-----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, UO4UG648tyWBEjH3F2g2HbGI+egVuAcpfU8CqUVuhKl3rg8UObOjMWN7DuDb1uka A4VtxJlmKu9lXXWLbDih/g== 0000753048-97-000019.txt : 19970814 0000753048-97-000019.hdr.sgml : 19970814 ACCESSION NUMBER: 0000753048-97-000019 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANALYTICAL SURVEYS INC CENTRAL INDEX KEY: 0000753048 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 840846389 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13111 FILM NUMBER: 97658112 BUSINESS ADDRESS: STREET 1: 1935 JAMBOREE DR STREET 2: SUITE 100 CITY: COLORADO SPRINGS STATE: CO ZIP: 80920 BUSINESS PHONE: 7195930093 MAIL ADDRESS: STREET 1: 1935 JAMBOREE DRIVE STREET 2: SUITE 100 CITY: COLORADO SPRINGS STATE: CO ZIP: 80920 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB __X__Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1997 or _____Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-13111 ANALYTICAL SURVEYS, INC. (Exact name of small business issuer as specified in its charter) Colorado 84-0846389 (State of incorporation)(IRS Employer Identification No.) 1935 Jamboree Drive Colorado Springs, Colorado 80920 (Address of principal executive offices) (Zip Code) (719) 593-0093 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past (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 ninety (90) days. Yes __X__ No_____ The number of shares of common stock outstanding as of August 11, 1997 was 6,055,424. Transitional Small Business Disclosure Format: Yes _____ No__X__ Part I Item 1.
ANALYTICAL SURVEYS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) June 30, September 30, 1997 1996 ASSETS CURRENT ASSETS Cash $ 2,402 $ 1,022 Accounts receivable, net of $60 allowance for doubtful accounts 5,632 5,781 Revenues in excess of billings 10,214 9,329 Prepaid expenses and other 417 215 Prepaid income taxes 129 -- Deferred tax assets 137 105 ------- ------- Total current assets 18,931 16,452 ------- ------- PROPERTY AND EQUIPMENT, at cost Equipment 7,929 7,544 Furniture and fixtures 1,079 957 Leasehold improvements 191 162 ------- ------- 9,199 8,663 Less Accumulated depreciation and amortization (6,850) (6,049) ------- ------- 2,349 2,614 Goodwill, net of accumulated amortization 2,729 2,881 Long term deferred tax assets 15 -- Other assets 40 41 ------- ------- TOTAL ASSETS $ 24,064 $ 21,988 ======= =======
See accompanying notes to financial statements.
ANALYTICAL SURVEYS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) June 30, September 30, 1997 1996 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Line-of-credit with bank (Note 2) $ -- $ 500 Current portion of long-term debt 1,327 1,247 Billings in excess of revenue 667 1,091 Accounts payable and accrued liabilities 2,733 2,268 Income taxes payable -- 20 Accrued payroll and benefits 1,372 1,340 ------- ------- Total current liabilities 6,099 6,466 Deferred income taxes payable -- 4 Long-term debt, less current portion 3,713 4,528 Deferred compensation payable 70 64 ------- ------- Total liabilities 9,882 11,062 ------- ------- STOCKHOLDERS' EQUITY Preferred stock-authorized 2,500,000 shares of no par value; none issued and outstanding -- -- Common stock-authorized 100,000,000 shares of no par value; issued 5,128 shares at June 30, 1997 and 4,922 shares at September 30, 1996 7,019 5,820 Treasury stock of 35 shares, at cost (125) (125) Retained earnings 7,288 5,231 ------- ------- Total stockholders' equity 14,182 10,926 ------- ------- TOTAL LIABILITIES AND EQUITY $ 24,064 $ 21,988 ======= =======
See accompanying notes to financial statements.
ANALYTICAL SURVEYS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands Except Per Share Amounts) (Unaudited) Nine months Three Months Ended Ended June 30, June 30, 1997 1996 1997 1996 SALES OF SERVICES $ 24,643 $15,296 $ 8,484 $ 5,963 ------- ------- ------- ------- COSTS AND EXPENSES Salaries, wages and benefits 11,524 7,077 3,983 2,747 Subcontractor costs 4,419 2,652 1,391 971 General and administrative 4,029 2,503 1,382 961 Depreciation and amortization 973 802 320 291 ------- ------- ------- ------- 20,945 13,034 7,076 4,970 ------- ------- ------- ------- EARNINGS FROM OPERATIONS 3,698 2,262 1,408 993 ------- ------- ------- ------- OTHER INCOME (EXPENSE) Interest (382) (217) (123) (91) Miscellaneous Income 8 15 7 12 ------- ------- ------- ------- (374) (202) (116) (79) ------- ------- ------- ------- EARNINGS BEFORE INCOME TAXES 3,324 2,060 1,292 914 INCOME TAX EXPENSE 1,267 782 490 346 ------- ------- ------- ------- NET EARNINGS $ 2,057 $ 1,278 $ 802 $ 568 ======= ======= ======= ======= EARNINGS PER SHARE $ 0.39 $ 0.26 $ 0.15 $ 0.11 ======= ======= ======= =======
See accompanying notes to financial statements.
ANALYTICAL SURVEYS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Nine months Nine months Ended Ended June 30, June 30, 1997 1996 CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES $ 2,680 $ 23 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of equipment 157 12 Purchase of property and equipment (709) (484) Net assets acquired in business combinations -- (3,548) ------- ------- Net cash used in investing activities (552) (4,020) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (payments) under notes payable (500) 150 Proceeds from issuance of long-term debt 214 3,708 Principal payments of long-term debt (948) (514) Proceeds from issuance of common stock 486 477 ------- ------- Net cash provided (used) by financing activities (748) 3,821 ------- ------- Net increase (decrease) in cash 1,380 (176) Cash at beginning of period 1,022 665 ------- ------- Cash at end of period $ 2,402 $ 489 ======= ======= SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 386 $ 215 ======= ======= Income taxes paid $ 738 $ 376 ======= =======
See accompanying notes to financial statements. ANALYTICAL SURVEYS, INC. Quarterly Report on Form 10-QSB June 30, 1997 Notes to Consolidated Financial Statements (Unaudited) 1. Summary of Significant Accounting Policies The accompanying interim financial statements have been prepared by management in accordance with the accounting policies described in the Company's annual report for the year ended September 30, 1996. The consolidated financial statements include the accounts of the Company and ASI Landmark, Inc., its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements have not been audited by independent auditors. The financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position of Analytical Surveys, Inc. at June 30, 1997 and its results of operations for the nine and three months ended June 30, 1997 and 1996, and its cash flows for the nine months ended June 30, 1997 and 1996. All such adjustments are of a normal recurring nature. The Statement of Cash Flows for the nine months ended June 30, 1996 includes certain reclassifications to conform the presentation to that used in the 1996 annual report and the current period. The computation of earnings per common share is based on the weighted average number of shares outstanding plus common stock equivalents as follows (in thousands): Nine months ended June 30, 1997 5,260 Nine months ended June 30, 1996 4,963 Three months ended June 30, 1997 5,409 Three months ended June 30, 1996 5,220 2. Notes Payable to Bank In February 1997, the Company renewed its line of credit loan agreement with its existing bank for one year at the same maximum loan amount of $1,850,000. The interest rate was reduced to 0.25 percent above the bank's published prime lending rate and is variable with changes in that prime rate. See note 4 regarding events subsequent to June 30, 1997 affecting notes payable to bank. ANALYTICAL SURVEYS, INC. Quarterly Report on Form 10-QSB June 30, 1997 3. Stock Options The following table summarizes stock option transactions under the Company's four non-qualified stock option plans (in thousands except per share amounts): Shares under Option Price option per share Outstanding at September 30, 1996 989 $ 0.67 to 14.33 Exercised (205) 1.03 to 11.08 Canceled (11) 1.58 to 11.08 Issued 292 11.00 to 12.50 ----- Outstanding June 30, 1997 1,065 0.67 to 14.33 ===== Options Exercisable at June 30, 1997: 527 ===== Available for Grant at June 30, 1997: 10 =====
4. Business combination subsequent to June 30, 1997 On July 2, 1997, the Company acquired MSE Corporation, an Indianapolis, Indiana based corporation providing data conversion services to the GIS industry and civil engineering and land surveying services for approximately $12,500,000 in cash (including transaction costs) and 925,000 shares of restricted common stock valued at $7,313,000 for total consideration of $18,813,000. The Company borrowed $12,500,000 from a bank under a note which is payable over a 5 year period and bears interest at a floating rate of 2% over the one month London Interbank Offered Rate ("LIBOR"). The Company has entered into an interest rate swap agreement with the bank that fixes the rate at 8.07% for the first year of the loan. This transaction occurred subsequent to the date of these financial statements, therefore these financial statements do not reflect any of the acquired assets, liabilities or results of operations of MSE. ANALYTICAL SURVEYS, INC. Quarterly Report on Form 10-QSB June 30, 1997 Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion contains certain forward looking statements, primarily those which discuss the future goals of the Company. There are important factors that could cause results to differ materially from those anticipated in the forward looking statements including factors which are beyond the control of the Company. These factors include the competitive environment such as the entry of new competitors, improved technical capabilities by existing competitors and capacity utilization achieved by all competitors. Market conditions that may also affect future results include, but are not limited to, the competitive and regulatory environments in the utilities market, local tax collections by municipalities and spending levels by local, state and federal governments. 1997 Compared to 1996 Results of Operations: Three Months Ended June 30, 1997 The Company implemented a strategy to enter the utilities facility data conversion market by the acquisition of Intelligraphics International ("Intelligraphics") on December 22, 1995. This utility market is competitive and margins are generally lower than those earned by the Company in its traditional markets. The lower margins are usually mitigated by the larger contract size and term and the expected greater volume of conversion work to be done in this market. A second acquisition in July 1996, Westinghouse Landmark GIS, also contributed to the growth strategy and provided the capability to perform deeds research tax mapping as opposed to the use of outside subcontractors to perform this work. This acquisition also provided additional capacity in the Company's traditional photogrammetry and cadastral markets as well as an enhanced regional presence in the east and southeast regions of the country. Sales for the three months ended June 30, 1997 were 42% greater than sales for the same period one year ago. The increase is due to increased production and the acquisition of the ASI Landmark subsidiary in July 1996. Costs and expenses for the three months ended June 30, 1997 also increased 42% over the same period of the previous year, again due increased production and the normal costs and expenses of ASI Landmark. The detail components of costs and expenses are in line with normal expectations as percentages of sales. Interest expense increased 35% in the three months ended June 30, 1997 over the same period of 1996 due to the greater term debt balances incurred as part of the ASI Landmark acquisition. Net income (all from continuing operations) for the three months ended June 30, 1997 was 42% higher than the same period of the previous year due to the increased sales described above. Earnings per share increased 36%, which was less than the increase in net income due to the effect of shares issued for stock option exercises and the effect of common stock equivalents on the average number of shares outstanding. Nine months Ended June 30, 1997 Net income (all from continuing operations) for the nine months ended June 30, 1997 increased 61% over the same nine months of 1996. Increased production plus the effects of the two acquisitions caused sales to increase 61% and earnings from operations to increase 64%. Salaries expense increased 63% due to the acquisitions and increased production. Subcontractor costs increased 67% due the greater use of aerial photography subcontractors in the second quarter. The 61% increase in general and administrative expenses was primarily the result of the acquisitions, increased selling and marketing activity and increased production. Interest expense was 76% more than the same period of the previous year due the term debt incurred as part of the acquisitions. Earnings per share increased 50%, which was less than the increase in net income due to the effect of shares ANALYTICAL SURVEYS, INC. Quarterly Report on Form 10-QSB June 30, 1997 issued for stock option exercises and the effect of common stock equivalents on the average number of shares outstanding. Cash flows presented on the Consolidated Statements of Cash Flows for the nine months ended June 30, 1996 have been reclassified from the original presentation in 1996 to conform to the presentation in the September 30, 1996 annual report. Cash flow provided by operations in the nine months ended June 30, 1997 was $2,680,000 compared to $ 23,000 in the same nine months of the previous year. Cash flow from operations was improved by increased net earnings and by normal variations in investment in unbilled revenues and accounts receivable. The Company maintains an open line of credit to finance the normal variations in investment in unbilled revenue and accounts receivable. Cash flows from investing activities include the proceeds from the sale of surplus equipment and the expenditures for routine capital equipment additions. Cash flow from financing activities consists of the financing of equipment using capital leases, the scheduled repayment of debt and capitalized leases and proceeds from the exercise of stock options by employees. The Company's backlog of contracted work increased to $45,939,000 at June 30, 1997 up 104% from 1996. The Company's expansion strategy has enabled it to sign significant contracts with utilities customers as well as municipal and commercial companies. Some of these projects are large multiple-year contracts which offer the Company the benefits of increased work but also subject the Company to increased risk due to possible inflation and/or changing customer expectations. The Company continues to seek and perform both larger and smaller projects for future work. The Company's management believes that the domestic market for its data conversion services is growing at annual rates of 15% to 20% per year. Over the next several years, the Company is seeking to more than double the market's annual growth rates by capitalizing on a variety of opportunities including increased participation in selected international markets. Additionally, the Company is seeking to develop new products and services which could expand its sales by offering even more solutions to customer needs than it does today. A third strategy for growth includes acquisitions where opportunities can be found that meet the Company's criteria for quality, technology, personnel and growth opportunity and that can be acquired in a manner that will contribute to the long term success of the Company. There is no assurance that the Company will be successful in any or all of these strategies and there are business risks inherent in seeking growth at these rates. Among the risks faced in successfully implementing these strategies are the continuing possibility of new competitors in the industry, possible attempts by others to consolidate the industry by the acquisition and combination of existing competitors, and the ability of the Company's management team to manage all of the elements of a rapidly growing business. There can be substantial variation in the short term rate of growth even if the Company is successful in achieving its longer term growth goals. As discussed in note 4 to the financial statements, the Company acquired MSE Corporation ("MSE") on July 2, 1997. MSE is also engaged in the data conversion business (approximately 80% of their revenues) and civil engineering and land surveying (approximately 20% of revenues). MSE had sales of $22 million in the year ended December 31, 1996, has approximately 335 employees and performs the majority of its GIS services work for utilities customers. The Company borrowed $12,500,000 from a bank to pay the cash portion of the purchase consideration and the transaction costs under a five year term note. The note payable to the bank bears interest at a floating rate of 2% over the one month London Interbank Offered Rate ("LIBOR"). The Company has entered into an interest rate swap agreement with the bank that fixes the rate at 8.07% for the first year of the loan. ANALYTICAL SURVEYS, INC. Quarterly Report on Form 10-QSB June 30, 1997 Liquidity and Capital Resources: Management expects to meet long-term liquidity requirements through cash flows generated by operations supplemented from time to time by short term borrowings on a bank line of credit. There was no balance owed under the line of credit at June 30, 1997 and the line of credit agreement was renewed for an additional year with the existing bank. Routine capital expenditures will usually be financed with term debt and/or capital leases. The cash portion of the July 2, 1997 acquisition of MSE Corporation was financed with new term debt of $12,500,000. The Company has not committed to significant capital expenditures at June 30, 1997. Management believes the line of credit combined with cash flows from operations are adequate to finance ongoing operations. Management also believes the Company will be able to finance any required capital expenditures from a combination of operating cash flows and new term debt or lease arrangements. The Company is dependent, however, upon its ability to successfully deliver acceptable products in order to maintain adequate operating cash flows. Other Risk Factors: The Company faces, as do all businesses, a wide variety of increasingly complex legal, regulatory and compliance requirements. The Company is not aware of any substantial risk of loss from product liability litigation nor from noncompliance with environmental, labor or other laws and regulations. The Company has been awarded several projects with contract values in the range of $3 million to $10 million, usually on a fixed-price basis. While these projects provide improved availability of work, the projects may extend over two to four years. The extended production period may increase the Company's exposure to the risk of inflation, changes in customer expectations and customer funding capabilities. The Company has not paid any dividends since its inception, and there is no intention to pay dividends in the foreseeable future. Under its present bank loan agreement, the Company must obtain the bank's prior written consent should the Company wish to pay a dividend. The bank has agreed to not unreasonably withhold such consent; however, there is no assurance that the Company would receive the bank's consent to pay a dividend. Part II Other Information Item 2. Legal Proceedings The Company is not a party to any material pending legal proceeding nor is its property the subject of a pending legal proceeding. The Company is involved in routine litigation from time to time, which is incidental to the business and the outcome of which is not expected to have a material effect on the Company. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed during the three months ended June 30, 1997, however one report on Form 8-K was filed subsequent to the end of the period reporting the acquisition of MSE Corporation. ANALYTICAL SURVEYS, INC. Quarterly Report on Form 10-QSB June 30, 1997 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. Analytical Surveys, Inc. (Registrant) Date: August 12, 1997 /s/ Sidney V. Corder Sidney V, Corder, Chairman and Chief Executive Officer Date: August 12, 1997 /s/ Scott C. Benger Scott C. Benger, Secretary/Treasurer (principal financial officer and principal accounting officer) Date: August 12, 1997 /s/ Brian J. Yates Brian J. Yates, Controller EX-27 2
5 This schedule contains summary financial information extracted from SEC Form 10-QSB and is qualified in its entirety by reference to such financial statements. 0000753048 ANALYTICAL SURVEYS INC 1000 9-MOS SEP-30-1997 JUN-30-1997 2402 0 15906 60 0 18931 9199 6850 24064 6099 0 6894 0 0 7288 24064 0 24643 0 20945 (8) 0 382 3324 1267 2057 0 0 0 2057 .39 .39
-----END PRIVACY-ENHANCED MESSAGE-----