-----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, YsidqWC7PJ771+Y0MMs/yR/RpIiIDeBpBO57rO5YKTkRyMj18U3droMucd4K8dWv PlyPX06n7syTSKZtX8NK/A== 0000769409-95-000010.txt : 19950420 0000769409-95-000010.hdr.sgml : 19950420 ACCESSION NUMBER: 0000769409-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950303 FILED AS OF DATE: 19950418 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNAMICS CORP CENTRAL INDEX KEY: 0000769409 STANDARD INDUSTRIAL CLASSIFICATION: 7373 IRS NUMBER: 952502865 STATE OF INCORPORATION: CA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15034 FILM NUMBER: 95529266 BUSINESS ADDRESS: STREET 1: 21171 WESTERN AVE STE 110 CITY: TORRANCE STATE: CA ZIP: 90501 BUSINESS PHONE: 3107827277 MAIL ADDRESS: STREET 1: GEODYNAMICS CORPORATION STREET 2: 21171 WESTERN AVENUE - SUITE 110 CITY: TORRANCE STATE: CA ZIP: 90501 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 3, 1995 COMMISSION FILE NUMBER 0-15034 GEODYNAMICS CORPORATION Exact name of registrant as specified in its charter CALIFORNIA 95-2502865 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 21171 WESTERN AVENUE, SUITE 110, Torrance, California 90501 (Address of principal executive offices) (310) 782-7277 (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 ( ) APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding as of March 31, 1995 Common Stock 2,593,770 shares This document is comprised of 13 pages GEODYNAMICS CORPORATION AND SUBSIDIARIES FORM 10-Q March 3, 1995 INDEX Page Part I: FINANCIAL INFORMATION Item 1: Financial Statements Condensed Consolidated Balance Sheets as of March 3, 1995 (unaudited) and June 3, 1994 3-4 Condensed Consolidated Statements of Income (unaudited) for the three months and nine months ended March 3, 1995 and 5 March 4, 1994 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended March 3, 1995 and March 4, 1994 6-7 Notes to Condensed Consolidated Financial Statements 8-9 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 10-11 Part II: OTHER INFORMATION Item 4: Submission of Matters to a Vote of Security Holders 12-13 Item 6: Exhibits and Reports on Form 8-K 13 Signatures 13 -- Page 2 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000 omitted) ASSETS
(Unaudited) March 3 June 3 1995 1994 --------- --------- CURRENT ASSETS Cash $1,665 $1,237 Short-term investments 7,259 7,546 Contract Receivables: Billed 12,564 9,124 Unbilled 1,220 3,140 Prepaid expenses and other 807 973 --------- --------- Total current assets 23,515 22,020 --------- --------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost Equipment and leasehold improvements 26,290 19,094 Less accumulated depreciation and amortization (15,835) (14,188) --------- --------- Net equipment and leasehold improvements 10,455 4,906 --------- --------- OTHER ASSETS Noncurrent unbilled contract receivables 1,041 1,041 Investments 1,443 2,812 Intangible Assets 2,224 0 Other Assets 956 1,077 --------- --------- Total other assets 5,664 4,930 --------- --------- $39,634 $31,856 ========= =========
-- Page 3 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000 omitted) Continued LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited) March 3 June 3 1995 1994 --------- --------- CURRENT LIABILITIES Accounts Payable $3,132 $1,692 Accrued Expenses 3,199 3,069 Other current liabilities 1,060 545 --------- --------- Total current liabilities 7,391 5,306 --------- --------- LONG TERM LIABILITIES Deferred income taxes 1,716 0 Long term debt and other 325 142 --------- --------- Total long term liabilities 2,041 142 --------- --------- SHAREHOLDERS' EQUITY Common stock, without par value: Authorized - 10,000,000 shares Outstanding - 2,585,000 at March 3, 1995 and 2,230,000 shares at June 3, 1994 11,772 8,997 Retained Earnings 18,429 17,414 Foreign currency translation 1 0 Less: notes receivable from sale of stock 0 (3) --------- --------- Total shareholders' equity 30,202 26,408 --------- --------- $39,634 $31,856 ========= ========= The accompanying notes are an integral part of these statements
-- Page 4 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (000 omitted except per share data)
Three Months Ended Nine Months Ended March 3, March 4, March 3, March 4, 1995 1994 1995 1994 -------- -------- --------- --------- REVENUES $16,556 $14,007 $44,319 $41,363 COSTS AND EXPENSES 15,821 13,990 41,916 40,536 -------- -------- --------- --------- Income from Operations 735 17 2,403 827 -------- -------- --------- --------- OTHER INCOME/(EXPENSE): Interest Income 120 88 292 248 Interest Expense (14) 0 (58) (2) -------- -------- --------- --------- Net Other 106 88 234 246 -------- -------- --------- --------- INCOME BEFORE PROVISION FOR INCOME TAXES 841 105 2,637 1,073 PROVISION FOR TAXES 324 48 1,015 416 -------- -------- --------- --------- NET INCOME $517 $57 $1,622 $657 ======== ======== ========= ========= EARNINGS PER COMMON SHARE $0.20 $0.02 $0.63 $0.28 ======== ======== ========= ========= Weighted average number of common shares outstanding (Note 3) 2,643 2,316 2,585 2,337 ======== ======== ========= ========= The accompanying notes are an integral part of these statements
-- Page 5 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (000 omitted)
Nine Months Ended: March 3, March 4, 1995 1994 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,622 $657 Adjustments to reconcile net income to cash provided by operating activities: Cash effect of changes, net of the effects from acquired company Depreciation and amortization 1,853 1,787 Loss on retirement of capital assets 1 0 Nonqualified stock options, charged to operations 62 118 (Increase) decrease in: Contract receivables (418) (867) Refundable income taxes 469 (939) Deferred expenses 0 (134) Prepaid expenses (241) (313) Other noncurrent assets 38 0 Increase (decrease) in: Accounts payable 122 (840) Accrued Expenses 130 242 Income tax liabilities 24 0 Other liabilities (283) 0 --------- --------- Net cash provided by (used in) operating activities 3,379 (289) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Loans to LCT, Inc. 0 (1,500) Purchases of short-term investments (2,158) (6,712) Sales of short-term investments 2,445 9,582 Purchase of LCT, net of acquired cash of $1,319 (1,419) 0 Employee loans, net 100 135 Purchases of property and equipment (1,240) (1,483) --------- --------- Net cash provided by (used in) investing activities (2,272) 22 --------- ---------
-- Page 6 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (000 omitted) Continued
Nine Months Ended: March 3, March 4, 1995 1994 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Line of credit borrowings 282 0 Proceeds from exercise of common stock options and tax benefits related to stock options 117 21 Repurchase of common stock (103) (779) Cash dividends paid (540) (479) Foreign currency translation 1 0 Long term subordinated debt (605) 0 Payments on notes receivable from sale of stock 3 18 Proceeds from employee stock purchase plan 166 66 --------- --------- Net cash (used in) financing activities (679) (1,153) --------- --------- Net increase (decrease) in cash 428 (1,420) Cash at beginning of period 1,237 3,024 --------- --------- Cash at end of period $1,665 $1,604 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period - income taxes $478 $1,290 Cash paid during the period - interest $58 $2 The accompanying notes are an integral part of these statements
-- Page 7 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 -- Accounting Policies The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have either been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations and cash flows for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the financial statements and notes thereto for the year ended June 3, 1994 included in the 1994 Annual Report to Shareholders. The Condensed Balance Sheet at June 3, 1994 has been taken from the audited financial statements at that date and condensed. Note 2 -- Investments The Company's short-term investments are stated at the lower of aggregate cost or market value and consist primarily of money market funds. On June 9, 1994 the Company acquired 100% of the stock of LaFehr and Chan Technologies, Inc, (LCT) for $5 million plus an earn-out amount to be determined by LCT's financial performance through December 31, 1995. The $5 million price was payable 1/2 in stock and 1/2 in cash, which resulted in the use of $2.5 million of cash and the issuance of 322,000 shares of common stock of Geodynamics Corporation. As part of the agreement, Geodynamics' $1.5 million loan to LCT was substantially repaid. The purchase price was allocated to the assets acquired based on fair market values. This allocation resulted in the recognition of $2.38 million of intangible assets, which are being amortized over useful lives ranging from 5 to 20 years. Pro-forma information regarding LCT's revenue, profit, and per share earnings is not practicable because LCT's records were not maintained on a quarterly basis during fiscal 1994. Pro-forma results for the full fiscal year 1994 were presented in the Company's Report on Form 8-K, which was filed during the first fiscal quarterly period ended September 2, 1994. In addition to LCT, noncurrent investments primarily include $1.2 million invested in ERDAS, Inc. In September 1993, the Company converted a portion of its loan to ERDAS to equity, raising the Company's holdings in ERDAS common stock from 14 percent to 19.5 percent. The remaining unconverted loan balance of approximately $115,000, plus an option, give Geodynamics the right to acquire up to a total of 25 percent of ERDAS common stock. This conversion does not alter the value of the Company's investment in ERDAS. -- Page 8 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES NOTES (Continued) (Unaudited) Note 3 -- Earnings per Common Share The following schedule summarizes the information used to compute earnings per common share. Fully diluted earnings per share did not vary significantly from primary earnings per share.
(000 omitted) Three months ended Nine months ended March 3, March 4, March 3, March 4, 1995 1994 1995 1994 -------- -------- --------- --------- Net Income $517 $57 $1,622 $657 ======== ======== ========= ========= Weighted average common shares outstanding 2,582 2,253 2,539 2,275 Dilutive effect of stock options 107 63 67 62 Weighted average shares used to compute earnings per -------- -------- --------- --------- common share 2,689 2,316 2,606 2,337 ======== ======== ========= =========
-- Page 9 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues were $16.6 million and $44.3 million in the third quarter and first nine months, respectively, of fiscal 1995, compared with $14.0 million and $41.4 million, respectively, in the comparable periods of fiscal 1994. The revenue improvements are due primarily to the acquisition of LCT, Inc., at the beginning of this fiscal year which contributed approximately $1.0 million to the quarter and almost $3.6 million to the nine-month period and did not exist in the prior year. Department of Defense (DOD) revenues also increased by approximately $1.5 million in the current quarter over comparable activities a year ago, due to a higher level of government contract activity. Largely as a result of the LCT acquisition, commercial (i.e., non-DOD) revenues now account for 10.4 percent of nine-month total revenues, compared with approximately 1.2 percent in the same period a year ago. Costs and expenses were $15.8 million and $41.9 million in the three-month and nine-month periods, respectively, of fiscal 1995. These represented increases of 13.1 percent and 3.4 percent, respectively, over the comparable periods of fiscal 1994. However, income from operations of $735,000 and $2.4 million, respectively, increased substantially from year-earlier totals of $17,000 and $827,000, respectively. Primarily, this improvement in profit margins is attributable to the near-elimination of operating losses from the Company's internally developed commercial activities. These efforts showed operating losses of approximately $100,000 in the nine months ended March 3, 1995, compared with operating losses of $1.6 million in the comparable period of fiscal 1994. In addition, the Company's overhead cost structure has improved significantly due to the reorganization from six operating units down to three divisions. Other income for the nine months of 1995 is down $12,000 from the prior year, due primarily to interest expenses incurred by LCT. Revenues for the remainder of fiscal 1995 are expected to be level or up slightly compared with fiscal 1994. Profitability, however, is expected to be significantly improved from the prior year. Backlog remains essentially unchanged from the end of fiscal 1994. The number of average shares outstanding during the first nine months of 1995 increased by 11.5 percent from the prior year. This increase represents the issuance of approximately 322,000 shares of common stock for the acquisition of LCT, Inc., partially offset by the net effect of common stock repurchases during the year. More shares could be issued for LCT under an earnout provision, based on higher revenues and profitability during the two-year period ending in December, 1995. As a result of the vote held for directors at the shareholders meeting on February 16, 1995, three new directors have been elected to replace a like number of previous incumbents. The change followed a proxy contest initiated by a shareholder, Mr. Alney A. Baham (see Part II, Item 4, below). The Company incurred expenses to defend against Mr. Baham's efforts which resulted in court approved sanctions against Mr. Baham. The amount of related legal expenses to -- Page 10 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) date is in the moderate 6 figure amount. The amount of future such expenses is indeterminate at this time. The company is attempting to reach a settlement on open issues that would limit any ongoing financial impact. CAPITAL RESOURCES AND LIQUIDITY The consolidated balance sheet as of March 3, 1995 includes the Company's LCT subsidiary acquired at the beginning of the current fiscal year, and is compared with the June 3, 1994 fiscal year-end balance sheet without LCT. Consolidated cash and short-term investments at March 3, 1995 were $8.9 million, up slightly from $8.8 million at June 3, 1994. These cash resources are net of approximately $2.5 million which was paid in cash for the acquisition of LCT during the year. Accounts receivable at the end of the first nine months of fiscal 1995 were $14.8 million, representing an aging of 82 days, down from 87 days at June 3, 1994. Current unbilled contract receivables have declined to $1.2 million from $3.1 million at June 3, 1994. Billings throughout the first nine months of the current year have been based on projected year-end overhead rates. These projected rates are slightly higher than actual rates through the first nine months, causing billings to be higher relative to revenue during this period. Actual rates are increasing slightly, and the relative balance between billings and revenues is expected to be more closely in balance by year-end. At March 3, 1995, net equipment and leasehold improvements had risen to $10.5 million from $4.9 million at the preceding year-end, reflecting the acquisition of LCT. Deferred income taxes of $1.7 million included $1.5 million from the acquisition. The balance sheet continues to be strong, with a current ratio of 3.2 to 1 as of March 3, 1995 and only $182,000 of long-term debt. The Company maintains an $8 million unsecured bank line of credit. As of March 3, 1995, advances of $282,000 were outstanding under this line, which was being used for working capital by LCT. -- Page 11 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES Part II. OTHER INFORMATION Items 1 through 5 have been omitted because the related information is either inapplicable or has been previously reported. Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Shareholders of Geodynamics Corporation was held on February 16, 1995. The following matters were voted upon: (b) Election of Directors: Seven Directors were elected from among the following nominated individuals, with cumulative votes as indicated: (1) W. Richard Ellis 1,467,295 (1) Frederick K. Evans 1,455,575 (1) Donald L. Haas 1,455,575 Delbert H. Jacobs 12,420 (1) Thomas R. LaFehr 1,467,296 (1) Robert L. Paulson 1,467,295 (1) Richard P. Smith 1,467,295 Alney A. Baham -0- (1) Michael E. Edleson 2,741,905 Bruce J. Gordon 17,900 James W. Montgomery -0- Frederick Y. Pearson -0- Will Stackhouse -0- Thomas D. Taverney 17,900 (1) Elected to Board As described in the press release attached as an exhibit to this Form 10-Q, two of Geodynamics' slate of directors subsequently resigned and were replaced by two of the Baham nominees, Bruce J. Gordon and Will Stackhouse. Directors Edleson and Gordon had been named as additional defendants in the proxy contest litigation initiated by the Company against Messrs. Baham and Strong. The Company subsequently voluntarily dismissed the litigation against Messrs. Edleson and Gordon, and the Company has no claims against either of those persons with respect to the proxy contest. (c) Other matters voted upon at the meeting were : - Approval of the Company's 1994 Employee Stock Bonus Plan Votes for: 1,269,785 Votes Against: 238,325 Abstained: 173,911
- Approval of the appointment of Arthur Andersen & Co. as independent public accountants for 1995 : Votes for: 1,642,204 Votes Against: 10,499 Abstained: 29,318
-- Page 12 -- GEODYNAMICS CORPORATION AND SUBSIDIARIES (d) The Company has entered into settlement discussions with Alney A. Baham and William Strong with respect to the resolution of matters relating to Mr. Baham's proxy solicitation; these discussions and any resulting agreement are subject to the approval of Geodynamics' Board of Directors, which has not yet been secured. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Press release. (b) Reports on Form 8-K None SIGNATURES 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 thereto duly authorized. GEODYNAMICS CORPORATION DATE: 4/14/95 By: /s/ David P. Nelson David P. Nelson, Vice President, Chief Financial Officer, and duly authorized to sign on behalf of registrant DATE: 4/14/95 By: /s/ Robert G. Cook Robert G. Cook, Corporate Controller and Chief Accounting Officer -- Page 13 -- EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000 9-MOS JUN-02-1995 MAR-03-1995 1,665 7,259 13,784 0 0 23,515 26,290 (15,835) 39,634 7,391 0 11,772 0 0 18,430 39,634 44,319 44,319 41,916 41,916 0 0 58 2,637 1,015 1,622 0 0 0 1,622 0.63 0.63
EX-99 3 PRESS RELEASE Geodynamics Corporation FOR IMMEDIATE RELEASE 21171 Western Avenue, Suite 120 Torrance, CA 90501 (310) 781-3612 Company Contact: Joanne M. Dunlap GEODYNAMICS ANNOUNCES RESULTS OF THE ANNUAL MEETING Torrance, California, March 6, 1995--Geodynamics Corporation (NASDAQ GDYN) today announced that the Inspector of Elections with respect to its Annual Meeting of Shareholders held on February 16, 1995 had certified the results of the election for directors at the Meeting, finding that six nominees from the slate of directors presented by the management of Geodynamics had been elected and one nominee from the opposing slate presented by Alney A. Baham had been elected. Accordingly, the Company announced that the Inspector had certified that the Board of Directors elected at the Meeting consists of Thomas R. LaFehr, Robert L. Paulson, W. Richard Ellis, Donald L. Haas, Richard P. Smith, Frederick K. Evans, and Michael E. Edelson. Although Mr. Baham's slate received only enough votes at the meeting to elect one director, Mr. Baham did, apparently, obtain enough proxies to elect three of the seven members of the Board. Mr. Baham, however, failed to vote many of those proxies at the Annual Meeting. In order to carry out the desires of the shareholders who tried to vote for Mr. Baham's nominees, the Company has taken certain steps to place three of the Baham nominees on the Board. Prior to certification by the Inspector of the new Board, the Board of Directors of the Company determined to request the resignations of two of the newly-elected members (from management's slate) in order that two new directors (from Mr. Baham's slate) could be appointed to fill the vacancies. Accordingly, Messrs. Smith and Evans have agreed to resign from the Board and the new Board, consisting of four members of management's slate and Dr. Edleson, will vote to fill the vacancies created by such resignations. It is expected that Bruce J. Gordon and Will Stackhouse, will be appointed to fill the two vacancies. The shareholders also approved the Company's 1994 Employee Stock Bonus Plan and ratified the appointment of Arthur Andersen and Company as Geodynamics' independent public accountants for the 1995 Corporate Fiscal Year. Robert L. Paulson, Chairman of the Board and Chief Executive Officer of the Company, stated that he and the other members of Geodynamics' management were looking forward to working with the new Board of Directors in achieving everyone's objective of maximization of the value of the shareholders' investment in the Company. For further information, contact Joanne M. Dunlap at (310) 781-3612. -----END PRIVACY-ENHANCED MESSAGE-----