This paper document is being filed pursuent to Rule 902(g) of Regulation S-T
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 1997
Commission file number 0-26596
Computational Systems, Incorporated
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Tennessee 62-1198047
- ---------------------------------------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
of Incorporation or Organization)
835 Innovation Drive
Knoxville, Tennessee 37932
- --------------------------------------- ---------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant'sRegistrants Telephone Number, Including Area Code: (423) 675-2110
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
Common Stock outstanding - 5,003,8455,023,023 shares at March 31,June 30, 1997
Page 1 of 14 pages.
Exhibit Index on page 13 .
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
- -----------------------------------------------------------------------------
Consolidated Condensed Balance Sheets
Consolidated Condensed Statements of Operations
Consolidated Condensed Statements of Cash Flows
Notes to Consolidated Condensed Financial Statements
COMPUTATIONAL SYSTEMS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
(Unaudited) (Audited)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 692,174 $ 4,576,801
Trade accounts receivable, less
allowance for doubtful accounts 16,062,089 15,656,516
Inventories 3,144,321 3,190,964
Prepaid expenses and other current assets 903,485 906,733
----------- -----------
Total current assets 20,802,069 24,331,014
----------- -----------
Property, plant and equipment:
Land 729,204 729,204
Building and improvements 7,812,000 6,714,979
Equipment and furniture 12,008,329 10,625,614
Construction-in-Progress ------- 1,293,587
----------- -----------
20,549,533 19,363,384
Less accumulated depreciation (6,479,637) (5,879,464)
----------- -----------
Property, plant and equipment, net 14,069,896 13,483,920
----------- -----------
Other assets
Other assets 826,226 552,777
Goodwill 6,194,663 6,292,490
Other intangible assets 664,288 612,646
----------- -----------
Total assets $42,557,142 $45,272,847
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,193,819 $ 2,598,425
Accrued liabilities 3,975,925 7,222,579
Income taxes payable (31,938) 1,026,110
Deferred maintenance contract revenue 2,329,947 2,070,411
Line of credit 519,000 -------
----------- -----------
Total current liabilities 8,986,753 12,917,525
Deferred maintenance contract revenue 612,661 668,862
----------- -----------
Total liabilities 9,599,414 13,586,387
----------- -----------
Shareholders' equity:
Common stock,no par value, 50,000,000 shares authorized, 18,508,561 18,034,208
5,003,845 and 4,991,618 shares issued and outstanding
in 1997 and 1996, respectively
Additional paid-in capital 951,230 865,805
Retained earnings 13,497,937 12,786,447
----------- -----------
Total shareholders' equity 32,957,728 31,686,460
----------- -----------
Total liabilities and shareholders' equity $42,557,142 $45,272,847
=========== ===========
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 816,516 $ 4,576,801
Trade accounts receivable,
less allowance for doubtful acccounts 15,399,795 15,656,516
Inventories 3,504,918 3,190,964
Prepaid expenses and other current assets 935,326 906,733
---------- ----------
Total current assets 20,656,555 24,331,014
---------- ----------
Property, plant and equipment:
Land 729,204 729,204
Building and improvements 7,829,143 6,714,979
Equipment and furniture 13,071,978 10,625,614
Construction-in-Progress ------- 1,293,587
---------- ----------
21,630,325 19,363,384
Less accumulated depreciation (7,061,724) (5,879,464)
---------- ----------
Property, plant and equipment, net 14,568,601 13,483,920
---------- ----------
Other assets
Capitalized R&D and other assets 1,187,226 552,777
Goodwill 6,109,847 6,292,490
Other intangible assets 646,480 612,646
---------- ----------
Total assets $43,168,709 $45,272,847
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,522,471 $ 2,598,425
Accrued liabilities 4,219,207 7,222,579
Income taxes payable (415,536) 1,026,110
Deferred maintenance contract revenue 2,337,362 2,070,411
Line of credit 1,438,000 -------
---------- ----------
Total current liabilities 9,101,504 12,917,525
Deferred maintenance contract revenue 694,090 668,862
---------- ----------
Total liabilities 9,795,594 13,586,387
---------- ----------
Shareholders' equity:
Common stock,no par value, 50,000,000
shares authorized, 5,023,023 and
4,991,618 shares issued and outstanding
in 1997 and 1996, respectively 18,639,006 18,034,208
Additional paid-in capital 951,230 865,805
Retained earnings 13,782,879 12,786,447
---------- ----------
Total shareholders' equity 33,373,115 31,686,460
---------- ----------
Total liabilities and shareholders' equity $43,168,709 $45,272,847
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
COMPUTATIONAL SYSTEMS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, March 31,Six Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
Revenues, net:
Product $ 8,721,280 $ 7,932,848$9,035,800 $8,354,790 $17,757,080 $16,287,638
Services 5,753,268 2,798,4455,411,240 2,854,602 11,164,508 5,653,047
----------- ----------- 14,474,548 10,731,293----------- -----------
14,447,040 11,209,392 28,921,588 21,940,685
Cost of revenues:
Product 2,178,165 2,316,0552,254,134 2,014,666 4,432,299 4,330,721
Services 4,018,907 2,180,2554,188,659 2,299,255 8,207,566 4,479,510
----------- ----------- 6,197,072 4,496,310----------- -----------
6,442,793 4,313,921 12,639,865 8,810,231
Gross margin 8,277,476 6,234,9838,004,247 6,895,471 16,281,723 13,130,454
----------- ----------- ----------- -----------
Costs and expenses:
Selling, general and administrative 5,634,274 4,355,0005,888,239 4,224,642 11,522,513 8,579,642
Research & development 1,611,124 1,206,1961,640,549 1,325,457 3,251,673 2,531,653
----------- ----------- 7,245,398 5,561,196----------- -----------
7,528,788 5,550,099 14,774,186 11,111,295
----------- ----------- ----------- -----------
Income from operations 1,032,078 673,787475,459 1,345,372 1,507,537 2,019,159
----------- ----------- ----------- -----------
Other income (expense)
Interest expense (10,477) (1,146)(41,345) (221) (51,822) (1,366)
Interest income 48,173 117,589(9,488) 134,872 38,685 252,460
Other income (expense), net 8,242 (5,859)7,053 4,347 15,295 (1,512)
----------- ----------- 45,938 110,584----------- -----------
(43,780) 138,998 2,158 249,582
----------- ----------- ----------- -----------
Income before taxes 1,078,016 784,371431,679 1,484,370 1,509,695 2,268,741
Provision for income taxes 366,526 282,375146,736 534,374 513,262 816,749
----------- ----------- ----------- -----------
Income after taxes $711,490 $501,996
=========== ===========$284,943 $949,996 $996,433 $1,451,992
----------- ----------- ----------- -----------
Earnings per share $0.14 $0.10
=========== ===========$0.06 $0.19 $0.19 $0.29
Weighted average shares and equivalents outstanding 5,266,400 5,018,945
=========== ===========5,169,688 5,068,388 5,191,375 5,047,363
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated condensed
financial statementsstatements.
COMPUTATIONAL SYSTEMS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)(Unaudited)
ThreeSix Months Ended
March 31, March 31,-------------------------
June 30, June 30,
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $711,490 $501,996$996,433 $1,451,992
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 732,395 403,6561,484,383 1,120,084
Deferred income taxes 2,000----- (176,000)
Changes in operating assets and liabilities:
Accounts receivable (396,535) 553,405265,759 701,078
Income taxes refundable (payable) (981,661) (72,073)(1,365,259) 66,306
Inventories 37,334 (264,864)(327,394) (374,029)
Prepaids & other current assets 3,248 71,587(28,593) 32,587
Other assets 5,697 (40,703)4,410 (170,062)
Accounts payable (399,763) (16,760)(1,067,802) (323,789)
Accrued liabilities (428,359) (516,951)(185,077) (68,756)
Deferred maintenance contract revenue 203,335 347,497292,179 477,876
---------- ----------
Net cash (used) provided by operating activities (510,819) 790,79069,039 2,737,287
---------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,184,973) (1,108,041)(2,301,956) (2,965,297)
Purchase of business (2,385,250)
Investment in other assets (359,050)(743,719) ------
---------- ----------
Net cash used in investing activities (3,929,273) (1,108,041)(5,430,925) (2,965,297)
---------- ----------
Cash flows from financing activities:
Net borrowings under (repayments on) line of credit 519,0001,438,000 ------
Repayments of long-term debt (4,843) (5,821)(8,152) (8,994)
Proceeds from issuance of common stock 41,308 59,610171,753 279,757
---------- ----------
Net cash provided by financing activities 555,465 53,7891,601,601 270,763
---------- ----------
Net increase (decrease) in cash and cash equivalents (3,884,627) (263,462)(3,760,285) 42,753
Cash and cash equivalents, at beginning of period 4,576,801 8,824,332
---------- ----------
Cash and cash equivalents, at end of period $692,174 $8,560,870
========== ==========$816,516 $8,867,085
---------- ----------
The accompanying notes are an integral part of these consolidated condensed
financial statements.
COMPUTATIONAL SYSTEMS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS:
Information in the accompanying financial
statements and notes to the financial statements for the
interim periods is unaudited. The accompanying unaudited
consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of regulation S-X.
Accordingly, they do not include all the information and
footnotes required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
threesix months ended March 31,June 30, 1997, are not necessarily
indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's Form 10-K for December 31, 1996.
2. INVENTORIES:
Inventories consist of the following:
March 31,June 30, December 31,
1997 1996
(Unaudited) (Audited)
----------- ---------------------
Raw Materials 1,428,088$1,561,539 $1,406,893
Work in-process 574,127Work-in-process 748,962 649,589
Finished goods, net 1,142,1061,194,417 1,134,482
----------- -----------
$3,144,321----------
$3,504,918 $3,190,964
=========== =====================
3. CASH FLOW INFORMATION:
March 31, March 31,June 30, June 30,
1997 1996
-------- ------------------- -----------
(Unaudited) (Unaudited)
Supplemental disclosures of cash flows:
Interest paid $ 36238,638 $ 1,4731,693
Income taxes paid, net $609,000 $461,899
On January 2, 1997 CSI issued$904,000 $857,894
The Company entered into the remainingfollowing noncash transaction
to purchase M&D: common stock to the former owners of
Maintenance & Diagnostic L.L.C. per the purchase agreement dated October 28,
1996. The value of the stock transferred wasvalued at $433,045.
4. RESEARCH AND DEVELOPMENT:
The majority of research and development costs are
expensed as incurred. Other research and development costsCosts incurred in developing a
product during the period that begins when the product's
prototype has been established and ending when the product
is available for general release are capitalized and are
amortized over the economic life of the product. Such
costs capitalized in the threesix months ended March 31,June 30, 1997
amounted to $281,146.$638,860. These costs will be amortized on
a per unit sold basis.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31,June 30, 1997 and March 31,June 30, 1996
Revenues, Net. Net revenues increased 34.9%28.9% in the three
months ended March 31,June 30, 1997 ("the(the 1997 quarter")quarter) to $14.5$14.4 million,
compared to $10.7$11.2 million during the three months ended March 31,June 30,
1996 ("the(the 1996 quarter")quarter). Revenue from the sale of products
increased 9.9%8.2% to $8.7$9.0 million in the 1997 quarter from $7.9$8.4
million in the 1996 quarter. The increase in product revenues is
due primarily to significant increases in the 2120 two channel
vibration analysis,
motor, and corrective product line, the latest version of the Company's original
product line.lines offset slightly by sales
decreases in other operating divisions. Service revenues
increased 105.6%89.6% to $5.8$5.4 million in the 1997 quarter from $2.8$2.9
million in the 1996 quarter primarily as a result of thea fourth
quarter, 1996, acquisition of Maintenance and Diagnostics LLC ("M&D"), an operator
of research, service and training centers for the electric power industry,
latea services company based in
1996 andPhiladelphia, Pennsylvania as well as increases in technical and customerother services
driven by continuing investments in sales and marketing. Although
net revenues increased significantly, the level of net revenues reached
was not sufficient to support investments made to increase in product sales.revenues.
Cost of Revenue. Total costs of revenues increased 37.8%49.3%
to $6.2$6.4 million in the 1997 quarter from $4.5$4.3 million in the 1996
quarter. As a percentage of net revenues, total cost of revenue
increased from 41.9%38.5% in the 1996 quarter to 42.8%44.6% in the 1997
quarter due to the increase in the level of services activity
whichthat has a lower gross margin than product revenues. Product
costs decreased 6.0%increased 11.9% to $2.2$2.3 million in the 1997 quarter from
$2.0 million in the 1996 quarter primarily due to the increased
level of product sales. Service costs increased 82.2% to $4.2
million in the 1997 quarter from $2.3 million in the 1996 quarter
primarily due to favorable pricing that resulted
from purchasing negotiations and improved efficiencies in the manufacturing process. Service costs increased 84.3% to $4.0 million in the
1997 quarter from $2.2 million in the 1996 quarter primarily due to theaforementioned acquisition of M&D as well as the
increase in activity associated with the overall increase in
services revenues.
Selling, General and Administrative. SG&A expense
increased 29.4%39.4% to $5.6$5.9 million in the 1997 quarter from $4.4$4.2
million in the 1996 quarter. The increase was due primarily to
an increase in investments in market development as well as the
cost of administrative support related to the corresponding
increase in net revenues. Also, the company completed a staff
restructuring late in the second quarter which generated
additional severance costs. SG&A expense, as a percentage of net
revenues, decreasedincreased to 38.9%40.8% in the 1997 quarter from 40.6%37.7% in
the 1996 quarter.
Research and Development. Research and development
expenses increased by $404,928 or 33.6%23.8% to $1.6 million in the 1997 quarter
from $1.2$1.3 million in the 1996 quarter, reflecting increases in
the required level of support of a more diverse product line as
well as continued expenditures for the development of new
products. As a percentage of net product revenues, research and
development expenses increased to 18.5%18.2% in the 1997 quarter from
15.2%15.9% in the 1996 quarter.
Income from Operations. Income from operations for the
1997 quarter increased 53.2%decreased 64.7% to $1.0 million,$475,000, or 7.1%3.3% of net revenue,
from $674,000,$1.3 million, or 6.3%12.0% of net revenue, in the 1996 quarter.
Total operating expenses increased
by $1,684,202 or 30.3% to $7.2 millionAs stated in the 1997 quarter from $5.6 millionnet revenues section above, investments were made
early in the 1996 quarter.
Interestyear to attain a higher level of sales throughout the
Company. Due to net revenues falling short of those levels, operating
income was negatively impacted when compared to the second quarter of
1996. In an effort to improve operating income, the Company has taken a
number of steps including the following: total staffing was reduced by
approximately 10% in an effort to reduce overall costs and, in divisions
where sales were below expectations, management has taken corrective
actions to bring costs in line with sales, as well as, to grow sales.
Other Expense/Income. InterestOther expense increased in the 1997
quarter to $10,477 from $1,146$43,000 compared to other income of $139,000 in the
1996 quarter primarily as a resultdue to the use of available cash and draws made on the
Company's bank line of credit to finance continuing growth.
Interest income decreased 59.0%Income Taxes. The Company's effective tax rate for the
1997 quarter was approximately 34% compared to the 1996 quarter
rate of approximately 36%. The rate has improved due to the
utilization of available research and development tax credits,
the establishment of a foreign sales corporation, and the completion
of an internal analysis of the appropriate tax levels.
Comparison of Six Months Ended June 30, 1997 and June 30, 1996
Revenues, Net. Net revenues increased 31.8% in the six
months ended June 30, 1997 (the 1997 period) to $28.9 million,
compared to $21.9 million during the six months ended June 30,
1996 (the 1996 period). Revenue from the sale of products
increased 9.0% to $17.8 million in the 1997 quarter to $48,173period from $117,589$16.3
million in the 1996 period. The increase in product revenues is
due primarily to significant increases in the vibration analysis,
motor, and corrective product lines offset by sales decreases in
certain other operating divisions. Service revenues increased
97.5% to $11.2 million in the 1997 period from $5.7 million in
the 1996 period primarily as a result of a fourth quarter, 1996,
acquisition of a services company based in Philadelphia,
Pennsylvania as well as increases in other services driven by
continuing investments in sales and marketing. Although net
revenues increased significantly, the level of net revenues reached
was not sufficient to support investments made to increase revenues.
Specific measures are being taken to address the aforementioned
challenges as stated in the applicable sections covering the three
months ended June 30, 1997.
Cost of Revenue. Total costs of revenues increased 43.5%
to $12.6 million in the 1997 period from $8.8 million in the 1996
period. As a percentage of net revenues, total cost of revenue
increased from 40.2% in the 1996 period to 43.7% in the 1997
period due to the increase in the level of services activity
which has a lower gross margin than product revenues as well as
lower than desired margins on certain services business lines.
Product costs increased 2.3% to $4.4 million in the 1997 period
from $4.3 million in the 1996 period due to the increased level
of product sales offset by higher margins on certain product
lines and a favorable sales mix towards higher margin products.
Service costs increased 83.2% to $8.2 million in the 1997 period
from $4.5 million in the 1996 period primarily due to the
aforementioned 1996 fourth quarter acquisition and the cost
associated with the overall increase in services revenues.
Selling, General and Administrative. SG&A expense
increased 34.3% to $11.5 million in the 1997 period from $8.6
million in the 1996 period. The increase was due primarily to an
increase in investments in market development as well as the cost
of administrative support related to the corresponding increase
in net revenues. Also, the Company incurred severance costs in
conjunction with a staff restructuring late in the second
quarter. SG&A expense, as a percentage of net revenues,
increased to 39.8% in the 1997 period from 39.1% in the 1996
period.
Research and Development. Research and development
expenses increased by 28.4% to $3.3 million in the 1997 period
from $2.5 million in the 1996 period. This increase reflects
changes in the required level of support of a more diverse
product line as well as expenditures for the development of new
products, some of which are scheduled for release during the
third and fourth quarters of 1997. As a percentage of net
product revenues, research and development expenses increased to
18.3% in the 1997 period from 15.5% in the 1996 period.
Income from Operations. Income from operations for the
1997 period decreased 25.3% to $1.5 million, or 5.2% of net
revenue, from $2.0 million, or 9.2% of net revenue, in the 1996
period. Operating income decreased due to the aforementioned
problems noted in the discussion on the three months ended June
30, 1997.
Other Expense/Income. Other income in the 1997 period was
$2,000 versus other income of $249,000 in the 1996 period due to
the use of available cash levels being available for investment.balances and draws made on the
Company's line of credit to finance continuing growth.
Income Taxes. The Company's effective tax rate for the
1997 quarter was approximately 34% versus the 1996 quarter rate
of approximately 36%. The rate has improved due to the
utilization of available research and development tax credits, as well asthe
establishment of a foreign sales corporation.corporation, and the completion of
an internal analysis of appropriate tax levels.
Liquidity and Capital Resources
Since its inception, the Company has financed its operations
through a combination of cash flow from operations, bank
borrowings and equity capital. The Company's capital
requirements have arisen primarily in connection with purchases
of fixed and intangible assets, including acquisitions, and the
Company makes significant expenditures each year for research and
development and market development.
Net cash utilizedprovided by operating activities during the first
six months of 1997 was $69,000 while net cash provided by
operating activities during the first six months of 1996 was $2.7
million. The decrease in the 1997 quarter was
$510,819. Netnet cash provided by operating
activities was $790,790caused by decreases in the 1996
quarter. The change was caused primarily bylevel of net income,
refunds due from the recognition and payment of accrued expensesestimated income
tax liabilities, and a decrease in accounts payable.
Net cash used by investing activities increased from $2.9
million for the previous year. Investing activities primarily include additionssix months ended June 30, 1996 to property, plant$5.4 million
for the six months ended June 30, 1997. Capital expenditures
during the first six months of 1997 included final payments to
complete a fourth quarter 1996 services business acquisition and
equipmentthe capitalization of certain types of research and cash payments made to closedevelopment
costs which did not occur during the acquisition
of M&D.same period in 1996.
The Company maintains bank lines of credit that provide for
borrowings of up to $12.0 million based on a borrowing formula
and a minimum current ratio of 1.25 or better and
bearingbetter. The bank lines of credit
bear interest at the lender's base rate or the adjusted LIBOR rate
plus the applicable LIBOR margin at the Company's discretion.
The Company's total liabilities decreased to $9.6$9.8 million as
of March
31,1997June 30, 1997 as compared to $13.6 million as of December 31,
1996 reflectingdue to payments on obligations incurredmade in connection with the first half of 1997 to close a
fourth quarter acquisition, a decrease in the level of M&D as
well asincome
taxes payable due to payments made for prior year tax
liabilities, and refunds due from the recognition and payment of
outstandingestimated tax liabilities.
Although the Company has presently has neither acquisition
agreements nor arrangements, the Company may in the future make
strategic acquisitions of other providers of maintenance products
or services using stock, cash, debt or a combination thereof.
Depending on the terms of the acquisition, the Company may need
to incur additional indebtedness or issue equity securities to
make any such acquisition.
The Company routinely engages in transactions in foreign
countries. Substantially all of the Company's transactions are
denominated in U.S. currency, thereby limiting the Company's
exposure to fluctuations in foreign currency exchange rates.
In February 1997, the FASB issued Statement of Accounting Standards No.
128, Earnings Per Share (EPS). The Statement simplifies the standards for
computing earnings per share by replacing the presentation of primary earnings
per share with a presentation of basic earnings per share. Additionally, the
Statement requires dual presentation of basic and diluted EPS on the face of
the income statement and requires a reconciliation of the numerator and
denominator of the diluted EPS calculation. The Company plans to adopt the
provisions of Statement 128 in fiscal year 1997 and the impact on the
Company's financial statements has not been determined.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(11) Statement re: computation of per share earnings
(27) Financial data schedule
(b) No reports on Form 8-K were filed for the quarter ended March 31, 1996.June 30, 1997.
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 thereunto duly authorized.
COMPUTATIONAL SYSTEMS, INCORPORATED
Date: May 13,August 11, 1997 By: /s/ Ronald G. Canada
--------------------------------------------------------------------------
Ronald G. Canada, Chairman and
Chief Executive Officer
By: /s/ Bryan J. Collier
------------------------------------
Bryan J. Collier,Tomas A. Valunas
--------------------------------------
Tomas A. Valunas, Vice President of
Finance and Chief Financial Officer
Exhibit Index
Sequential
Item
No. Description
---------- ----------------------------------------------------------------------------------------------
(11) Statement re: Computation of per share earnings
(27) Financial data schedule
EXHIBIT 11 - EARNINGS PER SHARE
THREE MONTHS ENDED MARCH 31, MARCH 31,SIX MONTHS ENDED
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
PRIMARY:
Weighted average number of
common shares outstanding 5,000,064 4,752,6115,015,466 4,798,001 5,007,429 4,781,501
Net effect of dilutive stock
options based on the treasury
stock method using the average
market price 266,336 266,334154,222 270,387 183,946 265,862
--------- --------- --------- ---------
Weighted average number of common
and common equivalent shares
outstanding 5,266,400 5,018,9455,169,688 5,068,388 5,191,375 5,047,363
--------- --------- --------- ---------
Net income $711,490 $501,996
--------- ---------$284,943 $949,996 $996,433 $1,451,992
Primary net income per common
share as reported $0.14 $0.10$0.06 $0.19 $0.19 $0.29
FULLY DILUTED:
Weighted average number of
common shares outstanding 5,000,064 4,752,6115,015,466 4,798,001 5,007,429 4,781,501
Net effect of dilutive stock
options based on the treasury
stock method using the period-end
market price if higher than
average price 266,336 272,174154,222 270,387 183,946 284,453
--------- --------- --------- ---------
Weighted average number of common
and common equivalent shares
outstanding 5,266,400 5,024,7855,169,688 5,068,388 5,191,375 5,065,954
--------- --------- --------- ---------
Net income $711,490 $501,996
--------- ---------$284,943 $949,996 $996,433 $1,451,992
Fully diluted net income per common
share as reported $0.14 $0.10$0.06 $0.19 $0.19 $0.29
The difference between fully diluted earnings per share and primary earnings
per share is immaterial. Therefore, fully diluted earnings per share have not
been disclosed in the financial statements.