We have reviewed the accompanying consolidated balance sheet of KSW, Inc. and
subsidiary as of March 31, 2000, and the related consolidated statements of
operations, retained earnings, and cash flows for the three months then ended.
These consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of KSW, Inc. and Subsidiary as of
December 31, 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended not presented
herein; and in our report dated February 4, 2000, we expressed an unqualified
opinion on those consolidated financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues
Total revenues for the first quarter ending March 31, 2000 increased 36% or
$3,193,000 to $12,121,000, compared to $8,928,000 for the first quarter of 1999
due to the availability of work on existing projects. As of March 31, 2000 the
Company had a backlog of $61,000,000 compared to $47,000,000 as of March 31,
1999.
Cost of Sales
Cost of sales for the first quarter increased by $2,332,000 or 30% to
$10,206,000 from $7,874,000 as a result of the increase in revenue noted above.
Gross Profit
Gross profit increased by 82% or $861,000 from $1,054,000 in the first
quarter of 1999 to $1,915,000 in the first quarter of 2000, primarily due to an
increase in the profit margins on new projects. The gross profit percentage for
the first quarter of 2000 was 15.8% compared to 11.8% for the first quarter of
1999.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A ”) increased from $920,000
for the first quarter of 1999 to $1,164,000 in first quarter of 2000 which
represents an increase of $244,000 or 26% due to the increase in revenue. SG &A
expenses for the first quarter of 2000 were 9.6% of revenue as compared to the
first quarter of 1999 which was 10.3% of revenue.
Provision for Taxes
The tax provision for the three months ended March 31, 2000 was $330,000 as
compared to a $40,000 for the same period in 1999, due to the profits for the
respective periods. The company also had an $18,000 benefit in the first quarter
of 1999 due to the over accrual of tax provisions in 1998.
Net Income
The net income for the first quarter of 2000 was $413,000 compared to $87,000
for the first quarter of 1999 due to the items mentioned above.
Liquidity and Cash Flow
For the first three months of 2000, cash used by operations was $341,000. For
the same period in 1999 the cash used by operations was $765,000. The cash flow
for the first quarter for 2000 was the result of the increase in sales volume
which resulted in increased accounts and retainage receivable.
While no significant capital improvements are projected over the next year,
cash may be needed to fund the start-up costs for new projects or acquisitions.
The Company has not used any portion of its revolving credit of $2,000,000 in
the year 2000 and believes the credit facility will be adequate to fund any
expansion for the remainder of the year.
Forward-Looking Statements
All statements contained herein and in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that are not historical facts,
including but not limited to statements regarding the Company's current business
strategy, and plans for future development and operations are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties, many of which are not within the control of
the Company. Actual results may differ materially. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which statements are made pursuant to the Private Litigation Reform Act of 1995
and as such, speak only as of the date made.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Company's market risk exposure with
respect to financial instruments depends upon changes in the "prime rate" in the
United States. We may borrow up to $2,000,000 under our credit facility.
Amounts outstanding under the credit facility bear interest at the bank's prime
rate plus 1.00%. At March 31, 2000, there were no amounts outstanding under the
credit facility. The Company currently does not use interest rate derivative
instruments to manage exposure to interest rate charges.
PART II - Other Information
Item 1. Legal Proceedings
See Note 2 to the Notes To Consolidated Financial Statements.
Item 2. Change in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits & Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Statement Regarding Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
(b) The Company did not file any Current Reports on Form 8-K during the first quarter of 2000.
SIGNATURE
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.
| |
|
(Principal Financial and Accounting Officer
and Duly Authorized Officer |
KSW, INC.
INDEX TO EXHIBITS
Exhibit
Number |
Description |
Sequentially
Numbered
Page |
| 11 |
Statement Regarding Computation of Per Share Earnings |
13 |
| 27 |
Financial Data Schedule |
14 |
