-----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, CtM9FAJxJnXm0OrnEXFA+siTkPnHbG7W2whnL+FSr+aVp/LztJAgCKJVSnbMnoKb gGUDU/n1fom/QtnYsV50SA== 0000927356-96-000036.txt : 19960129 0000927356-96-000036.hdr.sgml : 19960129 ACCESSION NUMBER: 0000927356-96-000036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960126 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BI INC CENTRAL INDEX KEY: 0000716629 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 840769926 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12410 FILM NUMBER: 96507440 BUSINESS ADDRESS: STREET 1: 6400 LOOKOUT RD CITY: BOULDER STATE: CO ZIP: 80301 BUSINESS PHONE: 3035302911 MAIL ADDRESS: STREET 1: 6400 LOOKOUT RD CITY: BOULDER STATE: CO ZIP: 80301 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 December 31, 1995 ----------------- 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 0-12410 ------- BI Incorporated ------------------------------------------------- (Exact name of issuer as specified in charter) Colorado 84-0769926 -------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6400 Lookout Road, Boulder, Colorado ------------------------------------- 80301 -------------------- (Address of principal executive offices) (Zip Code) (303) 530-2911 --------------------------------------------------- (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. The number of shares of no par value common stock outstanding at January 23, 1996 is 6,732,192. BI INCORPORATED INDEX ----- PART I - FINANCIAL INFORMATION: Page No. Item 1 - Financial Statements Balance Sheet at December 31, 1995 and June 30, 1995 2 Statement of Operations for the three and the six months ended December 31, 1995 and 1994 3 Statement of Cash Flows for the six months ended December 31, 1995 and 1994 4 Notes to Consolidated Financial Statements 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Signatures 8 PART II - OTHER INFORMATION: Item 1 - Legal Proceedings: Incorporated by reference to Notes to Financial Statements in Part I. Item 4 - Submission of matters to a vote of security holders. a) BI Incorporated's 1995 Annual Meeting of Stockholders was held on November 9, 1995. b) At the annual meeting the following persons were elected to the Board of Directors: William E. Coleman, Mckinley C. Edwards, Jr., David J. Hunter, Perry M. Johnson, Jeremy N. Kendall, George J. Pilmanis, Frank L. Randall, Jr., Byam K. Stevens, Jr., and Beverly J. Haddon. c) The following matters were authorized by a vote of the majority of the outstanding shares of 6,759,670 at record date as follows: Ratification of an amendment to the Company's 1991 Stock Option Plan. For = 4,402,864; Against = 827,963; Abstained = 59,336; Broker non-votes = 0. Ratification of Price Waterhouse, the independent auditor. For = 5,219,393; Against 46,754; Abstained = 24,016; Broker non-votes = 0. Item 6 - Exhibits and Reports on Form 8-K: None 1 BI INCORPORATED BALANCE SHEET (in thousands, unaudited)
December 31, June 30, 1995 1995 ------------ ----------- ASSETS Current assets Cash and cash equivalents $3,468 $2,358 Short-term investments 540 376 Receivables, net 6,764 6,245 Investment in sales-type leases, net 3,538 3,204 Inventories Raw materials 1,109 1,333 Work in process 1,214 1,049 Finished goods 809 896 Deferred income taxes 662 519 Prepaid expenses 613 683 ------------ ----------- Total current assets 18,717 16,663 Investment in sales-type leases, net 2,704 2,792 Rental and monitoring equipment, net 4,466 4,197 Property and equipment, net 2,110 2,027 Software, net 1,899 2,004 Intangibles, net 7,756 8,162 Deferred income taxes 452 568 Other assets 386 468 ------------ ----------- $38,490 $36,881 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $1,092 $407 Accrued compensation and benefits 1,145 1,060 Accrued product warranty 398 326 Current income taxes payable 160 130 Deferred revenue 1,233 1,232 Other liabilities 428 570 ------------ ----------- Total current liabilities 4,456 3,725 ------------ ----------- Deferred revenue and long-term debt 568 824 ------------ ----------- Stockholders' equity Common stock, no par value, 75,000 shares authorized; 6,850 shares issued December 31, 1995 and 6,865 shares issued June 30, 1995 28,767 28,883 Retained earnings 4,712 3,464 Less treasury shares at cost; 130 shares at December 31, 1995 and 154 shares at June 30, 1995 (13) (15) ------------ ----------- 33,466 32,332 ------------ ----------- $38,490 $36,881 ============ ===========
The accompanying notes are an integral part of these financial statements. 2 BI INCORPORATED STATEMENT OF OPERATIONS (in thousands except per share amounts, unaudited) For the three months For the six months ended December 31, ended December 31, -------------------------- ---------------------- 1995 1994 1995 1994 -------------------------- ---------------------- Revenues Net sales $4,129 $2,801 $7,163 $5,524 Service and monitoring income 5,370 4,010 10,436 7,764 Rental income 194 198 413 420 Other income 117 74 185 148 -------------------------- ---------------------- 9,810 7,083 18,197 13,856 -------------------------- ---------------------- Costs and expenses Cost of net sales 2,315 1,349 3,809 2,658 Cost of service and monitoring income 2,547 1,771 4,875 3,426 Cost of rental income 71 100 142 213 Selling, general and administrative expenses 2,811 2,136 5,340 4,316 Depreciation and amortization 333 299 660 590 Research and development expenses 638 490 1,253 1,009 -------------------------- ---------------------- 8,715 6,145 16,079 12,212 -------------------------- ---------------------- Income before income taxes 1,095 938 2,118 1,644 Income tax provision (448) (388) (870) (681) -------------------------- ---------------------- Net income $647 $550 $1,248 $963 ========================== ====================== Net Income per common and common equivalent share $0.09 $0.08 $0.18 $0.14 ========================== ====================== Weighted average number of common and common equivalent shares outstanding 7,052 6,752 7,025 6,911 ========================== =====================
The accompanying notes are an integral part of the financial statements. 3 BI INCORPORATED STATEMENT OF CASH FLOWS (in thousands, unaudited) For the six months ended December 31, ---------------------------------- 1995 1994 -------- -------- Cash flows from operating activities: Net income $1,248 $963 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 2,839 2,070 Provision for losses on accounts receivable and STL's 112 93 Changes in assets and liabilities: Receivables (742) 569 Investment in STLs (246) (1,345) Inventories 146 (119) Accounts payable 685 418 Accrued expenses 68 (155) Income taxes payable 30 78 Deferred revenue (109) 205 Rental equipment-net, converted to STL 122 Other 5 65 -------- -------- Net cash from operating activities 4,036 2,964 -------- -------- Cash flows from investing activities: Capital expenditures (657) (504) Increase in rental and monitoring equipment (1,565) (1,315) Increase in capitalized software (311) (83) Cash for acquisition (35) Change in investments (164) (2) -------- -------- Net cash from investing activities (2,732) (1,904) -------- -------- Cash flows from financing activities: Purchase of treasury stock (972) (2,501) Proceeds from issuance of common stock 778 62 -------- -------- Net cash from financing activities (194) (2,439) -------- -------- Net change in cash and cash equivalents 1,110 (1,379) Cash and cash equivalents at June 30 2,358 3,045 -------- -------- Cash and cash equivalents at December 31 $3,468 $1,666 ======== ========
The accompanying notes are an integral part of the financial statements. 4 BI INCORPORATED NOTES TO FINANCIAL STATEMENTS ----------------------------- (unaudited) Note 1 - Preparation of Financial Statements - -------------------------------------------- These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report. The interim financial data are unaudited; however, in the opinion of the management of the Company, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Note 2 - Net Income per Common and Equivalent Share - --------------------------------------------------- Net income per common and common equivalent share is computed on the basis of the weighted average number of shares of common and common equivalent shares outstanding during the period. Common equivalent shares are determined using the treasury stock method, which assumes that proceeds from exercise of certain outstanding stock options and warrants are utilized to repurchase outstanding shares of the Company at the average fair market value during such period. Note 3 - Legal Proceedings - -------------------------- The Company is involved in four legal proceedings; two alleging product liability; another alleging wrongful termination of a distributor contract; and the fourth alleging tortious interference with a competitor. One of the claimants seeks damages up to $2,700,000. Management believes the Company has adequate legal defenses and/or insurance coverage against all claims and intends to vigorously defend them. There can be no assurances however, that any individual case will result in an outcome favorable to the Company. In the event of any adverse outcome, neither the amount nor the likelihood of any potential liability which might result is reasonably estimable. The Company currently believes that the amount of the ultimate potential loss would not be material to the Company's financial position or results of operations. However, an adverse future outcome in any individual case, including legal defense costs, could have a material effect on the Company's reported results of operations in a particular quarter. Note 4 - Acquisition of JurisMonitor Assets - ------------------------------------------- On December 13, 1995, the Company acquired the assets of JurisMonitor, Inc. (Juris) of Boulder, Colorado. The transaction included $35,000 in cash and future non-guaranteed royalties of $275,000 from BI to Juris; no shares of stock were involved. Note 5 - Common Stock - --------------------- On October 6, 1995, the Company repurchased 136,373 shares of its common stock on the open market at an average price of $7.13 per share. These shares were subsequently retired to unissued, authorized shares. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- THE THREE-MONTH PERIOD ENDED DECEMBER 31, 1995 (FISCAL 1996), COMPARED TO THE THREE-MONTH PERIOD ENDED DECEMBER 31, 1994 (FISCAL 1995): Total revenue for the three months ended December 31, 1995, increased 38.5% to $9,810,000 compared to $7,083,000 in the corresponding period a year ago. This increase related both to an increase in net sales of $1,328,000 or 47.4% and an increase in service, monitoring and rental income of $1,356,000 or 32.2%. Net sales included revenue of $398,000 for the first sale of its Jail Management Software system (JMS) product during the quarter ended December 31, 1995. Increased sales and service revenue from the Company's home arrest products during the fiscal 1996 period is largely a result of continued acceptance by government agencies to use this technology as an alternative to incarceration. Gross profit on net sales, service, monitoring and rental income decreased to 49.1% in fiscal 1996 from 54.0% in fiscal 1995. The decrease in net sales gross profit margin was due largely to a trade-in program of home arrest equipment the Company offered to certain customers during the fiscal 1996 quarter. Cost of goods on the first JMS system sale were $402,000. As a result of initial development expenses and amortization of acquisition costs, the Company does not expect this product line to be profitable in fiscal 1996. Monitoring gross profit decreased as a result of home arrest equipment upgrades and increased costs related to monitoring labor and telephone expenses. The Company expects monitoring gross margins to improve as a result of efficiencies gained over time on increased units being monitored. Selling, general and administrative expenses decreased as a percentage of total revenue to 28.7% or $2,811,000 in fiscal 1996 compared to 30.2% or $2,136,000 in fiscal 1995. The increase of $676,000 is largely related to increased sales and marketing expenses on increased revenue. Research and development (R&D) expenses increased $148,000 to $638,000 in fiscal 1996 compared to $490,000 in fiscal 1995, but remained at approximately 7% of total revenue for both periods. R&D expenses largely related to software enhancements to the Company's monitoring center for both periods. Fiscal 1996 also related to current product evaluations and enhancements. The Company recorded income tax expense of $448,000 and $388,000 for the three months ended December 31, 1995 and 1994, respectively, which differs from the statutory rate largely as a result of state income taxes and non-deductible goodwill amortization expense. THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995 (FISCAL 1996), COMPARED TO THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1994 (FISCAL 1995): Total revenue increased 31.3% to $18,197,000 for fiscal 1996 from $13,856,000 in fiscal 1995. Net sales for fiscal 1996 were $7,163,000, a 29.7% increase over $5,524,000 for fiscal 1995. This increase was primarily a result of increased sales to certain non-government customers who use the Company's equipment to provide monitoring services to government agencies. In addition the first revenue from the JMS product was recognized as discussed above. Recurring revenue which includes service, monitoring and rental income increased to $10,849,000 in fiscal 1996 or 32.6% over $8,184,000 in fiscal 1995 due to the continuing trend by government agencies to contract services 6 versus purchasing equipment. The Company believes this revenue source will continue to increase during the remainder of fiscal 1996. Gross profit on net sales, service, monitoring and rental income decreased to 51% in fiscal 1996 from 54.1% in fiscal 1995 largely as a result of the discussion above. Selling, general and administrative expenses increased $1,025,000 to $5,340,000 in fiscal 1996 from $4,316,000 in fiscal 1995, but decreased as a percentage of total revenue to 29.3% for the six months ended December 31, 1995, versus 31.1% for the same period ended December 31, 1994. The increase was largely related to increased sales and marketing expenses on increased revenues. Research and development expenses increased $244,000 to $1,253,000 in fiscal 1996 from $1,009,000 in fiscal 1995, but remained approximately 7% of total revenue in both periods. The increase was due largely to factors discussed above. The Company's income tax expense for fiscal 1996 was $870,000, which was higher than the expected statutory rate as discussed above. Liquidity and Capital Resources - ------------------------------- The Company has significant net accounts receivable and net sales-type leases available to borrow against which could be used as collateral for future borrowing arrangements. During the six months ended December 31, 1995, the Company generated $4,036,000 from operating activities; expended $2,533,000 for capital equipment, rental and monitoring equipment and internally developed software; and, purchased $972,000 of its common stock on the open market. All cash flow activities resulted in an increase in cash of $1,110,000. Working capital increased $1,323,000 to $14,261,000 at December 31, 1995. This increase was primarily the result of an increase in cash and receivables offset by an increase in accounts payable. The Company believes its existing sources of liquidity expected to be generated from operations will provide adequate cash to fund the Company's anticipated capital needs through fiscal 1996. 7 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. BI Incorporated Date 1/26/96 By /s/ David J. Hunter ----------- ----------------------------- David J. Hunter President and Chief Executive Officer /s/ Jacqueline A. Chamberlin ----------------------------- Jacqueline A. Chamberlin Chief Financial Officer 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND RELATED NOTES. 1,000 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 3,468 540 10,302 0 3,132 18,717 2,110 0 38,490 4,456 0 0 0 28,767 (13) 38,490 18,012 18,197 8,826 16,079 0 0 0 2,118 870 0 0 0 0 1,248 0.18 0.18
-----END PRIVACY-ENHANCED MESSAGE-----