-----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, Ft3RiYHLrvGCXL4vCwjQBYVGL42+f3ka9POYGAyErUMAwNFMuK2uOIxOEr6PeKTJ PcOBN59+42eEaMf3PuK4LA== 0000889810-95-000092.txt : 19951214 0000889810-95-000092.hdr.sgml : 19951214 ACCESSION NUMBER: 0000889810-95-000092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS INC /DE/ CENTRAL INDEX KEY: 0000110536 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 954134955 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16438 FILM NUMBER: 95601344 BUSINESS ADDRESS: STREET 1: 24007 VENTURA BLVD CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185910776 MAIL ADDRESS: STREET 1: 24007 VENTURA BLVD CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS /DE/ DATE OF NAME CHANGE: 19880218 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TECHNICAL SERVICES INC DATE OF NAME CHANGE: 19810712 FORMER COMPANY: FORMER CONFORMED NAME: LINCOLN FUND INC DATE OF NAME CHANGE: 19760315 10-Q 1 NTS 10-Q FORM 10-Q --------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (mark one) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended October 31, 1995 ----------------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from ___________ to ___________ 0-16438 ------- (Commission File Number) NATIONAL TECHNICAL SYSTEMS, INC. -------------------------------- (Exact name of registrant as specified in its charter) Delaware 95-4134955 ----------- ------------- (State of Incorporation) (IRS Employer Identification number) 24007 Ventura Boulevard, Calabasas, California ---------------------------------------------- (Address of registrant's principal executive office) (818) 591-0776 91302 ------------------------------- --------- (Registrant's telephone number) (Zip code) 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 of common stock, par value $.01 per share, outstanding as of October 31, 1995 was 6,660,993. Exhibit Index on Page 18 -1- NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES Index ----- PART I. FINANCIAL INFORMATION Page No. ------- --------------------- --------- Financial Statements: Condensed Consolidated Balance Sheets October 31, 1995 and January 31, 1995 3 Condensed Consolidated Statements of Income Nine Months Ended October 31, 1995 and 1994 5 Condensed Consolidated Statements of Income Three Months Ended October 31, 1995 and 1994 6 Condensed Consolidated Statements of Cash Flows Nine Months Ended October 31, 1995 and 1994 7 Notes to the Condensed Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION & SIGNATURE 17 --------- ----------------------------- -2- PART I -- FINANCIAL INFORMATION ------------------------------- NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) October 31, January 31, ASSETS 1995 1995 ----------- ----------- Current assets: Cash $ 1,232,000 $ 1,696,000 Receivables, less allowance for doubtful accounts of $646,000 at October 31, 1995 and $577,000 at January 31, 1995 12,686,000 9,680,000 Inventories 2,158,000 2,082,000 Deferred income taxes 454,000 434,000 Prepaid expenses 1,194,000 757,000 ---------- ---------- Total current assets 17,724,000 14,649,000 Property, plant and equipment, at cost 41,470,000 40,413,000 Less: accumulated depreciation 25,038,000 23,500,000 ---------- ---------- Net property, plant and equipment 16,432,000 16,913,000 Intangible assets 346,000 529,000 Property held for sale 544,000 544,000 Other assets 355,000 433,000 ---------- ---------- Total Assets $35,401,000 $33,068,000 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short term borrowings $ 4,600,000 $ 0 Accounts payable 4,013,000 2,866,000 Accrued expenses 2,342,000 1,627,000 Income taxes payable 13,000 184,000 Current installments of long-term debt 1,945,000 2,060,000 ---------- ---------- Total current liabilities 12,913,000 6,737,000 Long-term debt, excluding current installments 5,321,000 10,045,000 Deferred income taxes 1,758,000 1,455,000 Minority Interest 160,000 0 -3- Stockholders' equity: Common stock of $.01 par value. Authorized, 20,000,000; issued and outstanding 6,661,000 as of October 31, 1995 and 6,650,000 as of January 31, 1995 67,000 66,000 Additional paid-in capital 10,511,000 10,480,000 Retained earnings 4,671,000 4,285,000 ---------- ---------- Total stockholders' equity 15,249,000 14,831,000 ---------- ---------- Total Liabilities and $35,401,000 $33,068,000 Stockholders' Equity ========== ========== See accompanying notes to Condensed Consolidated Financial Statements. -4- NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES ------------------------------------------------- Condensed Consolidated Statements of Income (unaudited) for Nine months Ended October 31, 1995 and 1994 1995 1994 ---- ---- Revenues $33,364,000 $28,634,000 Cost of sales 26,177,000 21,706,000 ---------- ---------- Gross profit 7,187,000 6,928,000 Selling, general and administrative expense 5,090,000 5,291,000 ---------- ---------- Operating income 2,097,000 1,637,000 Other income (expense): Interest expense, net (889,000) (766,000) Other 25,000 (13,000) ---------- ---------- Total other expense (864,000) (779,000) ---------- ---------- Income before income taxes and minority interest 1,233,000 858,000 Income taxes 555,000 386,000 ---------- ---------- Income before minority interest 678,000 472,000 Minority interest 33,000 0 ---------- ---------- Net income $ 645,000 $ 472,000 ========== ========== Primary and fully diluted net income per common share $ 0.10 $ 0.07 ========== ========== Weighted average number of common shares and common stock equivalents outstanding 6,656,000 6,617,000 ========== ========== See accompanying notes to Condensed Consolidated Financial Statements. -5- NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES ------------------------------------------------- Condensed Consolidated Statements of Income (unaudited) for Three Months Ended October 31, 1995 and 1994 1995 1994 ---- ---- Revenues $12,876,000 $ 9,368,000 Cost of sales 10,227,000 7,180,000 ---------- ---------- Gross profit 2,649,000 2,188,000 Selling, general and administrative expense 1,713,000 1,806,000 ---------- ---------- Operating income 936,000 382,000 Other income (expense): Interest expense, net (287,000) (175,000) Other 12,000 (14,000) ---------- ---------- Total other expense (275,000) (189,000) Income before income taxes and minority interest 661,000 193,000 Income taxes 297,000 86,000 ---------- ---------- Income before minority interest 364,000 107,000 Minority interest 21,000 0 ---------- ---------- Net income $ 343,000 $ 107,000 ========== ========== Primary and fully diluted net income per common share $ 0.05 $ 0.02 ========== ========== Weighted average number of common shares and common stock equivalents outstanding 6,661,000 6,623,000 ========== ========== See accompanying notes to Condensed Consolidated Financial Statements. -6- NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) for Nine months Ending October 31, 1995 and 1994 CASH FLOWS FROM OPERATING 1995 1994 ACTIVITIES: ---- ---- Net income $ 645,000 $ 472,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,748,000 1,794,000 Provision for losses on receivables 69,000 140,000 Deferred income taxes 283,000 199,000 Gain on sale of assets (20,000) 0 Net changes in assets and liabilities: Accounts receivable (3,075,000) 231,000 Inventories (76,000) (111,000) Prepaid expenses (432,000) (385,000) Other assets 78,000 (30,000) Accounts payable 1,147,000 (370,000) Accrued expenses 715,000 289,000 Income taxes (171,000) (90,000) Undistributed earnings of 33,000 0 affiliate ---------- ---------- Net cash provided by operating activities 944,000 2,139,000 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (1,094,000) (2,469,000) Proceeds on sale of fixed assets 25,000 3,000 ---------- ---------- Net cash used for investing activities (1,069,000) (2,466,000) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 1,085,000 2,454,000 Repayments of current and long-term debt (1,324,000) (2,421,000) Stock issued in lieu of compensation 19,000 Cash dividends paid (133,000) (131,000) Proceeds from stock options 14,000 27,000 exercised ---------- ---------- Net cash used for financing (339,000) (71,000) activities ---------- ---------- Net decrease in cash (464,000) (398,000) Beginning cash balance 1,696,000 1,419,000 ---------- ---------- ENDING CASH BALANCE $ 1,232,000 $ 1,021,000 ========== ========== See accompanying notes to Condensed Consolidated Financial Statements. -7- NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES ------------------------------------------------- Notes to the Condensed Consolidated Financial Statements 1. In accordance with instructions to Form 10-Q the accompanying consolidated financial statements and notes have been condensed and, therefore, do not contain all disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included in the Registrant's Form 10-K for the year ended January 31, 1995. 2. The statements presented as of and for the nine-month and three-month periods ended October 31, 1995 and 1994 are unaudited. In Management's opinion, all adjustments have been made to present fairly the results of such unaudited interim periods. All such adjustments are of a normal recurring nature. 3. While the Registrant's business is not materially seasonal, the quarterly results of operations should not be construed as representing pro rata results of the Registrant's fiscal year. 4. Income taxes for the interim periods are computed using the effective tax rates estimated to be applicable for the full fiscal year. The Registrant expects to pay state and alternative minimum federal income taxes for the fiscal year ended January 31, 1996. 5. Net income per share for the nine-month and three-month periods ended October 31, 1995 and 1994 was computed by dividing net income by the weighted average number of common shares outstanding during the periods. Common stock equivalents were excluded because their effect was immaterial or antidilutive. 6. The consolidated financial statements include the accounts of the Registrant and its wholly owned and financially controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 7. Inventories consist of accumulated costs applicable to uncompleted contracts and are stated at actual cost which is not in excess of estimated net realizable value. 8. Cash paid for interest and taxes for the nine months ended October 31, 1995 was $904,000 and $527,000 respectively. Cash paid for interest and taxes for the nine months ended October 31, 1994 was $772,000 and $183,000, respectively. 9. On January 17, 1995, the Board of Directors declared a cash dividend of $.01 per share to shareholders of record on February 10, 1995. The cash dividend, which totaled $67,000, was paid on February 24, 1995. On September 26, 1995, the Board of Directors declared an additional cash dividend of -8- $.01 per share to shareholders of record on October 17, 1995. This cash dividend, which totaled $66,000, was paid on October 31, 1995. 10. Minority interest in the Registrant's NQA-USA, Inc. subsidiary is a result of 50% of the stock of NQA-USA, Inc. being issued to NQA-UK in December 1994. Profits are shared 65% to NQA-USA, Inc. and 35% to NQA-UK. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ----------------------------------------------------------- The following discussion should be read in conjunction with the consolidated quarterly financial statements and notes thereto. All information is based upon operating results of National Technical Systems, Inc. for the nine months ended October 31. (tabular header information: Dollars in thousands) --------------------------------------------------- RESULTS OF OPERATIONS --------------------- REVENUES -------- Nine months ended October 31 1995 % Change 1994 ---- -------- ---- Technical services $25,930 10.1% $23,544 Environmental services 2,328 987.9% 214 Registration services 1,635 57.8% 1,036 Contract labor services 3,471 (9.6%) 3,840 ------ ------ Total net revenue $33,364 16.5% $28,634 ====== ====== For the nine months ended October 31, 1995, consolidated revenues increased by $4,730,000 or 16.5% when compared to the same period in 1994. In 1995, the technical services segment revenues increased as a result of increases in its traditional defense and aerospace related business. The Registrant's environmental services segment revenues increased by $2,114,000 as a result of continuing efforts by the Registrant to market its new lines of business. Revenues in the registration services segment also showed continued growth of $599,000. The contract labor segment revenues decreased by $369,000, reflecting the continuing effects of a declining backlog in the competitive nuclear market offset to some degree by increases in other emerging markets. -9- It is anticipated by the Registrant that revenues in the technical services segment will continue to improve and increase slightly over last year s levels, while revenues in both the environmental services segment and the registration services segment should also increase at a more moderate rate for the remainder of fiscal 1996. It is further anticipated that revenues in the contract labor services segment will continue to increase slightly through the end of the fiscal year. GROSS PROFIT Nine months ended October 31 1995 % Change 1994 ---- -------- ---- Technical services $5,901 4.1% $5,666 % to segment revenue 22.8% 24.1% Environmental services 15 116.9% (89) % to segment revenue 0.6% (41.6%) Registration services 529 18.1% 448 % to segment revenue 32.4% 43.2% Contract labor services 742 (17.8%) 903 % to segment revenue 21.4% 23.5% Total $7,187 3.7% $6,928 % to total net revenue 21.5% 24.2% Gross profit as a percentage of net revenues decreased in the nine months ended October 31, 1995 when compared to the same period in 1994. This decrease was due primarily to pricing pressures from increased competition in the technical services and contract labor services segments in addition to a one-time charge for cost overruns on a fixed price contract in the environmental services segment. The Registrant anticipates the competitive environment for aerospace and defense testing and contract labor services to persist, however gross profits in the environmental services segment should improve slightly through the end of the fiscal year. In addition, due to the decline in gross profits, the Registrant initiated an aggressive cost reduction program which included reductions in its workforce and consolidations of some of its operations. Therefore, barring any unforeseen circumstances, gross profits should increase slightly during the balance of fiscal 1996. -10- SELLING, GENERAL & ADMINISTRATIVE --------------------------------- Nine months ended October 31 1995 % Change 1994 ---- -------- ---- Technical services $3,677 (9.5%) $4,062 % to segment revenue 14.2% 17.3% Environmental services 141 151.8% 56 % to segment revenue 6.1% 26.2% Registration services 444 124.2% 198 % to segment revenue 27.2% 19.1% Contract labor services 745 (17.6%) 904 % to segment revenue 21.5% 23.5% Corporate 83 16.9% 71 Total S G & A $5,090 (3.8%) $5,291 % to total net revenue 15.3% 18.5% Selling, general and administrative expenses as a percentage of net revenues decreased in the nine months ending October 31, 1995 compared to the same period in 1994 as a result of managements cost reduction programs and increased revenues. These reductions were offset by increases in the environmental services and registration services segments which are reflective of the cost of pursuing business in these growing segments of the Registrant. The Registrant continues to look for ways to reduce costs but remain effective in these areas. INTEREST EXPENSE ---------------- Net interest expense increased $123,000 in the nine months ending October 31, 1995 when compared to the same period in 1994. This increase was principally due to higher interest rates on existing loans and increases in the term loan and line of credit balances. INCOME TAXES ------------ The income tax provisional rate for the first nine months of 1995 and 1994 reflects a rate in excess of the U.S. federal statutory rate primarily due to the inclusion of state income taxes. The Registrant's provision for the nine months ending October 31, -11- 1995 was higher than the same period in 1994 due to the higher income before taxes in 1995. Management has determined that it is more likely than not that the deferred tax asset will be realized on the basis of offsetting it against deferred tax liabilities. It is the Registrant's intention to evaluate the realizability of the deferred tax asset quarterly by assessing the need for a valuation account. NET INCOME ---------- The increase in net income in the nine months ending October 31, 1995 compared to the same period in 1994 was due to increased revenues and lower selling, general and administrative costs offset by slightly lower gross profit margins and higher interest costs. REVENUES -------- Quarter ended October 31 1995 % Change 1994 ---- -------- ---- Technical services $9,561 23.6% $7,733 Environmental services 1,348 961.4% 127 Registration services 617 39.0% 444 Contract labor services 1,350 26.9% 1,064 ------ ------ Total net revenue $12,876 37.4% $9,368 ====== ====== For the three months ended October 31, 1995, consolidated revenues increased by $3,508,000 or 37.4% when compared to the same period in 1994. In 1995, the technical services segment revenues increased as a result of increases in its traditional defense and aerospace related business. The Registrant's environmental services segment revenues increased by $1,221,000 as a result of continuing efforts by the Registrant to market its new lines of business. Revenues in the registration services segment also showed continued revenue growth of $173,000. The contract labor segment revenues increased by $286,000, reflecting the successful shift away from the competitive market for nuclear contract labor services and toward emerging lines of business. It is anticipated by the Registrant that revenues in the technical services segment will continue to improve and increase over last year, while revenues in both the environmental services segment and the registration services segment should also increase at a more moderate rate for the remainder of fiscal 1996. It is further anticipated that revenues in the contract -12- labor services segment should continue to increase slightly through the end of the fiscal year. GROSS PROFIT ------------ Quarter ended October 31 1995 % Change 1994 ---- -------- ---- Technical services $2,219 27.5% $1,741 % to segment revenue 23.2% 22.5% Environmental services (132) (214.3%) (42) % to segment revenue (9.8%) (33.1%) Registration services 165 (0.6%) 166 % to segment revenue 26.7% 37.4% Contract labor services 397 22.9% 323 % to segment revenue 29.4% 30.4% Total $2,649 21.1% $2,188 % to total net revenue 20.6% 23.4% Gross profit as a percentage of net revenues decreased in the quarter ended October 31, 1995 when compared to the same quarter in 1994. This decrease was due primarily to pricing pressures from increased competition in the technical services and contract labor services segments in addition to a one-time charge for cost overruns on a fixed price contract in the environmental services segment. The Registrant anticipates the competitive environment for aerospace and defense testing and contract labor services will persist for the foreseeable future, however gross profits for automotive testing and environmental services should improve slightly through the end of the fiscal year. In addition, due to the decline in gross profits, the Registrant initiated an aggressive cost reduction program which included reductions in its workforce and consolidations of certain of its operations. Therefore, barring any unforeseen circumstances, gross profits should increase slightly during the balance of fiscal 1996. -13- SELLING, GENERAL & ADMINISTRATIVE --------------------------------- Quarter ended October 31 1995 % Change 1994 ---- -------- ---- Technical services $1,179 (11.0%) $1,325 % to segment revenue 12.3% 17.1% Environmental services 43 0.0% 43 % to segment revenue 3.2% 33.9% Registration services 204 137.2% 86 % to segment revenue 33.1% 19.4% Contract labor services 257 (21.9%) 329 % to segment revenue 19.0% 30.9% Corporate 30 30.4% 23 Total S G & A $1,713 (5.1%) $1,806 % to total net revenue 13.3% 19.3% Selling, general and administrative expenses as a percentage of net revenues decreased in the three months ending October 31, 1995 compared to the same period in 1994 as a result of management's ongoing cost containment efforts. These reductions were offset by increases registration services segment which are reflective of the cost of pursuing business in this growing segments of the Registrant. The Registrant continues to look for ways to reduce costs but remain effective in these areas. INTEREST EXPENSE ---------------- Net interest expense increased $112,000 in the quarter ending October 31, 1995 when compared to the same period in 1994. This increase was principally due to higher interest rates and increases in the term loan and line of credit balances. INCOME TAXES ------------ The income tax provisional rate for the quarters of 1995 and 1994 reflects a rate in excess of the U.S. federal statutory rate primarily due to the inclusion of state income taxes. The Registrant's provision for the quarter ending October 31, 1995 was higher than the same period in 1994 due to the increase in income before taxes and minority interest. Management has determined that it is more likely than not that the deferred tax asset will be realized on the basis of offsetting it against -14- deferred tax liabilities. It is the Registrant's intention to evaluate the realizability of the deferred tax asset quarterly by assessing the need for a valuation account. NET INCOME ---------- The increase in net income in the quarter ending October 31, 1995 compared to the same period in 1994 was due to increased revenues along with a reduction in costs. BUSINESS ENVIRONMENT -------------------- Revenues in the Registrant's defense-related test business continued to be very competitive due to the ongoing cutbacks and consolidations in the aerospace and defense industry. The Registrant has, however, maintained a significant volume of work at lower prices compared to last year. After a detailed market analysis, the Registrant has decided, as part of its aggressive cost reduction program, to discontinue its aerospace test operations at its Hartwood, Virginia facility. This facility will continue to operate in support of the Registrant's Marine Corps' support contract in the Virginia area as well as providing a base of operation for the Registrant's national sales office. The Registrant plans to sell some of the aerospace test assets at this facility to others and reallocate the majority of the remaining assets to its other NTS laboratories. Also, at the end of the Marine Corps' support contract, the Registrant will decide whether to liquidate or lease out the real property. It is anticipated by the Registrant that the discontinuance of operations at this facility will not have a material affect on earnings nor the Registrant's ability to service its current customer base. The Registrant's strategy of establishing strategic alliances and winning work from companies that have downsized or discontinued their own testing operations has mitigated the trends in the defense-related business to some degree. Furthermore, the Registrant's strategy of growth through diversification has been successful with the continued revenue growth in ISO registration services and environmental services. Because of the foregoing, as well as other factors affecting the Registrant's operating results, past financial performance should not be considered to be a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- In the nine months ended October 31, 1995, cash provided by operations decreased by $1,195,000 when compared to the same period in 1994. Major items contributing to this decrease were significant increases in accounts receivable and prepaid expense -15- balances partially offset by increases in accounts payable and accrued expense balances. Net cash used in investing activities in the nine-month period ended October 31, 1995 decreased $1,397,000 when compared to the same period in 1994. The Registrant anticipates that its capital spending level in fiscal 1996 will continue to be lower than fiscal 1995. The actual level of spending will be dependent on a variety of factors, including general economic conditions, bank covenants and the Registrant's operating requirements. In the nine-month period ended October 31, 1995, net cash provided by financing activities consisted of increases in the bank term loans and lines of credit of $1,085,000 and proceeds from the exercise of stock options of $14,000 and stock issued in lieu of compensation of $19,000, offset by debt reduction on short term and long term debt of $1,324,000 and payments of a $0.02 per share dividend totaling $133,000. During fiscal 1995 the Registrant's revolving lines of credit with Bank of America NT & SA and Sanwa Bank California were extended to June 1996. During the nine-month period ended October 31, 1995, long term debt decreased by $4,932,000 from the same period in 1994. This was due primarily to the reclassification of the revolving lines of credit as current liabilities. The Registrant is currently negotiating with its existing banks to renew and increase its lines of credit. Management believes, based upon its current profitable operations and discussions with its banks, that these lines will be renewed. The Registrant also has a term loan agreement with Bank of America NT & SA and Sanwa Bank California for an aggregate amount of $5,000,000 payable in monthly installments of $83,000 through August 31, 1998 and an additional $1,000,000 loan with Sanwa Bank California entered into in January 1995 with payments of $16,667 through January 31, 2000. Management is not aware of any significant demands for capital funds that may materially affect the short or long-term liquidity in the form of large fixed asset acquisitions, unusual working capital commitments or contingent liabilities. The Registrant's future working capital will be provided from operations, supplemented by its bank credit lines. The Registrant's bank revolving lines of credit, which currently aggregate $5,000,000 for short-term liquidity needs had $400,000 available at October 31, 1995. -16- PART II. OTHER INFORMATION -------- ----------------- Item 6. Exhibits and Reports on Form 8-K ------- -------------------------------- a. Exhibit 27 - Financial Data Schedule b. During the quarter ended October 31, 1995 the registrant did not file a current report on Form 8-K. SIGNATURE --------- 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. NATIONAL TECHNICAL SYSTEMS, INC. -------------------------------- Date: December 13, 1995 By: /s/ Lloyd Blonder ----------------- ------------------------ Lloyd Blonder Senior Vice President Chief Financial Officer (Signing on behalf of the registrant and as principal financial officer) -17- EXHIBIT INDEX ------------- No. Description Page ----------------------------------------------------------- 27 Financial Data Schedule 19 -18- EX-27 2
5 1,000 9-MOS JAN-31-1996 OCT-31-1995 1,232 0 12,686 646 2,158 17,724 41,470 25,038 35,401 12,913 0 0 0 0 0 35,401 33,364 33,364 26,177 26,177 5,090 0 889 1,233 555 645 0 0 0 645 0.10 0.10
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