-----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, BmLouj/TrE0k+QCjV1WEvBa8TIGFMxfJVz5zUIo1H/1+nkR0cJm8C6iEtPw96Inl MR6224t8fORHOdcaDWRenw== 0000700841-95-000007.txt : 19950517 0000700841-95-000007.hdr.sgml : 19950517 ACCESSION NUMBER: 0000700841-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCM TECHNOLOGIES INC CENTRAL INDEX KEY: 0000700841 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 951480559 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10205 FILM NUMBER: 95540272 BUSINESS ADDRESS: STREET 1: 2500 MCCLELLAN AVE STE 350 CITY: PENNSAUKEN STATE: NJ ZIP: 08109 BUSINESS PHONE: 6094861777 MAIL ADDRESS: STREET 1: 2500 MCCLELLAN AVENUE STREET 2: STE 350 CITY: PENNSAUKEN STATE: NJ ZIP: 08109-4613 10-Q 1 SECOND QUARTER 10-Q UNITED STATES 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 quarterly period ended April 30, 1995 Commission file number: 1-10245 RCM TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Nevada 95-1480559 (State of Incorporation) (IRS Employer Identification No.) 2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109-4613 (Address of principal executive offices) (609) 486-1777 ( Registrant's telephone number, including area 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS 14,713,565 Common Stock, $.05 par value Outstanding as of May 16, 1995 Page 1 of 23 Exhibit Index on Page 20 RCM TECHNOLOGIES, INC. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements Page Consolidated Balance Sheets as of April 30, 1995 (Unaudited) and October 31, 1994 (Audited) 5-6 Unaudited Consolidated Statements of Income for the Three Month Periods Ended April 30, 1995 and 1994 7 Unaudited Consolidated Statements of Income for the Six Month Periods Ended April 30, 1995 and 1994 8 Unaudited Consolidated Statement of Changes in Shareholders' Equity for the Six Month Period Ended April 30, 1995 9 Unaudited Consolidated Statements of Cash Flows for the Six Month Periods Ended April 30, 1995 and 1994 10-11 Notes to Unaudited Consolidated Financial Statements 12-13 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 14-17 PART II - OTHER INFORMATION ITEM 1 - Legal Proceedings 18 ITEM 4 - Submission of Matters to a vote of Security-Holders 18 ITEM 5 - Other Information 18 ITEM 6 - Exhibits and Reports on Form 8-K 18 SIGNATURES 19 INDEX TO EXHIBITS 20 Part I Item 1 Financial Information RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 30, 1995 and October 31, 1994 (See notes to financial statements)
ASSETS 1995 1994 (Unaudited) (Audited) Current assets Cash and cash equivalents $3,071,413 $2,534,073 Accounts receivable (net of allowance for doubtful accounts of $8,179 and $15,000 in 1995 and 1994, respectively) 2,945,303 3,500,079 Prepaid expenses and other current assets 593,668 319,793 ---------- --------- Total current assets 6,610,384 6,353,945 ---------- --------- Property and equipment, at cost Equipment and leasehold improvements 801,003 749,666 Less: accumulated depreciation and amortization 663,426 616,054 -------- -------- 137,577 133,612 -------- -------- Other assets Deposits 33,847 36,431 Deferred charges 286,877 142,324 -------- -------- 320,724 178,755 -------- -------- Total assets $7,068,685 $6,666,312 ========= =========
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - CONTINUED April 30, 1995 and October 31, 1994 (See notes to financial statements)
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994 (Unaudited) (Audited) Current liabilities Current maturities of long-term debt $ 114,343 $ 38,901 Accounts payable and accrued expenses 225,510 73,915 Accrued payroll 391,135 589,218 Billings in excess of costs and estimated earnings 92,535 148,229 Taxes other than income taxes 135,473 183,600 Income taxes payable 51,850 119,473 ---------- ---------- Total current liabilities 1,010,846 1,153,336 ---------- ---------- Long term debt 73,621 35,496 ---------- ---------- Shareholders' equity Common stock, $0.05 par value; 40,000,000 shares authorized; 14,713,565 issued and outstanding 735,678 735,678 Additional paid-in capital 9,143,765 9,143,765 Accumulated deficit (3,832,403) (4,339,142) ----------- ----------- 6,047,040 5,540,301 Less: treasury stock, at cost, 314,000 shares 62,821 62,821 ---------- ---------- 5,984,219 5,477,480 ---------- ---------- Total liabilities and shareholders' equity $7,068,686 $6,666,312 ========== ==========
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended April 30, (Unaudited) (See notes to financial statements)
1995 1994 ------------ ---------- Revenues Sales of services $ 6,280,172 $ 7,068,220 Interest income and other 50,754 13,195 ---------- --------- Total revenues 6,330,926 7,081,415 ---------- --------- Cost and expenses Cost of services 5,124,759 5,773,847 Selling, general and administrative 892,199 943,526 Interest and other 9,251 8,341 ---------- --------- Total costs and expenses 6,026,209 6,725,714 ---------- --------- Income before income taxes 304,717 355,701 Income taxes 26,993 54,261 ---------- --------- Net income $ 277,724 $ 301,440 ========== ========= Net income per share: $ .01 $ .02 ========== =========
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Six Months Ended April 30, (Unaudited) (See notes to financial statements)
1995 1994 ----------- ---------- Revenues Sales of services $12,972,928 $13,857,887 Interest income and other 80,987 23,608 ----------- ----------- Total revenues 13,053,915 13,881,495 ----------- ----------- Cost and expenses Cost of services 10,667,153 11,486,320 Selling, general and administrative 1,804,719 1,802,973 Interest and other 21,061 20,291 ----------- ----------- Total costs and expenses 12,492,933 13,309,584 ----------- ----------- Income before income taxes 560,982 571,911 Income taxes 54,243 69,401 ----------- ----------- Net income $ 506,739 $ 502,510 =========== =========== Net income per share: $ .03 $ .03 =========== ==========
RCM TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Six Months Ended April 30, 1995 (Unaudited) (See notes to financial statements)
Additional Common Stock Paid-in Accumulated Treasury Shares Amount Capital Deficit Stock Balance, October 31, 1994 14,713,565 $ 735,678 $ 9,143,765 ($4,339,142) ($ 62,821) Net Income 506,739 ---------- --------- ----------- --------- --------- Balance, April 30, 1995 14,713,565 $ 735,678 $ 9,143,765 ($3,832,403) ($ 62,821) ========== ========= ========== ========= =========
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended April 30, (Unaudited) (See notes to financial statements)
1995 1994 --------- --------- Cash flows from operating activities: Net income $ 506,739 $ 502,510 ---------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 62,818 46,247 Provision for losses on accounts receivable ( 6,821) 96,490 Changes in assets and liabilities: Accounts receivable 561,597 ( 105,390) Prepaid expenses and other current assets ( 273,875) ( 252,281) Accounts payable and accrued expenses 151,595 54,215 Accrued payroll ( 198,083) ( 66,437) Billings in excess of costs and estimated earnings ( 55,694) 18,331 Taxes other than income taxes ( 48,127) 10,129 Income taxes payable ( 67,623) 57,734 ---------- ---------- Total adjustments 125,787 ( 140,962) ---------- ---------- Net cash provided by operating activities 632,526 361,548 ---------- -----------
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED Six Months Ended April 30, (Unaudited) (See notes to financial statements)
1995 1994 ---------- ----------- Cash flows from investing activities: Increase in deferred charges ($ 10,000) Property and equipment acquired ( 51,337) ($ 3,722) (Increase) decrease in deposits 2,584 ( 1,595) ----------- ----------- Net cash used in investing activities ( 58,753) ( 2,127) ----------- ----------- Cash flows from financing activities: Net repayments under short term debt arrangements ( 4,703) Repayments of long term debt ( 36,433) ( 17,178) ----------- ----------- Net cash used in financing activities ( 36,433) ( 21,881) ----------- ----------- Net increase in cash and cash equivalents 537,340 337,540 Cash and cash equivalents at beginning of period 2,534,073 913,535 ----------- ---------- Cash and cash equivalents at April 30, $ 3,071,413 $ 1,251,075 ============ ========== Supplemental cash flow information: Cash paid for: Interest expense $ 13,492 $ 15,208 Income taxes $ 137,781 $ 54,690
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. General The accompanying consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). This Report on Form 10-Q should be read in conjunction with the Company's annual report on Form 10-K for the year ended October 31, 1994. Certain information and footnote disclosures which are normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. The information reflects all normal and recurring adjustments which, in the opinion of Management, are necessary for a fair presentation of the financial position of the Company and its results of operations for the interim periods set forth herein. The results for the six months ended April 30, 1995 are not necessarily indicative of the results to be expected for the full year. 2. Income per Share Income per share is based on the weighted average number of common shares outstanding during the periods. For the six months ended April 30, 1995 and 1994, the weighted average number of shares outstanding was 14,570,360, and 14,521,704, respectively. 3. Acquisition and Notes Payable On December 15, 1994, the Company purchased certain operating assets of Great Lakes Design, Inc. for $200,000 in the form of a $150,000 note payable and $50,000 in cash. In addition, the Company will share with the seller a portion of the operating income for a period of five years. This acquisition has been accounted for using the purchase method of accounting. Costs in excess of assets acquired of approximately $160,000 are being amortized over a period of five years. The operating assets are not significant to the Company's consolidated results of operations. The note payable is uncollateralized, bears interest at 8% per annum and is payable in quarterly installments of $20,490 including interest with a final maturity date of December 1, 1996. The following are maturities of all long-term debt for each twelve month periods ending April 30:
Amount ------ 1996 (current portion) $114,343 1997 73,621 -------- $187,964 ========
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED) 4. Deferred Charges Deferred charges consist of the following:
April 30, October 31, Amortization 1995 1994 Period (Unaudited) (Audited) ------------ -------- --------- Cost in excess of net assets acquired 20 years $ 165,434 $ 165,435 Covenants not to compete 5 years 160,000 --------- --------- 325,434 165,435 38,557 23,111 --------- --------- $ 286,877 $ 142,324 ========= =========
5. Contingencies There are no material legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject. RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Overview During the last several years, the Company has redirected its resources and streamlined its operations in response to changing economic conditions. The Company has developed an operating model which consists of a strong, balanced approach to management, while maintaining an entrepreneurial spirit. Corporate management focuses on the overall performance of the Company. It establishes and maintains financial controls and provides financial data processing and administrative assistance to all its operating offices. It develops the business strategy, goals, and general operating guidelines for the Company, maintains strong relationships with the Company's principal customers, and oversees local management of operations. The Company believes that its performance-based compensation structure and its management techniques are necessary for providing proper incentives and maintaining overall monitoring and control of operations. The present downsizing of U.S. corporations is a "permanent phenomenon" and management believes is essential in order to achieve productivity improvements, payroll cost reduction and work force flexibility. Liquidity and Capital Resources Key indicators of liquidity, balance sheet strength and capital resources are as shown in the following table:
April 30, October 31, 1995 1994 (Unaudited) (Audited) --------- --------- Current assets $6,610,384 $6,353,945 Current liabilities 1,010,846 1,153,336 ---------- ---------- Working capital $5,599,538 $5,200,609 ========== ========== Current ratio 6.54 to 1 5.51 to 1 Borrowed capital $ 187,964 $ 74,397 Shareholders' equity $5,984,219 $5,477,480 Borrowed capital/ Shareholders' equity 3% 1% Common shares outstanding 14,399,565 14,399,565 (Net of Treasury shares) Book value per common share $.42 $.38
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Liquidity and Capital Resources (continued) During the six months ended April 30, 1995, working capital increased by $398,929. This was due primarily to the continued profitable operations of the Company. The Company, at April 30, 1995 had $73,621 in long-term debt and the Company held $3,071,413 of cash and cash equivalents. The Company maintains a credit facility with Mellon Bank, N.A.. Maximum borrowing permitted under the credit facility is $2,500,000 and the agreement expires June 1996. The credit facility is collateralized by the accounts receivable, contract rights and furniture and fixtures of Intertec Design, Inc. (Intertec) , the operating subsidiary, with unlimited guarantees from RCM Technologies, Inc. The credit facility is used to supply Intertec with the cash requirements needed to finance payroll relating to the provision of services to clients by Intertec personnel prior to the time that Intertec is paid by its customers. The loan requires both Intertec and RCM Technologies, Inc. to meet certain covenants with respect to financial ratios and earnings. Credit facility advances are to be used to meet cash flow requirements for Intertec as well as operating expenses for RCM Technologies, Inc. Advances to RCM Technologies, Inc. in excess of its operating expenses must have prior bank approval. The Company believes this will sufficiently support the operations of both Intertec and RCM Technologies, Inc. Borrowing under the credit facility is based on 75% of accounts receivable on which not more than sixty days have elapsed since the date of invoicing. The interest rate charged is 1.25% above the prime rate of the Bank (effective rate of 10.25% and 9.0% at April 30, 1995 and October 31, 1994, respectively). At April 30, 1995, there was no outstanding borrowing under the credit facility. The Company does not currently have material commitments for capital expenditures and does not anticipate entering into any such commitments during the next twelve months. The Company continues to evaluate for acquisition various businesses which are analogous to its current operations. The Company's current commitments consist primarily of lease obligations for office space. The Company believes that its capital resources are sufficient to meet its obligations incurred in the normal course of business for at least the next twelve months. RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) 1995 Compared to 1994 For the six months ended April 30, 1995, the Company experienced declining sales. Despite declining sales, the Company has maintained comparable profit levels with previous fiscal quarters. Revenues decreased $884,959 or approximately 6.4% from sales for 1994. Sales by IDI Personnel Services decreased approximately $750,000. Sales to Dow Chemical and Dow Corning decreased approximately $800,000. Sales to Sikorsky Aircraft (Sikorsky) decreased approximately $810,000. Sikorsky has reduced its direct labor force and virtually eliminated the contract and temporary labor force. Consequently, the Company has experienced a significant reduction in revenues from Sikorsky contracts and does not anticipate significant revenues from Sikorsky in the foreseeable future. The percentage of the Company's revenues received from Dow Chemical, Dow Corning and Sikorsky has declined over the last three years and the Company expects to continue its efforts to reduce its dependence on these customers. The Company is aggressively engaged in pursuing ways to restore the lost revenues through expanding it's sales efforts and accelerating it's search for possible acquisition and merger candidates. On December 15, 1994, the Company completed the acquisition of the business operations of Great Lakes Design, Inc. located in Grand Rapids and Grand Haven, Michigan. This acquisition will establish the Company's market presence in Western Michigan and provide for participation in the expanding industrial sectors located in the Central and Western Regions. On May 15, 1995, the Company has learned that Dow Corning has filed for Chapter 11 bankruptcy protection relating primarily to its on going breast implant litigation. In recent communication received by the Company from the President of Dow Corning, the Company was informed of no anticipated changes to Dow Corning's business conduct during this period. Results of operations for the six months ended April 30, 1995 reflected a net income of $506,739 ($.03 per share) in 1995 as compared to $502,510 ($.03 per share) for the comparable period in 1994. Cost of sales decreased $819,167 or approximately 7.1% from 1994 as a result of the decrease in revenues. Gross profit decreased by $65,792 or approximately 2.8% from 1994. The Company continues to effectively control its payroll and payroll-related costs as well as it's efforts to increase markups with new and existing clients. Operating costs increased by $2,516 or approximately .1% from 1994. The 1995 increase in operating costs resulted from the addition of Great Lakes Design offices in Grand Haven and Grand Rapids, Michigan. Income tax expense decreased by $15,158 or approximately 21.8% from 1994. This is the result of a reduction of income before taxes as well as an income tax overaccrual of approximately $10,000 from the year ended October 31, 1994. RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) 1994 Compared to 1993 With the further implementation of the Company's strategic business plan, the Company continues to show operational improvements. Results of operations reflected a net income of $502,510 in 1994 versus $300,187 in 1993. The continuing focus on Intertec Design, Inc. has improved profitability by $202,323 or 67.4% over results for 1993. Sales for Intertec Design, Inc., the Company's operating subsidiary, increased by $27,525, or approximately .2% from sales for the six months ended April 30, 1993. In the Los Angeles area, sales by IDI Services increased by $570,894. Sales to the offices servicing Dow Chemical and Dow Corning decreased by $166,697. Sales to Sikorsky Aircraft decreased by $278,418 while sales to various smaller clients decreased by $98,254. Cost of sales decreased by $360,198 or approximately 3.0% from the six months ended April 30, 1993. Gross profit increased by $387,723 or approximately 19.5% from the six months ended April 30, 1993. This increase occurred as a direct result of the Company's efforts to control its workmen's compensation costs as well as its efforts to increase mark-ups with new and existing clients. In 1994, operating costs increased by $172,206 or approximately 10.6% from the six months ended April 30, 1993. The 1994 increase in operating costs came about through the addition of two additional offices in the New England area which cost approximately $57,617 as well as recording approximately $114,600 in reserves for various items. The two additional offices were merged together on April 1, 1994 to achieve efficiency and cost effectiveness. Interest and other decreased by $22,310 or approximately 104.2% from the six months ended April 30, 1993. The majority of this decrease came from decreased financing costs associated with the Company's line of credit. Income tax expense increased by $35,504 or approximately 104.7% from the six months ended April 30, 1993. This is the result of the expiration of net operating loss carryforwards on the state level in 1995 and the Company's becoming subject to the alternative minimum tax on the federal level. PART II OTHER INFORMATION Item 1. Legal Proceedings The information required by this item is included in Part I Financial Statements of the Form 10-Q as of April 30, 1995 and is incorporated by reference. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (11) Computation of earnings per share. (27) Financial Data Schedule. RCM TECHNOLOGIES, INC. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. RCM Technologies, Inc. (Registrant) Date: May 16, 1995 By:/s/ Leon Kopyt -------------- Leon Kopyt Chairman, President, Chief Executive Officer and Director Date: May 16, 1995 By:/s/ Stanton Remer ----------------- Stanton Remer Chief Financial Officer, Treasurer and Director INDEX TO EXHIBITS Exhibit Sequentially Number Description Numbered - --------------------------------------------------------------------------- 11 Computation of Earnings Per Share 19 27 Financial Data Schedule 20 EXHIBIT 11 RCM TECHNOLOGIES, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Six Months Ended April 30, 1995 and 1994
1995 1994 ---------- --------- Income Net income applicable to common stock $ 506,739 $ 502,510 ========= ========== Shares Weighted average number of shares outstanding 14,399,565 14,374,565 Common stock equivalents 170,795 147,139 ---------- ---------- Total 14,570,360 14,521,704 ========== ========== Primary earnings per share $ .03 $ .03 ========= ========== Fully diluted earnings per share $ .03 $ .03 ========= ==========
EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED APRIL 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. 6-MOS OCT-31-1995 NOV-01-1994 APR-30-1995 3,071,413 0 2,953,482 8,179 0 6,610,384 801,003 663,426 7,068,685 1,010,846 0 735,678 0 0 5,248,541 7,068,686 12,972,928 13,053,915 10,667,153 12,471,872 0 0 21,061 560,982 54,243 506,739 0 0 0 506,739 .03 .03
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