to provide certain services in connection with a U. S. Marine Corps contract. Services under the subcontract commenced in January 1992. The subcontract generated revenues to VSS equal to about 15% of VSE's consolidated revenues for the three month period ended March 31, 1994. A protest against the award of the prime contract was sustained by the General Accounting Office (GAO) in February 1992, and in October 1993, a new prime contract was awarded to a different contractor. A protest of the new award was denied and substantially all work on the VSS subcontract terminated effective April 23, 1994. There was no revenue associated with this subcontract during 1995. VSS Contract. In February 1994 VSS was awarded a new contract with a U. S. Navy customer. The award of this contract was protested and performance was suspended during the protest period. The protest was denied in September 1994 and VSS began work on the contract immediately thereafter. The realization of these revenues is dependent upon the level of work ordered by the customer through individual work orders. The contract generated revenues to VSS equal to approximately 13% of consolidated revenues during the three month period ended March 31, 1995. Liquidity and Capital Resources Net cash flows from operations of approximately $1.3 million through March 31, 1995 were used primarily to pay for approximately $100 thousand of property and equipment, to eliminate short term borrowings of approximately $100 thousand under VSE's $8 million bank loan and to pay dividends of approximately $69 thousand. Additionally, cash and cash equivalents increased by approximately $1.2 million during the period. The company's principal requirements for cash are to finance the costs of operations pending the collection of accounts receivable, to acquire capital assets for office and computer support, and to pay cash dividends. As of March 31, 1995, VSE had no borrowings outstanding under its $8 million bank loan. Management believes that the cash flows from operations are adequate to meet current operating cash requirements. VSE's requirements for working capital are affected significantly by its revenues and accounts receivable, which arise primarily from billings made by the company to the U. S. Government or other prime contractors for services rendered. Such accounts receivable generally do not present liquidity or collection problems. VSE CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis Working capital is also affected by (a) contract retainages, (b) start-up and termination costs associated with new or complete contracts, (c) capital equipment requirements, and (d) differences between the provisional billing rates authorized by the government compared to the costs actually incurred by the company. Government contracts generally require VSE to pay for material and subcontract costs included in VSE's contract billings prior to receiving payment for such costs from the Government. However, such contracts generally provide for progress payments on a monthly or semimonthly basis, thereby reducing requirements for working capital. Cash dividends were declared at the rate of $.08 per share during the three month period ended March 31, 1995. Pursuant to its bank loan agreement, the payment of cash dividends by VSE may not exceed an annual rate of $.60 per share. VSE has paid cash dividends each year since 1973. Inflation and Pricing Policy Most of the contracts performed by VSE provide for estimates of future labor costs to be escalated for any future option periods provided by the contracts, while the non-labor costs included in such contracts are normally considered reimbursable at the then current cost. VSE property and equipment consists principally of computer systems equipment and furniture and fixtures. The overall impact of inflation on replacement costs of such property and equipment is expected to be insignificant. VSE CORPORATION AND SUBSIDIARIES PART II. Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None (b) Reports on Form 8-K. No current reports on Form 8-K were filed by the Registrant during the three month period ended March 31, 1995. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has omitted all other items contained in "Part II. Other Information" because such other items are not applicable or are not required if the answer is negative or because the information required to be reported therein has been previously reported. VSE CORPORATION AND SUBSIDIARIES 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 thereunto duly authorized. VSE CORPORATION Date: May 15, 1995 C. S. Weber C. S. Weber, Senior Vice President, Secretary and Treasurer (Principal Financial Officer) Date: May 15, 1995 T. J. Corridon T. J. Corridon, Vice President and Director of Accounting (Principal Accounting Officer) The financial information included in this report reflects all known adjustments normally determined or settled at year-end which are, in the opinion of management, necessary to a fair statement of the results for the interim periods. The accompanying note to consolidated financial statements are an integral part of this report. -----END PRIVACY-ENHANCED MESSAGE-----