-----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, OmpPATwXSaG2i2iS92uhu1Ko05flhcmxE3A5mH+fxL7CCWmizz3+DjzS4BO7fTdZ 6kJDNM+biPzHDux+k2wxZA== 0000806388-96-000003.txt : 19960117 0000806388-96-000003.hdr.sgml : 19960117 ACCESSION NUMBER: 0000806388-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960116 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NICHOLS RESEARCH CORP /AL/ CENTRAL INDEX KEY: 0000806388 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 630713665 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15295 FILM NUMBER: 96503753 BUSINESS ADDRESS: STREET 1: 4040 MEMORIAL PKWY SOUTH CITY: HUNTSVILLE STATE: AL ZIP: 35802 BUSINESS PHONE: 2058831140 10-Q 1 ================================================================== 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 November 30, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From ___________________ To __________________ Nichols Research Corporation _____________________ Commission File Number 0-15295 (Exact name of registrant as specified in its charter) _____________________ DELAWARE 63-0713665 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification no.) 4040 Memorial Parkway, South Huntsville, Alabama 35802-1326 (205) 883-1140 (Address, including zip code, of principal offices) _____________________ NO CHANGE (Former name, address and fiscal year if changed since last report) _____________________ 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 practical date. COMMON STOCK, $.01 PAR VALUE 6,366,956 SHARES OUTSTANDING ON November 30 ,1995 _____________________ ================================================================== FORM 10-Q NICHOLS RESEARCH CORPORATION QUARTERLY REPORT FOR THE PERIOD ENDED NOVEMBER 30, 1995 INDEX Part I. FINANCIAL INFORMATION Item 1. Financial Statements Statements of Income for the Three Months Ended November 30, 1995 and November 30, 1994 (Unaudited) Balance Sheets as of November 30, 1995 and August 31, 1995 (Unaudited) Statements of Changes in Stockholders' Equity for the Three Months Ended November 30, 1995 and November 30, 1994 (Unaudited) Statements of Cash Flows for the Three Months Ended November 30, 1995 and November 30, 1994 (Unaudited) Notes to Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II.OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Signatures FORM 10-Q NICHOLS RESEARCH CORPORATION PART I - FINANCIAL INFORMATION Item 1 - Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months Ended November 30, November 30, 1995 1994 ---------------------------------- (amounts in thousands except share data) Revenues $ 49,030 $ 36,231 Costs and expenses: Direct and allocable contract costs 41,671 31,638 General and administrative expenses 4,421 2,323 ---------------------------------- Total costs and expenses 46,092 33,961 ---------------------------------- Operating profit 2,938 2,270 Other income (expense): Interest expense (39) - Other income, principally interest 272 292 ---------------------------------- Income before income taxes 3,171 2,562 Income taxes 1,157 934 ---------------------------------- Net income $ 2,014 $ 1,628 ================================== Earnings per share $ .30 $ .27 ================================== Weighted average number of common and common equivalent shares 6,642,305 6,136,567 ================================== NOTE: The Company has not declared or paid dividends in any of the periods presented. FORM 10-Q NICHOLS RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) November 30, August 31, 1995 1994 ---------------------------------- (amounts in thousands) ASSETS Current assets: Cash and temporary cash investments $ 9,489 $ 17,196 Accounts receivable 59,920 53,103 Deferred income taxes 1,351 1,351 Other 1,863 1,593 ---------------------------------- Total current assets 72,623 73,243 Long-term investments 4,518 4,530 Property and equipment: Computers and related equipment 12,611 11,973 Furniture, equipment and improvements 5,611 5,149 Equipment-contracts 5,771 5,771 ---------------------------------- 23,993 22,893 Less accumulated depreciation 12,206 11,434 ---------------------------------- Net property and equipment 11,787 11,459 Goodwill (net of accumulated amortization) 8,614 8,803 Other assets 3,226 2,844 ---------------------------------- Total assets $ 100,768 $ 100,879 ================================== FORM 10-Q NICHOLS RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) CONTINUED November 30, August 31, 1995 1995 --------------------------------- (amounts in thousands except share data) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,148 $ 16,886 Accrued compensation and benefits 7,152 6,897 Income taxes payable 1,224 969 Current maturities of long-term debt 1,187 1,187 Other 823 531 --------------------------------- Total current liabilities 23,534 26,470 Deferred income taxes 1,195 1,195 Long-term debt: Industrial development bonds 2,000 2,000 Long-term notes 3,126 3,366 --------------------------------- Total long-term debt 5,126 5,366 Stockholders' equity: Common stock, par value $.01 per share Authorized - 10,000,000 shares Issued - 6,551,333 and 6,439,227 shares respectively 65 64 Additional paid-in capital 25,308 24,258 Retained earnings 47,683 45,669 Less cost of treasury stock - 184,377 shares (2,143) (2,143) --------------------------------- Total stockholders' equity 70,913 67,848 --------------------------------- Total liabilities and stockholders' equity $ 100,768 $ 100,879 ================================= FORM 10-Q NICHOLS RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Additional Total Common Stock Paid-In Retained Treasury Stockholders' Shares Amount Capital Earnings Stock Equity ------------------------------------------------------------- (amounts in thousands except share data) For the Three Months Ended November 30, 1995 ---------------------------------------------- Balance, August 31, 1995 6,439,227 $ 64 $ 24,258 $ 45,669 $(2,143) $67,848 Exercise of stock options 101,991 1 850 - - 851 Employee stock purchases 10,115 - 200 - - 200 Net income - - - 2,014 - 2,014 ------------------------------------------------------------- Balance, November 30, 1995 6,551,333 $ 65 $ 25,308 $ 47,683 $(2,143) $70,913 ============================================================= For the Three Months Ended November 30, 1994 --------------------------------------------- Balance, August 31, 1994 6,262,137 $ 63 $ 22,528 $ 38,467 $(3,750) $57,308 Exercise of stock options 35,125 - 205 - - 205 Employee stock purchases 12,112 - 128 - - 128 Sale of 70,000 shares of treasury stock - - - - 815 815 Net income - - - 1,628 - 1,628 ----------------------------------------------------------- Balance, November 30, 1994 6,309,37 $ 63 $ 22,861 $ 40,095 $(2,935) $60,084 ===========================================================
FORM 10-Q NICHOLS RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended November 30, November 30, 1995 1994 ---------------------------- (amounts in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,014 $ 1,628 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 1,017 599 Loss on sale of investments - 29 Changes in assets and liabilities net of effects of acquisitions: Accounts receivable (6,817) (1,933) Other assets (296) 936 Accounts payable (3,738) (2,234) Accrued compensation and benefits 255 1,045 Income taxes payable 255 (6) Other current liabilities 292 - ---------------------------- Total adjustments (9,032) (1,564) ---------------------------- Net cash provided (used) by operating activities (7,018) 64 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (1,100) (230) Payment for non-compete agreement - (900) Payments for acquisitions, net of cash acquired - (905) Payment for investment in HealthGate Date Corp. (400) - Proceeds from sale of long-term investments - 289 ---------------------------- Net cash used by investing activities (1,500) (1,746) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 1,051 333 Proceeds from sale of treasury stock - 734 Payments of long-term debt (240) (240) ---------------------------- Net cash provided by financing activities 811 827 ---------------------------- Net decrease in cash and temporary cash investments (7,707) (855) Cash and temporary cash investments at beginning of period 17,196 19,355 ---------------------------- Cash and temporary cash investments at end of period $ 9,489 $ 18,500 ============================ FORM 10-Q NICHOLS RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) CONTINUED SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: Deferred compensation resulting from the exercise of restricted stock options and issuance of treasury stock $ - $ 81 FORM 10-Q NICHOLS RESEARCH CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) November 30, 1995 NOTE 1 - BASIS OF PRESENTATION The condensed consolidated financial statements (and all other information in this report) have not been examined by independent auditors, but in the opinion of the Company, all adjustments, consisting of the normal recurring accruals necessary for a fair presentation of the results for the period, have been made. The condensed consolidated financial statements include the accounts of Nichols Research Corporation and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. NOTE 2 - INVESTMENT In October 1995, the Company entered into an agreement to purchase 1,000 shares of Series B Preferred Stock of HealthGate Data Corporation (HealthGate). HealthGate provides a biomedical and health information system on the World Wide Web. The agreement provides for four equal purchase installments of $400,000, contingent upon HealthGate achieving certain milestones as defined in the agreement. The first installment was made in October 1995. The 1,000 shares of Preferred Stock are convertible to 20% of the common stock on a fully diluted basis at the date of the agreement. NOTE 3 - RECLASSIFICATION Certain prior period amounts have been reclassified to conform with the current period's presentation. FORM 10-Q NICHOLS RESEARCH CORPORATION Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The Company provides information systems and technology services to agencies of the Department of Defense, non-defense federal agencies, state governments and commercial entities. The major portion of the Company's revenues result from services performed under U.S. Government contracts, either directly or through subcontracts. The following tables set forth, for the periods indicated, the percentage change in certain items in the consolidated statements of income and the percentages such items bear to consolidated revenues. For the Three Months Ended November 30, November 30, Amount of Percent 1995 1994 Change Change ------------------------------------------------ (amounts in thousands ) Revenues $ 49,030 $ 36,231 $12,799 35.3% Costs and expenses: Direct and allocable costs 41,671 31,628 10,033 31.7 General and administrative expenses 4,421 2,323 2,098 90.3 ------------------------------------ Total costs and expenses 46,092 33,961 12,131 35.7 ------------------------------------ Operating profit 2,938 2,270 668 29.4 Other income (expense): Interest expense (39) - 39 N/A Other income, principally interest 272 292 (20) (6.8) ------------------------------------ Income before income taxes 3,171 2,562 609 23.8 Income taxes 1,157 934 223 23.9 ------------------------------------ Net income $ 2,014 $ 1,628 $ 386 23.7% ==================================== FORM 10-Q NICHOLS RESEARCH CORPORATION RESULTS OF OPERATIONS (CONTINUED) For the Three Months Ended November 30,November 30, 1995 1994 -------------------------- Revenues 100.0% 100.0% Costs and expenses: Direct and allocable costs 85.0 87.3 General and administrative expenses 9.0 6.4 -------------------------- Total costs and expenses 94.0 93.7 -------------------------- Operating profit 6.0 6.3 Interest expense (0.1) 0.0 Other income 0.6 0.8 -------------------------- Income before income taxes 6.5 7.1 Income taxes 2.4 2.6 -------------------------- Net income 4.1% 4.5% ========================== FORM 10-Q NICHOLS RESEARCH CORPORATION Revenues for the three months ended November 30, 1995 increased 35.3%, or $12.8 million, as compared to the three months ended November 30, 1994. The increase was primarily the result of the revenues from an information technology services contract with a commercial customer and the revenues contributed by two information technology subsidiaries acquired late in the 1995 fiscal year. Revenue from Government Systems and Technologies contracts was approximately $27,546,000 (56%), revenue from Government Information Services contracts was approximately $10,458,000 (21%) and revenue from Commercial/Healthcare Information Services contracts was approximately $11,026,000 (23%) for the three months ended November 30, 1995. Costs and expenses increased to 94.0% of revenues for the three months ended November 30, 1995 as compared to 93.7% for the three months ended November 30, 1994. The reduction in direct and allocable costs as a percentage of revenues is offset by increases in general and administrative expenses which reflect the efforts to use contract cost reductions to fund planned increases in business development and marketing efforts. Other income of $272,000 consists primarily of interest income. Substantially all available cash is invested in interest bearing accounts and fixed income instruments. Income taxes were approximately 36.5% of pretax income for the three months ended November 30, 1995, consistent with the same period in the prior year. Net income increased 23.7%, or $386,000, for the reasons discussed above. During the three months ended November 30, 1995, the Company won new contract awards totaling approximately $16,458,000 as compared to approximately $44,837,000 for the three months ended November 30, 1994. The new contract awards for the three months ended November 30, 1994 included one contract award of $35,800,000. The Company's backlog at November 30, 1995 and November 30, 1994, was as follows: 1995 1994 ---- ---- Base period contracts and exercised options, net of services provided $261,924,000 $273,428,000 Options 211,803,000 262,760,000 --------------------------- Total $473,727,000 $536,188,000 =========================== FORM 10-Q NICHOLS RESEARCH CORPORATION Backlog at November 30, 1995 decreased compared to November 30, 1994 due to the lower value of new contract awards. At November 30, 1995 the Company has proposals outstanding on several substantial contracts for which the award dates have been delayed. The Company's business is dependent upon its ability to win new contracts, the funding levels of awarded contracts and the Company's ability to perform under contract provisions. FORM 10-Q NICHOLS RESEARCH CORPORATION FINANCIAL CONDITION For the three months ended November 30, 1995, operating activities used $7,018,000 in cash as compared to providing $64,000 during the three months ended November 30, 1994. The increase in use of cash was the result of the increase in sales and accounts receivable. The Company realized proceeds from the issuance of common stock during the three months ended November 30, 1995 of $1,051,000 as compared to $333,000 during the three months ended November 30, 1994. During the three months ended November 30, 1994 the Company reissued 70,000 shares of treasury stock, providing cash of $734,000. Working capital was $49,089,000 at November 30, 1995 as compared to $45,989,000 at November 30, 1994. The Company also has $4,518,000 invested primarily in fixed income instruments at November 30, 1995, as compared to $7,576,000 at November 30, 1994. The Company has a bank line of credit which provides for borrowing up to $73,500,000, secured primarily by accounts receivable. During the three months ended November 30, 1995, the Company had no outstanding borrowings under the provisions of this line of credit. Long-term debt includes a term note used to purchase computer hardware for lease to a customer under a system integration contract. The proceeds from an Alabama State Industrial Development Bond are being used to expand information technology programs. Purchases of property and equipment were $1,100,000 during the three months ended November 30, 1995, as compared to $230,000 during the three months ended November 30, 1994. The Company is upgrading its enterprise information systems as well as replacing capital assets in the normal course of business. The Company is actively pursuing new contracts for information system development and computer system integration activities which could require to the Company to acquire substantial amounts of computer hardware. The Company will also take advantage of opportunities to make strategic acquisitions, should they arise. The Company believes that its existing capital resources, together with available borrowing capacity, are sufficient to fund these objectives. FORM 10-Q NICHOLS RESEARCH CORPORATION PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits. Exhibit No. Description ----------- ----------- 27 Financial Data Schedule (b) The Company has not filed any reports on Form 8-K for the three months ended November 30, 1995. FORM 10-Q NICHOLS RESEARCH CORPORATION SIGNATURES MANAGEMENT REPRESENTATION The accompanying unaudited Consolidated Balance Sheets at November 30, 1995, and August 31, 1995 as well as the Consolidated Statements of Income, Consolidated Statements of Changes in Stockholders' Equity and Consolidated Statements of Cash Flows for the three months ended November 30, 1995 and 1994, have been prepared in accordance with instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation have been included. January 16, 1996 Allen E. Dillard - ------------------------ ------------------------- Date Allen E. Dillard Vice President and Chief Financial Officer (Principal Finance and Accounting Officer) 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. NICHOLS RESEARCH CORPORATION January 16, 1996 By: Allen E. Dillard - ------------------------ ------------------------- Date Allen E. Dillard Vice President and Chief Financial Officer (Principal Finance and Accounting Officer) EX-27 2
5 1,000 3-MOS AUG-31-1995 NOV-30-1995 9,489 0 59,920 0 0 72,623 23,993 12,206 100,768 23,534 5,126 65 0 0 70,848 100,768 49,030 49,030 41,671 41,671 0 0 39 3,171 1,157 2,014 0 0 0 2,014 .30 .30
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