-----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, Uih45jVLV4MPi63WY5fHr4o1l9ZWrikOY/BFnGkG7EEjdhMxtdgsiENuYM0seXI3 onQg98EO9nFzjzyDsD30kQ== 0000927356-96-000194.txt : 19960425 0000927356-96-000194.hdr.sgml : 19960425 ACCESSION NUMBER: 0000927356-96-000194 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960424 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: 96549997 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 March 31, 1996 -------------- 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 April 12, 1996 is 6,768,425. BI INCORPORATED INDEX ----- PART I - FINANCIAL INFORMATION: Page No. Item 1 - Financial Statements Balance Sheet at March 31, 1996 and June 30, 1995 2 Statement of Operations for the three and the nine months ended March 31, 1996 and 1995 3 Statement of Cash Flows for the nine months ended March 31, 1996 and 1995 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 6 - Exhibits and Reports on Form 8-K: None
BI INCORPORATED BALANCE SHEET (in thousands, unaudited) March 31, June 30, 1996 1995 ---------- --------- ASSETS Current assets Cash and cash equivalents $2,897 $2,358 Short-term investments 541 376 Receivables, net 7,524 6,245 Investment in sales-type leases, net 3,887 3,204 Inventories Raw materials 1,384 1,333 Work in process 1,119 1,049 Finished goods 910 896 Deferred income taxes 544 519 Prepaid expenses 749 683 ---------- --------- Total current assets 19,555 16,663 Investment in sales-type leases, net 2,988 2,792 Rental and monitoring equipment, net 4,256 4,197 Property and equipment, net 2,260 2,027 Software, net 1,949 2,004 Intangibles, net 7,502 8,162 Deferred income taxes 407 568 Other assets 253 468 ---------- --------- $39,170 $36,881 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $881 $407 Accrued compensation and benefits 1,347 1,060 Accrued product warranty 226 326 Current income taxes payable 130 Deferred revenue 1,402 1,232 Other liabilities 296 570 ---------- --------- Total current liabilities 4,152 3,725 ---------- --------- Deferred revenue and long-term debt 641 824 ---------- --------- Stockholders' equity Common stock, no par value, 75,000 shares authorized; 6,872 shares issued March 31, 1996 and 6,865 shares issued June 30, 1995 28,954 28,883 Retained earnings 5,436 3,464 Less treasury shares at cost; 123 shares at March 31, 1996 and 154 shares at June 30, 1995 (13) (15) ---------- --------- 34,377 32,332 ---------- --------- $39,170 $36,881 ========= =========
The accompanying notes are an integral part of these financial statements. 2 BI INCORPORATED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands except per share amounts, unaudited)
For the three months For the nine months ended March 31, ended March 31, --------------------- ---------------------- 1996 1995 1996 1995 Revenues -------- ------- -------- ------- Net sales $3,859 $3,083 $11,022 $8,607 Service and monitoring income 5,279 4,214 15,715 11,978 Rental income 209 207 622 627 Interest income 58 21 160 108 Other income 83 38 167 98 -------- ------- -------- ------- 9,488 7,563 27,686 21,418 -------- ------- -------- ------- Costs and expenses Cost of net sales 1,820 1,599 5,629 4,257 Cost of service and monitoring income 2,640 1,944 7,515 5,370 Cost of rental income 74 84 216 297 Selling, general and administrative expenses 2,697 2,308 8,038 6,625 Amortization and depreciation 355 317 1,015 906 Research and development expenses 678 474 1,931 1,482 -------- ------- -------- ------- 8,264 6,726 24,344 18,937 -------- ------- -------- ------- Income before income taxes 1,224 837 3,342 2,481 Income tax provision (499) (320) (1,369) (1,001) -------- ------- -------- ------- Net income $725 $517 $1,973 $1,480 ======== ======= ======== ======= Income per common and common equivalent share: Net income $0.10 $0.08 $0.28 $0.22 ======== ======= ======== ======= Weighted average number of common and common equivalent shares outstanding 7,095 6,785 7,065 6,869 ======== ======= ======== =======
The accompanying notes are an integral part of the consolidated financial statements. 3 BI INCORPORATED STATEMENT OF CASH FLOWS (in thousands, unaudited)
For the nine months ended March 31, ---------------------------------- 1996 1995 --------------- --------------- Cash flows from operating activities: Net income $1,973 $1,480 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 4,265 3,205 Provision for losses on accounts receivable and STLs 169 139 Changes in assets and liabilities: Receivables (1,550) (632) Investment in STLs (879) (1,049) Inventories (105) (472) Accounts payable 474 182 Accrued expenses (87) 665 Income taxes payable (130) (162) Deferred revenue 133 308 Rental equipment-net, converted to STL 122 Other 275 (214) --------------- --------------- Net cash from operating activities 4,538 3,572 --------------- --------------- Cash flows from investing activities: Capital expenditures (1,079) (1,069) Increase in rental and monitoring equipment (2,095) (1,817) Increase in capitalized software (552) (172) Cash for acquisition (35) Change in investments (165) (5) --------------- --------------- Net cash from investing activities (3,926) (3,063) --------------- --------------- Cash flows from financing activities: Purchase of treasury stock (970) (2,501) Proceeds from issuance of common stock 897 150 --------------- --------------- Net cash from financing activities (73) (2,351) --------------- --------------- Net change in cash and cash equivalents 539 (1,842) Cash and cash equivalents at June 30 2,358 3,045 --------------- --------------- Cash and cash equivalents at March 31 $2,897 $1,203 =============== ===============
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 two legal proceedings; one alleging product liability and another alleging wrongful termination of a distributor contract who seeks damages up to $2,700,000. On February 27, 1996, a third suit, also alleging product liability, was dismissed and on February 20, 1996, a fourth suit alleging tortious interference with a competitor was also dismissed. Management believes the Company has adequate legal defenses and/or insurance coverage against all claims and intends to 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. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain information in "Management's Discussion and Analysis" and other statements periodically reported by the Company contain forward-looking statements that involve risks and uncertainties. Management believes that its expectations are based on reasonable assumptions. However, no assurances can be given that its goals will be achieved. It should be noted that the earnings history of the Company has not been consistent year to year. Factors that could cause actual results to differ materially include, but are not limited to: pricing pressures; changes in federal, state and local regulations; misrepresented political or media statements; new product introductions by competitors or unexpected delays of new product introductions by the Company; raw material availability, changes in telecommunications regulations or technologies, or the loss of a material contract in October 1996. RESULTS OF OPERATIONS - --------------------- THE THREE-MONTH PERIOD ENDED MARCH 31, 1996 (FISCAL 1996), COMPARED TO THE THREE-MONTH PERIOD ENDED MARCH 31, 1995 (FISCAL 1995): Total revenue for the three months ended March 31, 1996, increased 25.5% to $9,488,000 compared to $7,563,000 in the corresponding period a year ago. This increase related both to an increase in net sales of $776,000 or 25.1% and an increase in service, monitoring and rental income of $1,067,000 or 24.1%. During the three months ended March 31, 1996, 20.8% of total revenue was from customers who had not previously purchased the Company's equipment or services, and 79.2% was from the growth of existing customers. Gross profit on net sales, service, monitoring and rental income was 51.5% in fiscal 1996 compared to 51.7% in fiscal 1995. The increase in net sales gross profit margin of 4.7% in fiscal 1996 was due largely to a fiscal 1995 upgrade program of home arrest equipment the Company offered to certain customers which resulted in lower margins for that period. Service, monitoring and rental gross profits decreased from 54.1% in fiscal 1995 to 50.5% in fiscal 1996 largely as a result of a lower service usage rate for monitoring equipment. This lower utilization of monitoring equipment, and increased costs for telephone and certain monitoring supplies resulted in the lower margins for the fiscal 1996 period. The Company expects monitoring gross margins to improve over time as a result of efficiencies gained on increased units being monitored. Selling, general and administrative expenses increased $389,000 to $2,697,000 in fiscal 1996 from $2,308,000 in fiscal 1995, but decreased as a percentage of total revenue to 28.4% for the three months ended March 31, 1996, versus 30.5% for the three months ended March 31, 1995. The increase largely related to increased sales and marketing expenses on increased revenue. Research and development expenses increased $204,000 to $678,000, or 7.1% of total revenue, compared to $474,000, or 6.3% in fiscal 1995. Approximately half of the fiscal 1996 increase related to a study of the need for improved automation to the monitoring operations. In addition, the Company continued its evaluation and enhancements of current products. The Company recorded income tax expense of $499,000 and $320,000 for the three months ended March 31, 1996 and 1995, respectively, which differs from the statutory rate largely as a result of state income taxes and non-deductible goodwill amortization expense. 6 THE NINE-MONTH PERIOD ENDED MARCH 31, 1996 (FISCAL 1996), COMPARED TO THE NINE- MONTH PERIOD ENDED MARCH 31, 1995 (FISCAL 1995): Total revenue increased 29.3% to $27,686,000 in fiscal 1996 from $21,418,000 in fiscal 1995. Revenue from net sales increased $2,415,000 to $11,022,000, or 28.1% in fiscal 1996 from $8,607,000 for the same period in fiscal 1995. This increase is largely the result of increased sales to certain non-governmental customers who purchase the Company's equipment and provide monitoring services to government agencies. Service, monitoring and rental revenue in fiscal 1996 of $16,337,000 increased 29.6% from $12,605,000 reported one year ago. This is the result of a continuing trend of government agencies to utilize monitoring services and a focusing of our sales efforts on this revenue stream. Gross profit on net sales, service, monitoring and rental income decreased to 51.2% in fiscal 1996 from 53.2% in fiscal 1995 largely as a result of lower margins on service and monitoring revenue as discussed above. Selling, general and administrative expenses increased $1,413,000 to $8,038,000 in fiscal 1996 from $6,625,000 in fiscal 1995, but decreased as a percentage of total revenue to 29.0% for the nine months ended March 31, 1996, versus 30.9% for the same period ended March 31, 1995. The increase was largely related to increased sales and marketing expenses on increased revenues. Research and development expenses increased $449,000 to $1,931,000 in fiscal 1996 from $1,482,000 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 and 1995 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 nine months ended March 31, 1996, the Company generated $4,538,000 from operating activities and expended $3,726,000 for capital equipment, rental and monitoring equipment and internally developed software. The Company purchased $972,000 of its common stock on the open market in October 1995 and has received $897,000 from the exercise of stock options during the period. All cash flow activities resulted in an increase in cash of $539,000. Working capital increased $2,465,000 to $15,403,000 at March 31, 1996. 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 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 4/22/96 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 9-MOS JUN-30-1996 JUL-01-1995 MAR-31-1996 2,897 541 11,411 0 3,413 19,555 2,260 0 39,170 4,152 0 0 0 28,954 (13) 39,170 27,359 27,686 13,360 24,344 0 0 0 3,342 1,369 0 0 0 0 1,973 .28 .28
-----END PRIVACY-ENHANCED MESSAGE-----