-----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, PBOXVcUNuHc1aTV8Ouz+1CKPCbDE6FpC8/dCoLtyv84WSXTaoMSAOWp3eZTndwg+ k8JFei8P99dSt54ZghidyA== /in/edgar/work/20000814/0000950133-00-003420/0000950133-00-003420.txt : 20000921 0000950133-00-003420.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950133-00-003420 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GROUP 1 SOFTWARE INC CENTRAL INDEX KEY: 0000023055 STANDARD INDUSTRIAL CLASSIFICATION: [7372 ] IRS NUMBER: 520852578 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15255 FILM NUMBER: 697136 BUSINESS ADDRESS: STREET 1: 4200 PARLIMENT PLACE STREET 2: SUITE 600 CITY: LANHAM STATE: MD ZIP: 20706-1860 BUSINESS PHONE: 3019180400 MAIL ADDRESS: STREET 1: 4200 PARLIAMENT PLACE, SUITE 600 STREET 2: 4200 PARLIAMENT PLACE, SUITE 600 CITY: LANHAM STATE: MD ZIP: 20706 FORMER COMPANY: FORMER CONFORMED NAME: COMNET CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER NETWORK CORP DATE OF NAME CHANGE: 19851117 10-Q 1 e10-q.txt FORM 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 June 30, 2000 Commission file number 0-6355 GROUP 1 SOFTWARE, INC. Incorporated in Delaware IRS EI No. 52-0852578 4200 Parliament Place, Suite 600, Lanham, MD 20706-1860 Telephone Number: (301) 918-0400 Indicate by check mark whether the registrant (1) has filed 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 Shares Outstanding Effective Class August 7, 2000 Common Stock, $.50 par value 5,798,414 1 2 GROUP 1 SOFTWARE, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PAR VALUE) (UNAUDITED)
June 30, March 31, 2000 2000 ASSETS Current assets: Cash and cash equivalents $ 22,937 $ 20,735 Short-term investments 9,343 11,259 Trade and installment accounts receivable, less allowance of $3,276 and $3,317 16,730 21,561 Deferred income taxes 3,469 3,297 Prepaid expenses and other current assets 3,528 3,407 ---------------- ------------------ Total current assets 56,007 60,259 Installment accounts receivable, long-term 1,652 1,945 Property and equipment, net 4,633 4,290 Computer software, net 20,867 21,823 Other assets 4,548 4,750 ---------------- ------------------ Total assets $ 87,707 $ 93,067 ================ ================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,025 $ 1,940 Current portion of capital lease obligation 112 109 Accrued expenses 6,385 6,627 Accrued compensation 5,383 7,617 Current deferred revenues 23,863 26,865 ---------------- ------------------ Total current liabilities 37,768 43,158 Capital lease obligation, net of current portion 59 88 Deferred revenues, long-term 917 1,169 Deferred income taxes 3,324 3,724 ---------------- ------------------ Total liabilities 42,068 48,139 ================ ================== Commitments and contingencies Stockholders' equity: 6% cumulative convertible preferred stock $0.25 par value; 200 shares authorized; 48 shares issued and outstanding (aggregate involuntary liquidation preference $950,000) 916 916 Common stock $0.50 par value; 14,000 shares authorized; 6,497 and 6,468 shares issued and outstanding 3,248 3,234 Additional paid in capital 27,611 27,431 Retained earnings 16,801 15,684 Accumulated comprehensive income (602) (2) Less treasury stock, 497 shares, at cost (2,335) (2,335) ---------------- ------------------ Total stockholders' equity 45,639 44,928 ---------------- ------------------ Total liabilities and stockholders' equity $ 87,707 $ 93,067 ================ ================== See notes to consolidated financial statements.
2 3 GROUP 1 SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (ADJUSTED TO REFLECT THE 3 FOR 2 STOCK SPLIT APPROVED BY THE BOARD OF DIRECTORS ON FEBRUARY 4, 2000) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
For the Three Month Period Ended June 30, 2000 1999 Revenues: Software license and related revenues $ 7,637 $ 6,885 Maintenance and services 12,425 9,872 -------- -------- Total revenue 20,062 16,757 -------- -------- Cost of revenue: Software license expense 3,060 3,199 Maintenance and service expense 4,212 3,709 -------- -------- Total cost of revenue 7,272 6,908 -------- -------- Gross profit 12,790 9,849 Operating expenses: Research and development 1,511 802 Sales and marketing 6,512 5,863 General and administrative 3,642 2,774 -------- -------- Total operating expenses 11,665 9,439 -------- -------- Income from operations 1,125 410 Non-operating income Interest income 528 192 Interest expense (6) (9) Other non-operating income 249 25 -------- -------- Total non-operating income 771 208 -------- -------- Income from operations before provision for income taxes 1,896 618 -------- -------- Provision for income taxes 765 239 -------- -------- Net income 1,131 379 Preferred stock dividend requirements (14) (14) -------- -------- Net income available to common stockholders $ 1,117 $ 365 ======== ======== Basic earnings per share $ 0.19 $ 0.07 ======== ======== Diluted earnings per share $ 0.16 $ 0.06 ======== ======== Basic weighted average shares outstanding 5,980 5,588 ======== ======== Diluted weighted average shares outstanding 6,898 5,670 ======== ======== See notes to consolidated financial statements
3 4 GROUP 1 SOFTWARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2000 1999 Cash flows from operating activities: Net income $ 1,131 $ 379 Adjustments to reconcile net income from Operations to net cash provided by operating activities: Amortization expense 2,763 2,696 Depreciation expense 448 388 Provision for doubtful accounts 75 150 Net loss on disposal of assets -- 9 Deferred income taxes (572) (358) Foreign currency transaction gain (267) -- Changes in assets and liabilities: Accounts receivable 4,930 4,493 Prepaid expenses and other current assets (130) 196 Other assets 45 42 Deferred revenues (3,180) 20 Accounts payable 105 (11) Accrued expenses and accrued compensation (2,396) (3,226) -------- -------- Net cash provided by operating activities 2,952 4,778 -------- -------- Cash flows from investing activities: Purchase and development of computer software (1,893) (3,070) Purchase of property and equipment (863) (522) Purchase of marketable securities (38,160) (27,339) Sale of marketable securities 40,076 20,775 -------- -------- Net cash used in investing activities (840) (10,156) -------- -------- Cash flows from financing activities: Proceeds from exercise of stock options 194 8 Repayment of principal on capital lease obligations (26) (24) -------- -------- Net cash provided by (used in) financing activities 168 (16) -------- -------- Net increase (decrease) in cash and cash equivalents 2,280 (5,394) Effect of exchange rate on cash and cash equivalents (78) (1) Cash and cash equivalents at beginning of period 20,735 13,378 -------- -------- Cash and cash equivalents at end of period $ 22,937 $ 7,983 -------- -------- Supplemental disclosure of non-cash financing activity: Warrants issued in exchange for services $ 208 --
See notes to consolidated financial statements. 4 5 GROUP 1 SOFTWARE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) (UNAUDITED)
For the Three Month Period Ended June 30, 2000 1999 Net income $ 1,131 $ 379 Foreign currency translation adjustments (600) (37) ------- ------- Comprehensive income $ 531 $ 342 ======= =======
See notes to consolidated financial statements. 5 6 Group 1 Software, Inc. Notes to Consolidated Financial Statements (Unaudited) 1. The consolidated financial statements for the three months ended June 30, 2000 and 1999 are unaudited. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Limited footnote information is presented in accordance with quarterly reporting requirements. The results of operations for the three months ended June 30, 2000 are not necessarily indicative of the results for the year ending March 31, 2001. The information contained in the annual report on the Form 10-K for the year ended March 31, 2000, should be referred to in connection with the unaudited interim financial information. 2. Certain prior period amounts have been reclassified to conform to current period presentation. 3. On February 4, 2000, the Board of Directors approved a 3 for 2 common stock split for stockholders of record as of February 17, 2000. There was no change in the par value of the stock as a result of the split. The effect of the stock split has been retroactively reflected in the consolidated financial statements for all periods presented. 4. Research and development expense, before the capitalization of computer software development costs, amounted to approximately $3.3 million and $2.6 million for the three months ended June 30, 2000 and 1999, respectively. Capitalization of computer software development costs for both three month periods was $1.8 million. 5. Earnings per share Earnings per share (EPS) is computed in accordance with SFAS No. 128, "Earnings Per Share". Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of shares of common stock and potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of convertible preferred stock (using the if converted method) and stock options and warrants (using the treasury stock method). Potentially dilutive securities are excluded from the computation if the effect is antidilutive. Reconciliation of basic EPS calculations to the shares used in the diluted EPS calculation (in thousands, adjusted to reflect the 3 for 2 stock split approved by the Board of Directors on February 4, 2000):
For the Three Month Period Ended June 30, 2000 1999 Weighted average common shares outstanding-basic 5,980 5,588 Effect of dilutive securities: Stock options and warrants 918 82 ------ ------ Weighted average shares outstanding-diluted 6,898 5,670 ====== ======
There were additional potentially dilutive convertible securities of 47,500 in the three months ended June 30, 2000, and 1999 respectively, which were not included in the earnings per share calculation due to their anti-dilutive effect. 6 7 6. Recent Accounting Pronouncements In December 1999, the SEC released Staff Accounting Bulletin ("SAB") No. 101,"Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. Subsequently, the SEC released SAB 101A, which delayed the implementation date of SAB 101 for registrants with fiscal years that begin between December 16, 1999 and March 15, 2000. In June 2000 the SEC issued SAB 101B, further delaying the required implementation of SAB 101 by the Company until the fourth quarter of fiscal year 2001. The Company has not fully assessed the effect on our financial statements as a result of SAB 101. In June 1999, the Financial Accounting Standards Board issued SFAS No. 137, which delays the effective date of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for our fiscal year 2002. This statement establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. We believe the adoption of SFAS Nos. 133 and 137 will not have a material effect on our financial statements. In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an Interpretation of Accounting Principles Board Opinion No. 25" ("FIN 44"). FIN 44 will be effective on July 1, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. The Company believes the adoption of FIN 44 will not have a material effect on its financial statements. 7. Legal Contingencies The Company is not a party to any legal proceedings which in its belief, after review by legal counsel, could have a material adverse effect on the consolidated financial position, cash flows or results of operations of the Company. 8. Segment Information The following table presents certain financial information relating to each reportable segment:
Three Months Ended June 30, Segment Information (in thousands) 2000 1999 Revenue: Enterprise Solutions Software $ 13,253 $ 10,973 Electronic Document Composition Software 6,809 5,784 -------- -------- Total revenue $ 20,062 $ 16,757 ======== ======== Gross Profit: Enterprise Solutions Software $ 8,384 $ 6,791 Electronic Document Composition Software 4,406 3,618 Other -- (560) -------- -------- Total gross profit $ 12,790 $ 9,849 ======== ========
All of the Company's assets are retained and analyzed at the corporate level and are not allocated to the individual segments. Amortization of capitalized software associated with the Enterprise Solutions Software segment was $1.7 7 8 million and $1.5 million for the three months ended June 30, 2000 and 1999, respectively. Amortization of capitalized software associated with the Electronic Document Composition Software segment was $0.6 million for both the three months ended June 30, 2000 and 1999. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Any statements in this quarterly report on Form 10-Q concerning the Company's business outlook or future economic performance; anticipated profitability, revenues, expenses or other financial items; together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under the Federal Securities laws. Forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, changes in currency exchange rates, changes and delays in new product introduction, customer acceptance of new products, changes in government regulations, changes in pricing or other actions by competitors and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission. For the three months ended June 30, 2000 and 1999, the Company had revenues of $20.1 million and $16.8 million, respectively. Net income available to common stockholders for the three months ended June 30, 2000 was $1.1 million or $0.16 per share compared with net income available to common stockholders of $0.4 million or $0.06 per share in the same period in the prior year. The increase in profitability for the first fiscal quarter of 2001 is primarily due to higher revenue in both of the Company's operating segments along with higher interest and other non-operating income. All of Group 1's operations are based in the two business segments defined as Enterprise Solutions Software and Electronic Document Composition Software. Enterprise Solutions revenue accounted for 66% and 65% of Group 1's total revenue for the first fiscal quarter of 2001 and 2000, respectively. Electronic Document Composition revenue was 34% and 35% of total revenue for the first quarter of fiscal 2001 and fiscal 2000. International revenues accounted for 16% of Group 1's total revenue in the first quarter of fiscal 2001 and 15% in the first quarter of fiscal 2000. Software license and related revenues of $7.6 million for the first fiscal quarter of 2001 increased 10% from $6.9 million the same period the prior year. As a percent of total revenue, first quarter software license and related revenues were 38% in fiscal 2001 compared with 41% in fiscal 2000. For the quarter ended June 30, 2000, license fees from database marketing products decreased by $0.1 million compared to the same period in the prior year. The decrease for the quarter was primarily due to lower sales of the Model 1 product. The Company's mailing efficiency/data quality software license fees for the first quarter of fiscal 2001 increased 11.0% over the same period in the prior year. The increase is primarily due to higher sales of the Geotax product. License fees from Electronic Document Composition software increased 15% in the first quarter of fiscal 2001 over the same period the prior year. The increase in sales for the three month period ended June 30, 2000 was due to higher European sales. Maintenance and service revenue of $12.5 million for the first quarter of fiscal 2001 increased 26% over the prior year period. Maintenance and service revenue accounted for 62% of total revenue for the quarter ended June 30, 2000, compared with 59% in the same period in the prior year. Recognized maintenance fees included in 8 9 maintenance and service revenue, were $9.6 million for the quarter ended June 30, 2000, and $7.3 million for the same period the prior year, an increase of 32%. The increase in maintenance revenue is due to the recognition of higher maintenance deferrals based on higher aggregate sales from prior periods and from increased maintenance renewals based on an increased installed customer base. For the quarter ended June 30, 2000, Enterprise Solutions recognized maintenance increased 27% to $7.7 million over the same period the prior year. Electronic Document Composition recognized maintenance increased 59% to $1.9 million in the quarter ended June 30, 2000 compared to the comparable period in the prior year. Professional and educational service revenue from the Enterprise Solutions segment increased to $0.9 million in the quarter ended June 30, 2000, an increase of 89% over the same period in the prior fiscal year. Electronic Document Composition service revenue decreased 11% to $1.9 million in the first quarter of fiscal 2001 from the same period the prior fiscal year. The decrease in Electronic Document Composition service revenue is primarily due to the completion of a large services engagement in the first quarter of fiscal 2000 partially offset by higher European service revenue. Total cost of revenue for the first fiscal quarter of 2001 was $7.3 million versus $6.9 million in the same period of fiscal 2000. The separate components of cost of revenue are discussed below. Software license expense decreased for the three month period ended June 30, 2000 to $3.1 million from $3.2 million for the same period the prior year representing 41% and 46% of software license and related revenues, respectively. The decrease in expense as a percent of software license revenue was due to higher license fees in both operating segments. Maintenance and service expense increased to $4.2 million in the current quarter from $3.7 million in the comparable period in fiscal 2000, representing 34% and 38% of maintenance and service revenue, respectively. The decrease in expense as a percentage of revenue can be attributed to higher maintenance and service revenue spread across relatively flat maintenance and service costs partially offset by lower margins on professional services as discussed below. Included in maintenance and service expense discussed above are professional and educational service costs of $2.3 million which were 83% of professional service and education revenue for the first quarter compared with $2.0 million which represented 76% of professional service and educational revenue for the comparable period in the prior year. The increase in expense as a percent of revenue for the quarter can be attributed to lower revenue in Electronic Document Composition services as discussed above. Costs of maintenance were $1.9 million for the first fiscal quarter of 2001 representing 20% of maintenance revenue. Costs of maintenance for the same quarter in the prior year were $1.7 million, representing 23% of maintenance revenue. The lower cost as a percentage of revenue reflects economies of scale achieved with maintenance and support costs spread over a larger revenue base. Total operating costs of $11.7 million amounted to 58% of revenue for the quarter ended June 30, 2000 compared $9.4 million or 56% of revenue for the prior year period. The various components of operating costs are discussed below. Research and development expenses (after capitalization of certain software development costs) totaled $1.5 million for the first fiscal quarter of 2001 and $0.8 million for the same period of fiscal 2000, representing 8% and 5% of revenue, respectively. The increase in expense is due to increased spending on new product initiatives in both the Enterprise Solutions and Electronic Document Composition segments. 9 10 Sales and marketing expenses totaled $6.5 million or 32% of revenue in the first quarter of fiscal 2001 and $5.9 million or 35% in the prior year same period. The decrease in cost as a percent of revenue for the three month periods versus the prior year same period was primarily due to higher revenue partially offset by higher costs for sales and marketing of Enterprise Solutions and Electronic Document Composition products. Sales and marketing costs for the Enterprise Solutions products were 33% of Enterprise Solutions revenue in the first fiscal quarter of 2001 and 37% for the same period the prior year. Electronic Document Composition selling and marketing costs were 34% and 32% for the periods ending June 30, 2000 and 1999, respectively. General and administrative expenses were $3.6 million or 18% of total revenue compared with $2.8 million or 17% of revenue for the three months ended June 30, 2000 and 1999, respectively. The increase in general and administrative expenses is primarily related to increased compensation associated with increased head count along with increased shareholder relations costs. The Company expects these costs to remain relatively close to the current levels as a percent of revenue. Net non-operating income was $0.8 million for the quarter ended June 30, 2000 as compared with $0.2 million for the same period in the prior year. This increase represents higher interest income generated from higher cash and short-term investment balances in the current period compared to the same period of fiscal 2000 along with a $0.3 million currency gain. The Company's effective tax rates were 40% and 38% for the three month period ended June 30, 2000, and 1999, respectively. The current year's rate is the net effect of a 33% effective tax rate on foreign taxable income and a 47% rate on domestic taxable income. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital was $18.2 million at June 30, 2000, as compared with $17.1 million at March 31, 2000. The current ratio was 1.5 to 1 at June 30, 2000 and 1.4 to 1 at March 31, 2000. The Company provides for its cash requirements through cash funds generated from operations. Additionally, the Company maintains a $10 million line of credit arrangement with a commercial bank, expiring October 31, 2001. The line of credit bears interest at the bank's prime rate, or Libor plus 150 basis points at Group 1's option. The line of credit is not collateralized and requires Group 1 to maintain certain operating ratios. At June 30, 2000 and at March 31, 2000, there were no borrowings outstanding under the line of credit. For the three months ended June 30, 2000, net cash provided by operating activities was $2.9 million. This amount included net income of $1.1 million plus non-cash expenses of $2.4 million. Also included in cash provided by operating activities was a $4.9 million decrease in accounts receivable and a $3.2 million decrease in deferred revenues, and a $2.4 million decrease in accrued expenses offset by $0.1 million provided by other operating activities. The decrease in accounts receivable is due to increased cash collections. Investment in purchased and developed software of $1.9 million, and capital equipment of $0.9 million, in addition to the decrease of $2.0 million in short-term investments resulted in $0.8 million used in investing activities. For the three months ended June 30, 2000, $0.2 million was provided by financing activities. Group 1 continually evaluates the credit and market risks associated with outstanding receivables. In the course of this review, Group 1 considers many factors specific to the individual client as well as to the concentration of receivables within industry groups. Group 1's installment receivables are predominately with clients (service bureaus) who provide computer services to the direct marketing industry. Many of these clients have limited capital and insufficient assets to secure their liability with Group 1. The service bureaus are highly dependent on Group 1's software and services to offer their customers the economic benefit of postal discounts and mailing efficiency. To qualify for the U.S. Postal Service and Canada Post Corporation postal discounts, service bureaus require continuous regulatory product updates from the Company. The service bureau industry is also highly competitive and subject to 10 11 general economic cycles, as they impact advertising and direct marketing expenditures. The Company is aware of no current market risk associated with the installment receivables. Service bureaus represent approximately $2.5 million or 69% of the installment receivables at June 30, 2000. As of June 30, 2000, the Company's capital resource commitments consisted primarily of non-cancelable operating lease commitments for office space and equipment. The Company believes that its current minimum lease obligations and other short-term and long-term liquidity needs can be met from its existing cash and short-term investment balances and cash flows from operations. The Company believes that its long-term liquidity needs are minimal and no large capital expenditures are anticipated, except for the continuing investment in capitalized software development costs, which the Company believes can be funded from operations during the next twelve months. The Year 2000 Issue In 1997, the Company formed two special task forces: - - The first task force was established to identify and evaluate our internal systems and applications that may be affected by the Year 2000 issue; modify or replace those systems and applications so they will work properly in the Year 2000, and communicate with our suppliers to make sure they are prepared for the Year 2000. - - The second task force was established to evaluate the products sold by us, to ensure they will function as designed after the Year 2000. The Company identified and evaluated all of its systems and applications that might have been affected by the Year 2000 issue, and developed plans to ready these systems and applications for the century change. Modification and replacement projects were completed pursuant to their modification and replacement projects. All products sold by the Company, with one exception, were modified to ensure Year 2000 functionality. The costs of the readiness program for products and internal systems were primarily costs of existing internal resources largely absorbed within existing spending levels. These costs were incurred primarily in 1998 and earlier years and were not broken out from other operating costs. Recent Accounting Pronouncements In December 1999, the SEC released Staff Accounting Bulletin ("SAB") No. 101,"Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. Subsequently, the SEC released SAB 101A, which delayed the implementation date of SAB 101 for registrants with fiscal years that begin between December 16, 1999 and March 15, 2000. In June 2000 the SEC issued SAB 101B, further delaying the required implementation of SAB 101 by the Company until the fourth quarter of fiscal year 2001. The Company has not fully assessed the effect on our financial statements as a result of SAB 101. In June 1999, the Financial Accounting Standards Board issued SFAS No. 137, which delays the effective date of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for our fiscal year 2002. This statement establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. We believe the adoption of SFAS Nos. 133 and 137 will not have a material effect on our financial statements. In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an Interpretation of Accounting Principles Board Opinion 11 12 No. 25" ("FIN 44"). FIN 44 will be effective on July 1, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. The Company believes the adoption of FIN 44 will not have a material effect on its financial statements. Legal Contingencies The Company is not a party to any legal proceedings which in its belief, after review by legal counsel, could have a material adverse effect on the consolidated financial position, cash flows or results of operations of the Company. Quantitative and Qualitative Disclosures about Market Risk The Company has a subsidiary in the United Kingdom with offices in Germany, Italy and Denmark. Additionally, the Company uses third party distributors to market and distribute its products in other international regions. Transactions conducted by the subsidiary are typically denominated in the local country currency, while transactions conducted by the distributors are typically denominated in pounds sterling. As a result, the Company is primarily exposed to foreign exchange rate fluctuations as the financial results of its subsidiary and third party distributors are translated into U.S. dollars in consolidation. As exchange rates vary, these results, when translated, may vary from expectations and impact overall expected profitability. However, through June 30, 2000, the Company's exposure was not material to the overall financial statements taken as a whole. The Company has not entered into any foreign currency hedging transactions with respect to its foreign currency market risk. The Company does not have any financial instruments subject to material market risk. Euro Currency The European Union's adoption of the Euro currency raises a variety of issues associated with the Company's European operations. Although the transition from national currencies to the Euro will be phased in over several years, the Euro became the single currency for most European countries on January 1, 1999. The Company is assessing Euro issues related to its treasury operations, product pricing, contracts and accounting systems. Although the evaluation of these issues is still in process, management currently believes that the Company's existing or planned hardware and software systems will accommodate the transition to the Euro and any required operating changes will not have a material effect on future results of operations or financial condition. 12 13 PART II OTHER INFORMATION Item 1. Legal Proceedings NONE Item 2. Changes 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 and Reports on Form 8-K Exhibit 10.59 Sixth amendment to Employment Agreement by and between Robert S. Bowen and Group 1 Software, Inc. dated July 17, 2000 No filings on Form 8-K have been made during the quarter 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Group 1 Software, Inc. Date: August 14, 2000 /s/ Mark Funston Mark Funston Chief Financial Officer 14 EX-10.59 2 ex10-59.txt SIXTH AMENDEMENT TO EMPLOYMENT AGREEMENT 1 Exhibit 10.59 AMENDED AND RESTATED EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of July 17, 2000, by and between Group 1 Software, Inc. (f/k/a COMNET Corporation), a Delaware corporation ("Group 1"), and ROBERT S. BOWEN ("Bowen"). As a result of the September 24, 1998 merger of Group 1 Software, Inc. into COMNET Corporation (and the renaming of COMNET as Group 1 Software, Inc.), Bowen and Group 1 are subject to the Amended and Restated Employment Agreement, dated as of January 28, 1992 between Bowen and Group 1's former subsidiary (as heretofore amended, the "Agreement"). Group 1 and Bowen desire to amend further the Agreement, and to accomplish such amendment by restating the Agreement in its entirety. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound agree that the Agreement is hereby amended and restated in its entirety as follows: 1. Definitions. For purposes of this Agreement, the following terms shall be defined as set forth in this Section 1. (a) "Net Operating Income" shall mean, with respect to any Fiscal Year, the consolidated net income of Group 1 and its Affiliates for such Fiscal Year (including, without limitation, gains or losses resulting from any Sale) to the extent (but only to the extent) attributable to the Existing Businesses, determined in accordance with generally accepted accounting principles, consistently applied, as set forth on the annual financial statements certified by Group 1's independent certified public accountants, adjusted, however, to delete the following items to the extent they were taken into account in determining such consolidated net income: (1) any extraordinary items; (2) any provision for taxes; (3) any bonus payable to Bowen as determined in Section 5 hereof; 2 (4) any interest income from Group 1's and Group 1's Affiliates' cash investments relating to the Existing Businesses (including interest from loans, bank accounts, certificates of deposit, commercial paper and similar items), to the extent that such interest income exceeds interest expense of Group 1 and its Affiliates arising from borrowing or financing activities relating to the Existing Businesses; and (5) any charge to income arising from the grant or exercise of stock options, stock appreciation rights or any other form of compensatory stock rights. (b) "Cause" shall mean for purposes of Section 10 hereof either (i) Bowen's conviction of either a felony involving moral turpitude or any crime in connection with his employment by Group 1 which causes Group 1 or any Affiliate a substantial detriment; or (ii) actions by Bowen as an executive officer of Group 1 or any Affiliate which clearly are contrary to the best interests of Group 1 or any Affiliate; or (iii) Bowen's refusal to submit to a medical examination if directed to do so by the Board to determine if Bowen is disabled pursuant to subsection 1(c) hereof; or (iv) Bowen's willful failure to take actions permitted by law and necessary to implement policies of the Board which the Board has communicated to him in writing, provided that minutes of a Board meeting attended in its entirety by Bowen shall be deemed communicated to Bowen; or (v) Bowen's continued failure to attend to his duties as an executive officer of Group 1 as set forth in this Agreement; or (vi) any condition which either results from Bowen's habitual drunkenness or addiction to narcotics, or results from any intentionally self-inflicted injury. (c) "Disability" shall mean any disability which continuously disables and wholly prevents Bowen from performing his duties under this Agreement and which is expected to be of a permanent duration. The determination of whether Bowen is disabled shall be made by two duly licensed physicians, one chosen by the Board and one chosen by Bowen. In the event the two physicians are unable to agree with respect to whether Bowen is disabled, the determination of whether Bowen is disabled shall be made by a third duly licensed physician chosen by the two physicians. -2- 3 (d) "Fiscal Year" shall mean Group 1's annual accounting period, which is the twelve (12) month period ending each March 31. (e) "Board" shall mean the Board of Directors of Group 1. (f) "Affiliate" shall mean any corporation which is consolidated with Group 1 in Group 1's annual audited financial statements reviewed by Group 1's independent certified public accountants in accordance with generally accepted accounting principles applied on a basis consistent with prior periods. (g) "Sale" shall mean the sale or other disposition of any of the Existing Businesses (whether in a single transaction or a series of transactions), including any merger, sale of assets, tender or exchange offer or sale of the outstanding voting securities of any of the Existing Businesses, but excluding a sale of assets in the ordinary course of business. (h) "Existing Businesses" shall mean any of Group 1's business operations as of, or directly related to those operations as of, the date of this Agreement. If an acquisition is consummated that is directly related to any of the Existing Businesses, the Board shall determine, in advance of the closing of such acquisition, whether (and if so, to what extent) the financial results from such transaction shall be included in the calculation of Bowen's bonus. 2. Term. Group 1 hereby agrees to employ Bowen and Bowen hereby agrees to accept employment for a period up through April 1, 2004. If Bowen shall terminate his employment with Group 1 prior to the end of such term, the consequences to him shall be as described in Section 10 hereof. 3. Title and Duties. Bowen's title shall be Chief Executive Officer or such other title evidencing a senior executive position as the Board shall determine, and his duties shall be commensurate with such position. Subject to the direction of the Board or any duly authorized committee thereof, Bowen shall exercise all of the authority that his title and office confers, and otherwise vested in him by the Board which shall be commensurate with his title and office, and, in general, so long as Bowen continues as Chief Executive Officer of any of the Existing Businesses, he shall (subject to the direction of the Board or the Board of Directors of such -3- 4 Existing Business, or any duly authorized committee thereof) direct and manage all of the operations, employees, financial and business affairs of such Existing Businesses and such other business operations and subsidiaries as Bowen and the Board may agree. 4. Compensation. Subject to Section 10 hereof, Bowen shall be paid by Group 1 compensation for the services rendered by him as set forth below: (a) For the period July 17, 2000 through March 31, 2001, Bowen shall be entitled to a total base salary of Three Hundred Eighty-Seven Thousand, Three Hundred Seventy-Three Dollars ($387,373) per annum. Effective April 1, 2001, Bowen's total base salary shall be Four Hundred Thousand Dollars ($400,000) per annum, adjusted each April 1 thereafter by the greater of changes in the area cost of living or the average salary percentage increase for Company employees as part of the annual budget presented to the Board. Base salary shall be payable in equal installments on the last day of each month or in accordance with Group 1's general salary payment procedures for its executives. (b) As to Bowen's base salary adjustment, for purposes hereof, the Consumer Price Index shall mean the Consumer Price index (All Urban Consumers - 1967 = 100) for the Washington Metropolitan Area, published by the United States Department of Labor, Bureau of Labor Statistics. If the Consumer Price Index shall be discontinued, there shall be substituted therefor the most nearly comparable index published by any governmental agency, or if no such index shall be available, then a comparable index published by a bank or other financial institution or by a universally recognized financial publication. (c) In addition to the amounts described in subsection (a) of this Section 4, Bowen shall be paid such other amounts in addition to his base salary as the Board may, in its discretion, determine from time to time, provided that any such additional payments shall not be considered to be "base salary" for purposes of subsection (a) above, unless designated as such by the Board in a written document delivered to Bowen. 5. Bonuses. (a) If Bowen is employed by Group 1 on the last day of any Fiscal Year (or as otherwise provided in Section 10 -4- 5 below) then, in addition to any payments made to Bowen by Group 1, Bowen shall be entitled to receive, following the close of such Fiscal Year, the following cash bonus payments for services in such Fiscal Year: (i) For the Fiscal Year ending March 31, 2001, an amount equal to the applicable percentages set forth in the table below of Net Operating Income for such Fiscal Year;
Net Operating Income Bonus Percent ---------------------------------- ------------------------- First $1,000,000 7-1/2% Amounts above $1,000,000 10%
provided that such bonus shall not exceed Eight Hundred Thousand Dollars ($800,000). (ii) For the Fiscal Years ending March 31, 2002, 2003 and 2004, an amount determined by multiplying the amount that Group 1's consolidated net earnings for that Year exceed the consolidated net earnings for the immediately preceding Year ("Earnings Growth") as follows: seven percent (7%) of the Company's Earnings Growth from Zero Dollars ($0) up through Five Hundred Thousand Dollars ($500,000), plus ten percent (10%) of that Year's Earnings Growth from Five Hundred Thousand Dollars ($500,000) up through One Million Dollars ($1,000,000), plus fourteen percent (14%) of that Year's Earnings Growth from One Million Dollars ($1,000,000) up through One Million, Five Hundred Thousand Dollars ($1,500,000) plus seventeen percent (17%) of that Year's Earnings Growth above One Million Five Hundred Thousand Dollars ($1,500,000). However, for the Fiscal Years ending March 31, 2002, 2003 and 2004, the corresponding bonuses shall not exceed Five Hundred Thousand Dollars ($500,000). Notwithstanding the foregoing, the Board may, in its sole discretion pay Bowen additional bonus, in a Fiscal Year, if specific circumstances warrant such payment. (b) Upon the complete divestiture of any subsidiary of Group 1, Bowen shall have no further right to any bonus based on the Net Operating Income of such divested subsidiary (other than Net Operating Income attributable to the divestiture), and his obligations to perform duties with respect to such subsidiary shall also cease upon the consummation of the divestiture, subject to any agreements that the Board of Directors or authorized representatives of such subsidiary may have in place or may reach as to Bowen's responsibilities and compensation for such divested subsidiary. -5- 6 (c) The amount of any bonus for any Fiscal Year determined under Section 5(a) shall be paid in cash to Bowen within fifteen (15) days after Group 1's regular independent certified public accountants render their reports on Group 1's annual audited financial statements for such Fiscal Year. 6. Stock Options. At execution of this restated agreement, Bowen shall be granted options to purchase up to Two Hundred Fifty Thousand (250,000) shares of common stock of Group 1. These options shall be granted under the Group 1 1995 Incentive Stock Option, Non-Qualified Stock Option and Stock Appreciation Unit Plan (the "Plan"). A material inducement for entry into this restated agreement is the grant by the Company of the aforesaid options to purchase Two Hundred and Fifty Thousand (250,000) shares of Group 1 common stock. If the aforesaid options are cancelled by Group 1 without Bowen's agreement, the terms and conditions of the January 28, 1992 Agreement, as amended prior to July 17, 2000, shall govern, effective on and after the date of cancellation. 7. Fringe Benefits. In addition to all other remuneration provided by this Agreement, during the term of this Agreement, Bowen shall be entitled, but not limited, to the following benefits (or, in the case of benefits described in subsections 6(a), (b), (c), (d) or (e), their reasonable equivalent) at Group 1's expense: (a) Life insurance on the life of Bowen pursuant to the outstanding policy issued by Executive Life Insurance Company in the amount of $2,000,000 to the Robert S. Bowen Insurance Trust, as policy-holder, or pursuant to comparable coverage with an equivalent carrier, which coverage shall be selected by Bowen and reasonably acceptable to the Board as to the carrier and the terms of the policy (including, without limitation, premiums). (b) Accidental death and dismemberment insurance, in addition to the insurance provided under subsection (a) above, in an amount not less than Bowen's base salary as the same shall be adjusted from time to time as provided herein and payable to Bowen or a beneficiary or beneficiaries named by him, as the case may be. Benefits shall be provided under essentially the same conditions as set forth in Exhibit A attached hereto and hereby incorporated herein. -6- 7 (c) Short-term disability protection in an amount not less than Bowen's base salary, as the same shall be adjusted from time to time as provided herein, for a period of fifty-two (52) weeks. (d) Long-term disability protection in an amount equal to Two Hundred Seventy-Five Thousand Dollars ($275,000.00) per year reduced by any social security disability benefits received by Bowen with respect to the same disability. (e) An annual physical at a clinic or from a physician(s) of Bowen's choice. (f) Paid vacation in an amount determined by Bowen in his discretion but subject to the needs of the business and subject to a limit of four (4) weeks per year of this Agreement. (g) All reasonable expenses incurred by Bowen with regard to the successful maintenance or enforcement of this Agreement. (h) All other rights and benefits for which Bowen may be eligible pursuant to any employee benefit plans maintained from time to time by Group 1 for its executives or its employees. 8. Board of Directors. Subject to the provisions of Section 3 hereof, so long as Bowen is serving as Chief Executive Officer of Group 1, Group 1 will use its best efforts to cause Bowen to remain a member of the Board and the Executive Committee, if any, thereof. Bowen shall serve without additional compensation in such capacities. References herein to the Board shall include, where the context requires, such Executive Committee. 9. Conditions and Places of Employment. (a) Bowen's services will be rendered in the United States or at such other places as he and the Board deem advisable; provided, however, that Bowen shall not be required to render services hereunder at any principal location for Group 1 (in the event that Group 1's location is moved from its present site in Lanham, Maryland) if such principal location lies in excess of thirty-five (35) miles from Bowen's then-residence, without Bowen's consent. Bowen shall devote such time and attention to his duties under this Agreement both -7- 8 within and outside normal working hours as shall be reasonably required by the Board. (b) While he is employed under this Agreement, Bowen shall not, without the prior written consent of the Board, directly or indirectly engage in, or accept any position as agent, employee, officer or director of, or consult with, advise, invest in (except for investments of less than five percent (5%) of the capital stock of a publicly-traded company) or otherwise in any way give assistance or aid to any person, engaging in business which competes with the business of Group 1 or any of its subsidiaries as conducted during the term of Bowen's employment hereunder. If Bowen's employment is terminated for any reason whatsoever, Bowen shall not (as an individual, principal, agent, employee, consultant or otherwise), for a period of twenty-four (24) months after such date of employment termination, directly or indirectly within the Unites States of America (including its territories and possessions) engage in activities relating to any of the businesses engaged in by Group 1 or any of its subsidiaries within the twelve (12) month period immediately preceding such date of employment termination, nor render services to, be associated with or have an ownership interest in (except for investments of less than five percent (5%) of the capital stock of a publicly-traded company) any business entity which offers goods or services that are directly competitive with those offered for Group 1 or any of its subsidiaries within such twelve (12) month period. Notwithstanding anything contained in this Section 8(b), if Group 1 sells or otherwise disposes of any of the Existing businesses Bowen may render services to, be affiliated with or have an ownership interest in such Existing Business. (c) Bowen shall not, at any time during or following the term of his employment hereunder, directly or indirectly furnish to any person not entitled to receive the same for the immediate benefit of Group 1 or any of its subsidiaries, any trade secrets or confidential information, including but not limited to, information as to the business methods, operations and affairs of Group 1 or any of its subsidiaries, the names, addresses or requirements of any of its customers, or the prices, credit and other terms extended to or by Group 1 or any of its subsidiaries. (d) The provisions of subsections (b) and (c) of this Section 8 shall survive the termination of this Agreement. This provision shall not be construed to limit the survival of any -8- 9 other provisions that also survive the termination of this Agreement by the express or implied terms of such provisions. Bowen acknowledges that breach of any provision in such subsections (b) and (c) would cause grave and irreparable injury to Group 1 that would not be compensable in money damages, and therefore, in addition to Group 1's other express and implied remedies, Group 1 shall be entitled to injunctive and other equitable relief to prevent any actual or intended injuries that may result from such breach without any need to demonstrate that Group 1 has no adequate damages at law. However, nothing in this subsection (d) shall limit any other right or remedy to which Group 1 may be entitled. 10. Expenses, Etc. All expenses reasonably incurred by Bowen in connection with the performance of his duties hereunder, including expenses for travel, entertainment and other business activities, shall be paid by Group 1 or reimbursed to Bowen as the case may be. Group 1 shall provide, for Bowen's business or personal use, an luxury automobile reasonably selected by Bowen and shall provide for all operation and maintenance expenses in connection therewith, including adequate insurance with respect, thereto. 11. Termination of Bowen's Employment During the Term of this Agreement. (a) In the event that Bowen's employment by Group 1 is terminated during the term of this Agreement because of Bowen's Disability, the consequences shall be as follows: (i) Bowen shall be entitled to receive his base salary described in Section 4 hereof equitably pro-rated through the date of Bowen's termination of employment; (ii) all amounts of bonus which have not been paid to Bowen, including a bonus for the Fiscal year of his termination of employment equitably pro-rated through the day of termination, shall be paid to Bowen at the time set forth in Section 5 hereof; and (iii) fringe benefit coverage granted to Bowen pursuant to Section 6 hereof, other than those set forth in Section 6(e) and (f), shall continue to be provided during the term of this Agreement. (b) In the event that Bowen's employment by Group 1 is terminated during the term of this Agreement because of Bowen's death, the consequences shall be as follows: (i) Bowen's base salary described in Section 4 hereof equitably pro-rated through the date of Bowen's death shall be paid to Bowen's executor or other person representative or as Bowen shall otherwise have directed in writing; (ii) all amounts of bonus -9- 10 which have not been paid to Bowen, including a bonus for the Fiscal Year of his death equitably pro-rated through the day of such termination, shall be paid at the time set forth in Section 5 hereof to Bowen's executor or other personal representative or as Bowen shall otherwise direct in writing; and (iii) fringe benefit coverage granted to Bowen pursuant to Section 6 hereof, other than those set forth in Section 6(g), shall cease, except for benefits payable due to such death, and except for those benefit coverages which would survive for the spouse, dependents or beneficiaries of Group 1's executives in general. (c) In the event that Bowen terminates his employment with Group 1 during the term of this Agreement for some reason other than death or Disability, or in the event that Bowen is discharged by Group 1 for Cause (as such term is defined in subsection 1(b) hereof), the consequences shall be as follows: (i) Bowen shall be entitled to receive his base salary described in Section 4 hereof equitably pro-rated through the date of Bowen's termination of employment; (ii) all amounts of bonus which have not been paid to Bowen shall be paid to Bowen at the time set forth in Section 5 hereof; provided that he shall not be entitled to a bonus for the Fiscal Year which includes the date of his termination of employment; (iii) Bowen shall be afforded the maximum length of time permissible under Group 1's stock option plans to exercise stock options granted to him thereunder; and (iv) fringe benefit coverage granted to Bowen pursuant to Section 6 hereof shall cease. (d) If Bowen's employment by Group 1 is terminated during the term of this Agreement by Group 1 without Cause, the consequences shall be as follows: (i) Bowen shall be entitled to receive, during the remaining term of this Agreement, his base salary, as adjusted, as described in Section 4 hereof and payable as set forth in such Section 4, (ii) all amounts of bonus shall be paid to Bowen, for the remainder of the term of this Agreement, in such amounts and at such times as if Bowen's employment with Group 1 had not been terminated but had continued for the outstanding balance of this Agreement; (iii) all stock options granted to Bowen which have not yet vested shall continue to vest as if Bowen's employment with Group 1 had not been terminated but had been continued for the outstanding balance of the term of this Agreement, and Bowen shall be afforded the maximum length of time permissible under Group 1's stock option plans to exercise stock options granted to him thereunder (disregarding any provisions that such options expire on termination); provided, however, that if such vesting after termination is prohibited by a governmental or regulatory -10- 11 authority, Group 1 shall at such time as such stock options would have vested, pay Bowen the difference between the average reported price for the stock over the immediately preceding twenty (20) days and the exercise price of such options at such date; and (iv) fringe benefits granted to Bowen pursuant to Section 6 hereof shall continue to be provided for the balance of the term of this Agreement as if Bowen's employment had not been terminated, including, but not limited to, the insurance policy issued to the Robert S. Bowen Insurance Trust, as policy-holder, pursuant to Section 6(a) hereof, the annual premiums for which policy shall be paid by Group 1. (e) Upon any termination of Bowen's employment hereunder, unless otherwise specifically provided herein, all options held by Bowen to purchase Group 1's stock shall be treated as provided in the instruments or agreements governing such options. Such treatment shall include any provision for acceleration of vesting upon retirement. 12. Notice. All notices, demands or other communications under this Agreement shall be effective if in writing and either given personally to the other party or sent pre-paid certified or registered mail, with return-receipt requested, addressed to the other party at the address set forth below or at such other address as may have been furnished by such other party in writing. Any notice sent by mail pursuant to the preceding sentence shall be deemed to have been received no later than seven (7) days after mailing. Notices to Bowen by mail shall be sent to Bowen's address as shown on the records of Group 1. Notices to Group 1 may be delivered by hand to the Chief Financial Officer of Group 1 or by mail by sending the same to Group 1's headquarters, Attention: Chief Financial Officer. 13. Effectiveness; Binding Effect. This Agreement shall be effective upon the execution and delivery hereof. This Agreement shall be binding on the parties hereto and their respective heirs, successors and assigns. 14. Governing Law; Severability. This Agreement and the relationships of the parties in connection with the subject matter of this Agreement shall be governed by and determined in accordance with the laws of the State of Maryland. The parties acknowledge that the terms of this Agreement are fair and reasonable at the date signed by them. However, in light of the possibility of a change of conditions or differing interpretations by a court of what is fair and reasonable, the parties stipulate as follows: if any one or more of the terms, -11- 12 provisions, covenants or restrictions of this Agreement shall be determined by a tribunal of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated; further, if any one or more of the terms, provisions, covenants, and restrictions contained in this Agreement shall for any reason be determined by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed, by limiting or reducing it, so as to be enforceable to the maximum extent compatible with then-applicable law. 15. Arbitration. Any disputes between the parties with respect to the meaning or interpretation of this Agreement or the amounts of any payments hereunder which cannot be settled amicably by the parties hereto, shall be settled by arbitration in the State of Maryland or another location mutually acceptable to the parties in accordance with the rules of arbitration of the American Arbitration Association. 16. Gender; Number. The use of the feminine, masculine or neuter pronoun herein shall not be restrictive as to gender and shall be interpreted in all cases as the context may require. The use of the singular or plural herein shall not be restrictive as to number and shall be interpreted in all cases as the context may require. 17. Execution in Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. Counterparts may be executed on the same date (or different dates) in different locations and telephonic confirmation by all individual signators shall be deemed proper, complete and binding execution of this Agreement (on the date that Bowen and at least one (1) signator for Group 1 has signed) such that this Agreement shall thereafter be in full force and effect. 18. Entire Agreement; Amendment. This Agreement sets forth the entire understanding and agreement of the parties hereto concerning the subject matter hereto, including the understandings previously set out in the Fee Agreement dated as of January 25, 1992 between Bowen and Group 1. No representation, promise, inducement or statement of intention has been made by or on behalf of any party hereto concerning the subject matter hereof which is not set forth in this Agreement. -12- 13 None of the provisions of this Agreement may be amended, waived, otherwise modified or terminated, except by a writing which is signed by both Bowen and Group 1 and which is specifically authorized or ratified by the Board. 19. No Assignment Without Consent of Group 1. Except as set forth herein or either by operation of law upon Bowen's death or pursuant to Bowen's will upon his death, no rights of any kind under this Agreement shall, without the specific authorization of the Board, be transferable or assignable by Bowen or any other person, or be subject to alienation, encumbrance, garnishment, attachment, execution or levy of any kind, voluntary or involuntary. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amended and Restated Employment Agreement as of the date first above written. GROUP 1 SOFTWARE, INC. By: -------------------------------- Name: Title: ----------------------------------- Robert S. Bowen -13- 14 EXHIBIT A ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE This benefit is in addition to the Basic Life Insurance. It will be paid, if while insured, you suffer any of the losses described below solely as the result of accidental injury. The loss must occur within one hundred eighty (180) days of the injury. Accidental injury is one that occurs solely through external, violent and accidental means. No more than your amount of insurance will be paid for all losses incurred during your lifetime. An amount equal to your Basic Life Insurance will be paid for the accidental loss of life, two limbs, sight of two eyes. An amount equal to one-half your Basic Life Insurance will be paid for the accidental loss of one limb or sight of one eye. Loss of sight means total and irrecoverable loss of sight. Loss of limb means loss of hand or foot by severance, at or above the wrist or ankle. No loss if covered as an accidental death or dismemberment if it results directly or indirectly from: a. Suicide, while sane or insane; b. a state of war, any act of war, an insurrection, or participating in a riot; c. bodily or mental infirmity or disease; d. ptomaine or bacterial infection except only septic infection of and through a visible wound accidentally sustained. -14- EX-27 3 ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAR-31-2001 APR-01-2000 JUN-30-2000 22,937 9,343 18,382 3,276 0 56,007 4,633 7,085 87,707 37,768 0 0 916 30,859 13,864 87,707 20,062 20,062 7,272 18,937 0 0 6 1,896 765 1,117 0 0 0 1,117 0.19 0.16
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