-----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, PxIKx9ovSmK2I63g39vp3zJaHOXK58hpfh44qSFKNYR2qxMok+8942DuNqS+l37C K7Xtluz59EJCvAD/RFI2bQ== 0000769409-96-000002.txt : 19960117 0000769409-96-000002.hdr.sgml : 19960117 ACCESSION NUMBER: 0000769409-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951201 FILED AS OF DATE: 19960116 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNAMICS CORP CENTRAL INDEX KEY: 0000769409 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [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: 96503720 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 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: December 1, 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: 0-15034 GEODYNAMICS CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) California 95-2502865 - --------------------------------- ---------------------- (State or other jurisdiction (I.R.S. employer of incorporation or organization) identification number) 21171 Western Avenue, Suite 110, Torrance, California 90501 ----------------------------------------------------------- (Address of principal executive office) (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 December 31, 1995 ------------ ----------------------------------- Common Stock 2,704,170 This document is comprised of 11 pages. -1- GEODYNAMICS CORPORATION AND SUBSIDIARIES FORM 10-Q December 1, 1995 INDEX Page Part I: FINANCIAL INFORMATION Item 1: Financial Statements Condensed Consolidated Balance Sheets as of December 1, 1995 (unaudited) and June 2, 1995 3 Condensed Consolidated Statements of Income (unaudited) for the three and six months ended December 1, 1995 and December 2, 1994 4 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended December 1, 1995 and December 2, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II: OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K 10 Signatures 11 -2- Part I. Financial Information GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
December 1, June 2, 1995 1995 ----------- ----------- (Unaudited) ASSETS Current Assets Cash $ 2,866,000 $ 2,310,000 Short-term investments 3,970,000 5,862,000 Contract receivables: Billed 12,419,000 12,614,000 Unbilled 2,700,000 1,910,000 Prepaid expenses and others 1,934,000 1,354,000 ----------- ----------- Total current assets 23,889,000 24,050,000 ----------- ----------- Equipment and Leasehold Improvements, at cost Equipment and leasehold improvements 28,421,000 28,098,000 Less accumulated depreciation and amortization (17,300,000) (16,615,000) ----------- ----------- Net equipment and leasehold improvements 11,121,000 11,483,000 ----------- ----------- Other Assets Noncurrent unbilled contract receivables 920,000 920,000 Investments 1,295,000 1,277,000 Goodwill, net of amortization of $113,000 at December 1, 1995 and $75,000 at June 2, 1995 1,387,000 1,425,000 Intangible assets, net of amortization of $1,070,000 at December 1, 1995 and $916,000 at June 2, 1995 926,000 1,080,000 Other assets 299,000 405,000 ----------- ----------- Total other assets 4,827,000 5,107,000 ----------- ----------- $39,837,000 $40,640,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 1,441,000 $ 2,907,000 Accrued expenses 3,581,000 3,229,000 Line of credit 647,000 747,000 Other current liabilities 650,000 1,429,000 ----------- ----------- Total current liabilities 6,319,000 8,312,000 ----------- ----------- Long-term liabilities Long-term debt, net of current portion 138,000 163,000 Other liabilities 1,696,000 1,709,000 ----------- ----------- Total long-term liabilities 1,834,000 1,872,000 ----------- ----------- Shareholders' Equity Common stock, without par value Authorized - 10,000,000 shares Outstanding - 2,699,000 at December 1, 1995 and 2,605,000 shares at June 2, 1995 12,552,000 11,910,000 Retained earnings 19,143,000 18,542,000 Foreign currency translation (11,000) 4,000 ----------- ----------- Total shareholders' equity 31,684,000 30,456,000 ----------- ----------- $39,837,000 $40,640,000 =========== =========== The accompanying notes are an integral part of these consolidated statements.
-3- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Three Months Ended For the Six Months Ended -------------------------- -------------------------- December 1, December 2, December 1, December 2, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Revenues $16,055,000 $14,619,000 $32,053,000 $27,763,000 Costs and Expenses 15,405,000 13,763,000 30,583,000 26,095,000 ----------- ----------- ----------- ----------- Income from Operations 650,000 856,000 1,470,000 1,668,000 ----------- ----------- ----------- ----------- Other Income/(Expense) Interest income 92,000 103,000 159,000 172,000 Interest expense (27,000) (22,000) (50,000) (44,000) ----------- ----------- ----------- ----------- Net other 65,000 81,000 109,000 128,000 ----------- ----------- ----------- ----------- Income before Provision for Income Taxes 715,000 937,000 1,579,000 1,796,000 Provision for Income Taxes 275,000 360,000 608,000 691,000 ----------- ----------- ----------- ----------- Net Income $ 440,000 $ 577,000 $ 971,000 $ 1,105,000 =========== =========== =========== =========== Earnings per Common Share $ 0.15 $ 0.22 $ 0.33 $ 0.43 =========== =========== =========== =========== Weighted average number of common shares outstanding (Note 3) 2,947,000 2,632,000 2,905,000 2,571,000 =========== =========== =========== =========== The accompanying notes are an integral part of these consolidated statements.
-4- GEODYNAMICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended ------------------------ December 1, December 2, 1995 1994 ----------- ----------- Cash Flows from Operating Activities Net income $ 971,000 $1,105,000 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and amortization 1,523,000 1,368,000 Loss on retirement of capital assets -- 1,000 Nonqualified stock options, charged to operations 32,000 35,000 Deferred income taxes 14,000 -- (Increase) decrease in: Contract receivables (1,222,000) 783,000 Refundable income taxes (160,000) -- Prepaid expenses and other (420,000) 60,000 Other noncurrent assets 63,000 5,000 Increase (decrease) in: Accounts payable (1,466,000) 211,000 Accrued expenses 352,000 (236,000) Other current liabilities (152,000) 24,000 Other liabilities (27,000) (283,000) ---------- ---------- Net cash provided by (used in) operating activities (492,000) 3,073,000 ---------- ---------- Cash Flows from Investing Activities: Purchases of short-term investments (3,608,000) (2,071,000) Sales of short-term investments 5,500,000 2,445,000 Purchase of LCT, net of acquired cash of $1,319,000 -- (1,419,000) Employee loans, net 25,000 43,000 Purchases of property and equipment (969,000) (836,000) ---------- ---------- Net cash provided by (used in) investing activities 948,000 (1,838,000) ---------- ---------- Cash Flows from Financing Activities: Line of credit repayments (150,000) -- Line of credit borrowings 50,000 185,000 Proceeds from exercise of common stock options and tax benefits related to stock options 546,000 102,000 Repurchases of common stock (14,000) (103,000) Cash dividends paid (370,000) (359,000) Foreign currency translation (15,000) (3,000) Long-term subordinated debt (25,000) (389,000) Payments on notes receivable from sale of stock -- 3,000 Proceeds from employee stock purchase plan 78,000 108,000 ---------- ---------- Net cash provided by (used in) financing activities 100,000 (456,000) ---------- ---------- Net increase in cash 556,000 779,000 Cash at beginning of period 2,310,000 1,237,000 ---------- ---------- Cash at end of period $2,866,000 $2,016,000 ========== ========== Supplemental Disclosure of Cash Flow Information: Cash paid during the period - income taxes $ 857,000 $ 379,000 Cash paid during the period - interest $ 50,000 $ 44,000 The accompanying notes are an integral part of these consolidated statements.
-5- 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 2, 1995 included in the Company's 1995 Annual Report on Form 10-K. The Condensed Consolidated Balance Sheets at June 2, 1995 have been taken from the audited financial statements at that date and condensed. Note 2 - Investments The Company's short-term investments are stated at market, which equals cost, and consist of money market funds. 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.
Three Months Ended: Six Months Ended: ------------------------ ------------------------ December 1, December 2, December 1, December 2, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Net income $440,000 $577,000 $971,000 $1,105,000 =========== =========== =========== =========== Weighted average common shares outstanding 2,668,000 2,571,000 2,646,000 2,519,000 Dilutive effect of stock options 279,000 61,000 259,000 52,000 ----------- ----------- ----------- ----------- Weighted average shares used to compute earnings per common share 2,947,000 2,632,000 2,905,000 2,571,000 =========== =========== =========== ===========
-6- Note 4 - Material Transaction On October 18, 1995, the Company announced that a definitive agreement had been reached with Logicon, Inc. ("Logicon") concerning the acquisition of the Company's DoD-related business and would result in the divestiture of the Company's remaining assets, its interest in its LaFehr & Chan Technologies, Inc. ("LCT") subsidiary, either through a spin-off to the Company's shareholders, through sale of the stock or assets or a combination thereof. The transaction would result in the payment to Company shareholders of an estimated $11.08 to $11.25 per share, depending upon the amount of certain transaction expenses, on a fully diluted basis in cash, plus a pro rata distribution of shares in LCT, or an estimated range of $12.08 to $12.25 if a sale of LCT occurs. LCT would, in conjunction with the issuance of the LCT stock in a spin-off, apply for inclusion for trading on the NASDAQ SmallCap Market, or distribute the sales proceeds of a divestiture of the Company's interest in LCT. The transaction is subject to Geodynamics' shareholder approval and is conditional on the successful divestiture of LCT. Prior to the effective date of the proxy statement, the Company intends to continue in its efforts to dispose of its interest in LCT, and, if successful, will distribute the proceeds to Company shareholders in lieu of LCT shares. A proxy statement has been submitted to the Securities and Exchange Commission for comment. The shareholder's meeting to vote on the proposed transaction is expected to occur in early March 1996 and the closing before the end of March 1996. -7- GEODYNAMICS CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues were $16.1 million and $32.1 million in the three and six months ended December 1, 1995, respectively, an increase of 9.8% and 15.5%, respectively, over the $14.6 million and $27.8 million in the corresponding fiscal 1995 periods. These increases were attributable to higher marine and airborne survey activity for the LCT subsidiary, and a DoD contract with a higher volume of equipment purchases in the first half of fiscal 1996. Costs and expenses were $15.4 million and $30.6 million in the three and six months ended December 1, 1995, respectively, reflecting a decline in consolidated profit margins from 6.0% through six months of 1995 to 4.6% through the same period in fiscal 1996. This decline in profit margins is primarily attributable to expenses related to the planned divestiture of LCT and the proposed merger into Logicon, Inc. (see Note 4 in Notes to Condensed Consolidated Financial Statements and "Material Transaction" below). Earnings per share were $0.15 and $0.33 for the three and six months ended December 1, 1995, declining from $0.22 and $0.43 in the comparable periods ended December 2, 1994. The declines are attributable to lower profit margins (see above) and a higher weighted average number of shares outstanding in fiscal 1996, plus an increase in the dilutive effect of stock options due to higher market prices per share in the current quarter (see Note 3 in Notes to Condensed Consolidated Financial Statements). CAPITAL RESOURCES AND LIQUIDITY Cash and short-term investments decreased to $6.8 million at December 1, 1995 from $8.2 million at June 2, 1995. The decrease is due in large part to a decrease in accounts payable from $2.9 million at June 2, 1995 to $1.4 million at the end of the current quarter. In addition, outstanding contract receivables increased to $15.1 million from $14.5 million at June 2, 1995. Accounts receivable aging at December 1, 1995 was 91 days, decreasing slightly from 93 days at June 2, 1995. The balance sheet remains strong, with working capital up approximately $1.8 million to a total of $17.6 million and a current ratio of 3.8 to 1 at December 1, 1995, compared with 2.9 to 1 at June 2, 1995. The Company maintains an $8.0 million line of credit with a bank; at December 1, 1995, borrowings were $647,000 under this line, down from $747,000 at June 2, 1995. Borrowings under the line of credit, which are guaranteed by the parent company, were to provide working capital for the Company's LaFehr & Chan Technologies, Inc. ("LCT") subsidiary. -8- MATERIAL TRANSACTION As discussed in the Notes to the Consolidated Financial Statements, the Company reached a definitive agreement with Logicon, Inc. ("Logicon") in which the Company's DoD business would be acquired by Logicon. The agreement, announced on October 18, 1995, is subject to approval by Geodynamics shareholders, and is expected to be voted on in early March of 1996. If approved, the agreement calls for the payment of an estimated $11.08 - $11.25 per share, depending upon the amount of certain transaction expenses, to holders of Geodynamics stock, plus a pro rata distribution of shares in the Company's wholly-owned subsidiary LCT, if a spin-off as a separate, publically-traded company in conjunction with the merger occurs, or an estimated range of $12.08 to $12.25 per share in the event of a sale of LCT, in which there would be a distribution of the sale proceeds. The spin off would occur if the Company is unable to otherwise dispose of LCT, which will not be included as part of the business acquired by Logicon. The Company intends to continue to attempt to dispose of its interest in LCT until the effective date of the proxy statement, and, if successful, will distribute the proceeds to Geodynamics shareholders in lieu of LCT shares. -9- 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 6. Exhibits and reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K Date Item Reported ---------------- ----------------------------------- October 18, 1995 Item 5 - Logicon Merger Agreement October 18, 1995 Item 5 - LCT Agreement October 18, 1995 Item 5 - LCT Agreement w/Attachment -10- 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: January 15, 1996 By: /s/ David P. Nelson ----------------------------------------- David P. Nelson, Vice-President, Chief Financial Officer, and duly authorized to sign on behalf of registrant DATE: January 15, 1996 By: /s/ Robert G. Cook ----------------------------------------- Robert G. Cook, Corporate Controller and Chief Accounting Officer -11- EX-27 2
5 6-MOS MAY-31-1996 DEC-1-1995 2,866,000 3,970,000 15,119,000 0 0 23,889,000 28,421,000 (17,300,000) 39,837,000 6,319,000 0 12,552,000 0 0 19,132,000 39,837,000 32,053,000 32,053,000 30,583,000 30,583,000 0 0 50,000 1,579,000 608,000 971,000 0 0 0 971,000 $0.33 $0.33
-----END PRIVACY-ENHANCED MESSAGE-----