-----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, SqcCwTutmg51xK0E7jFzN9dmIf+0+PIEVtJSP+iIaHfJZouL6EXpQGLpBaEoMZGr rHXOAfPRXEu52Jwiy666zQ== 0000928385-95-000545.txt : 19951119 0000928385-95-000545.hdr.sgml : 19951119 ACCESSION NUMBER: 0000928385-95-000545 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MANAGEMENT SYSTEMS INC CENTRAL INDEX KEY: 0000310624 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 540856778 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09233 FILM NUMBER: 95592054 BUSINESS ADDRESS: STREET 1: 4050 LEGATO RD CITY: FAAIRFAX STATE: VA ZIP: 22033 BUSINESS PHONE: 7032678000 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File No. 0-9233 American Management Systems, Incorporated (Exact name of registrant as specified in its charter) State or Other Jurisdiction of I.R.S. Employer Incorporation or Organization: Delaware Identification No.: 54-0856778 4050 Legato Road Fairfax, Virginia 22033 (Address of principal executive office). Registrant's Telephone No., Including Area Code: (703) 267-8000 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 --- --- As of November 9, 1995, 26,610,332 shares of common stock were outstanding. CONTENTS Page ---- Part I Financial Information --------------------- Item 1. Financial Statements................................... 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 7 Part II Other Information Required in Report ------------------------------------ Item 1. Legal Proceedings...................................... 11 Item 2. Changes in Securities.................................. 11 Item 3. Defaults Upon Senior Securities........................ 11 Item 4. Submission of Matters to a Vote of Security Holders.... 11 Item 5. Other Information...................................... 11 Item 6. Exhibits and Reports on Form 8-K....................... 11 Part I FINANCIAL INFORMATION --------------------- Item 1. Financial Statements -------------------- The information furnished in the accompanying Consolidated Statements of Operations, Consolidated Revenues by Market, Consolidated Balance Sheets, and Consolidated Statements of Cash Flows reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results of operations and financial condition for the interim periods. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes for the year ended December 31, 1994, included in the American Management Systems, Incorporated (the "Company" or "AMS") Annual Report on Form 10-K (File No. 0-9233) filed with the Securities and Exchange Commission on March 30, 1995. 1 American Management Systems, Incorporated CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In thousands except per share data)
For the Quarter For the Nine Months Ended September 30, Ended September 30, 1995 1994 1995 1994 ---------- --------- ---------- --------- REVENUES Services and Products............. $143,774 $107,419 $406,141 $291,567 Reimbursed Expenses............... 18,924 11,713 49,780 37,613 -------- -------- -------- -------- 162,698 119,132 455,921 329,180 EXPENSES Client Project Expenses........... 92,678 62,605 259,038 177,973 Other Operating Expenses.......... 44,716 36,874 133,446 99,318 Corporate Expenses................ 12,092 9,628 30,485 23,580 -------- -------- -------- -------- 149,486 109,107 422,969 300,871 INCOME FROM OPERATIONS............. 13,212 10,025 32,952 28,309 OTHER (INCOME) EXPENSE Interest Expense.................. 501 345 1,236 942 Other (Income) Expense............ (274) (131) (1,006) (388) -------- -------- -------- -------- 227 214 230 554 INCOME BEFORE INCOME TAXES......... 12,985 9,811 32,722 27,755 INCOME TAXES....................... 5,453 4,023 13,743 11,380 -------- -------- -------- -------- NET INCOME......................... 7,532 5,788 18,979 16,375 DIVIDENDS AND ACCRETION ON SERIES B PREFERRED STOCK........... - - - 266 -------- -------- -------- -------- NET INCOME TO COMMON SHAREHOLDERS.. $ 7,532 $ 5,788 $ 18,979 $ 16,109 ======== ======== ======== ======== WEIGHTED AVERAGE SHARES AND EQUIVALENTS.................... 27,242 26,588 27,069 25,650 ======== ======== ======== ======== NET INCOME PER COMMON SHARE........ $ 0.28 $ 0.22 $ 0.70 $ 0.63 ======== ======== ======== ========
2 American Management Systems, Incorporated CONSOLIDATED REVENUES BY MARKET Unaudited (In thousands)
For the Quarter For the Nine Months Ended September 30, Ended September 30, 1995 1994 1995 1994 --------- --------- --------- --------- Financial Services Institutions........ $ 34,663 $ 24,323 $ 93,976 $ 63,407 Federal Government Agencies............ 25,192 22,757 72,403 66,033 State and Local Government and Education............................. 21,998 21,409 68,150 60,615 Telecommunications Firms............... 53,920 34,170 146,683 82,616 Other Corporate Clients................ 8,001 4,760 24,929 18,896 -------- -------- -------- -------- Total Services and Products Revenues... 143,774 107,419 406,141 291,567 Reimbursed Expenses Revenues........... 18,924 11,713 49,780 37,613 -------- -------- -------- -------- Total Revenues......................... $162,698 $119,132 $455,921 $329,180 ======== ======== ======== ========
3 American Management Systems, Incorporated CONSOLIDATED BALANCE SHEETS (In thousands)
9/30/95 ASSETS (Unaudited) 12/31/94 ---------- ---------- CURRENT ASSETS Cash and Cash Equivalents............................ $ 35,542 $ 34,238 Accounts and Notes Receivable........................ 187,993 141,089 Prepaid Expenses and Other Current Assets............ 5,467 6,669 -------- -------- 229,002 181,996 FIXED ASSETS Equipment............................................ 46,342 52,697 Furniture and Fixtures............................... 13,249 12,044 Leasehold Improvements............................... 11,350 10,608 -------- -------- 70,941 75,349 Accumulated Depreciation and Amortization............ (34,038) (46,674) -------- -------- 36,903 28,675 OTHER ASSETS Purchased and Developed Computer Software (Net of Accumulated Amortization of $44,212,000 and $41,094,000).................................... 33,257 28,786 Intangibles (Net of Accumulated Amortization of $1,957,000 and $1,581,000).......................... 7,012 7,365 Other Assets (Net of Accumulated Amortization of $4,113,000 and $3,513,000).......................... 7,365 5,360 -------- -------- 47,634 41,511 -------- -------- TOTAL ASSETS.......................................... $313,539 $252,182 ======== ========
4 American Management Systems, Incorporated CONSOLIDATED BALANCE SHEETS (In thousands)
9/30/95 LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) 12/31/94 ---------- ---------- CURRENT LIABILITIES Notes Payable and Capitalized Lease Obligations..... $ 29,625 $ 9,424 Accounts Payable.................................... 11,982 6,988 Accrued Incentive Compensation...................... 16,778 17,134 Other Accrued Compensation and Related Items........ 27,772 16,603 Deferred Revenues................................... 19,175 25,673 Other Accrued Liabilities........................... 2,580 3,896 Income Taxes Payable................................ - 1,778 -------- -------- 107,912 81,496 Deferred Income Taxes............................... 13,321 11,047 -------- -------- 121,233 92,543 NONCURRENT LIABILITIES Notes Payable and Capitalized Lease Obligations..... 22,106 12,933 Other Accrued Liabilities........................... 677 704 Deferred Income Taxes............................... 7,722 7,688 -------- -------- 30,505 21,325 -------- -------- TOTAL LIABILITIES.................................... 151,738 113,868 OTHER STOCKHOLDERS' EQUITY Preferred Stock ($0.10 Par Value, 4,000,000 Shares Authorized, None Issued or Outstanding)............ Common Stock ($0.01 Par Value, 100,000,000 Shares Authorized, 32,428,148 and 32,201,104 Issued and 26,543,190 and 26,196,520 Outstanding, Respectively)...................................... 324 322 Capital in Excess of Par Value...................... 62,183 60,341 Retained Earnings................................... 131,562 112,583 Currency Translation Adjustment..................... (765) (1,354) Common Stock in Treasury, at Cost (5,884,958 and 6,004,584 Shares)................... (31,503) (33,578) -------- -------- 161,801 138,314 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........... $313,539 $252,182 ======== ========
5 American Management Systems, Incorporated CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In thousands)
For The Nine Months Ended September 30, 1995 1994 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income......................................................... $ 18,979 $ 16,375 Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization.................................. 21,932 15,214 Deferred Income Taxes.......................................... 2,308 3,825 Provision for Doubtful Accounts................................ 1,200 1,100 Changes in Assets and Liabilities: Increase in Trade Receivables............................... (48,104) (45,591) Decrease in Prepaid Expenses and Other Current Assets....... 1,202 2,891 Increase in Other Assets.................................. (5,745) (1,277) Increase (Decrease) in Accrued Incentive Compensation....... 2,544 (3,082) Increase in Accounts Payable, Other Accrued Compensation, and Other Accrued Liabilities................ 14,820 5,413 (Decrease) Increase in Deferred Revenue..................... (6,498) 125 Decrease in Income Taxes Payable............................ (1,778) (174) -------- -------- Net Cash Provided (Used) by Operating Activities............... 860 (5,181) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Fixed Assets........................................... (18,388) (11,204) Purchase of Computer Software...................................... (1,779) (1,188) Investment in Software Products.................................... (10,914) (7,720) Increase in Other Investments...................................... 254 (102) Proceeds from Sale of Furniture, Equipment, and Computer Software................................................. 289 165 -------- -------- Net Cash Used by Investing Activities.......................... (30,538) (20,049) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings......................................................... 33,058 10,900 Payments on Borrowings............................................. (3,684) (3,151) Proceeds from Common Stock Options Exercised....................... 1,844 4,482 Payments to Acquire Treasury Stock................................. (826) - Dividends Paid to Preferred Shareholders........................... - (288) -------- -------- Net Cash Provided by Financing Activities...................... 30,392 11,943 Decrease in Currency Translation Adjustment........................ 590 432 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................. 1,304 (12,855) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................... 34,238 15,600 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD........................... $ 35,542 $ 2,745 ======== ======== NON-CASH OPERATING AND FINANCIAL ACTIVITIES: Treasury Stock Utilized to Satisfy Accrued Incentive Compensation Liability......................................................... $ 2,900 $ 600 Conversion of Preferred Stock to Common Stock...................... - $ 8,478
6 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations ------------- Results of Operations - --------------------- The following table sets forth for the periods indicated the percentage of revenues of major items in the Consolidated Statements of Operations and the percentage of change in such items from period to period, excluding percentage changes in deminimus dollar amounts.
Percentage of Period-to-Period Change Total Revenues --------------------------------------- ---------------- Quarter Ended Nine Months Ended Quarter Ended September 30, 1995 September 30, 1995 September 30, vs. vs. 1995 1994 September 30, 1994 September 30, 1994 ---- ---- ------------------ ------------------ Revenues Services and Products........................... 88.4% 90.2% 33.8% 39.3% Reimbursed Expenses............................. 11.6 9.8 61.6 32.3 ----- ----- Total........................................... 100.0 100.0 36.6 38.5 Expenses Client Project Expenses......................... 57.0 52.6 48.0 45.5 Other Operating Expenses........................ 27.5 31.0 21.3 34.4 Corporate Expenses.............................. 7.4 8.1 25.6 29.3 ----- ----- Total........................................... 91.9 91.7 37.0 40.6 Income from Operations............................ 8.1 8.3 31.8 16.4 Other (Income) Expense............................ 0.1 0.2 6.1 (58.5) Income Before Income Taxes........................ 8.0 8.1 32.4 17.9 Income Taxes...................................... 3.4 3.4 35.5 20.8 Net Income........................................ 4.6 4.7 30.1 15.9 Dividends and Accretion on Series B Preferred Stock.................................. 0.0 0.0 0.0 (100.0) Net Income to Common Shareholders................. 4.6 4.7 30.1 17.8 Weighted Average Shares and Equivalents........... - - 2.5 5.5 Earnings per Share................................ - - 27.3 11.1
7 Results of Operations (continued) - --------------------- Revenues Services and Products revenues ("S&P Revenues") increased 34% in the third quarter and 39% for the first nine months of 1995 compared to the same 1994 periods, and all of the Company's target markets experienced revenue growth in both the quarter and the nine month period. S&P Revenues derived from business with non-US clients increased approximately 59% during the third quarter (to $44.0 million) and 101% during the first nine months (to $117.3 million) and accounted for approximately 45% of the third quarter and 51% of the nine month S&P Revenue increases. In the Financial Services Institutions target market, S&P Revenues increased 43% in the third quarter and 48% in the first nine months of 1995 (to $34.6 millon and $94.0 million, respectively) over the comparable 1994 periods, owing principally to build-ups in business with clients who started large projects in the second half of 1994. The Company expects that S&P Revenues in this market for the year will increase at approximately the same rate as the Company's overall revenue growth rate. S&P Revenues in the Federal Government Agencies target market increased approximately 10% for both the quarter and the first nine months (to $25.2 million and $72.4 million, respectively) when compared to the same 1994 periods. The Company expects S&P Revenues in this market for the year to continue to increase, but at rates lower than the overall growth in total S&P Revenues. In the State and Local Government and Education target market, S&P Revenues increased 3% during the quarter and 12% during the nine months, compared to 1994. The nine-month increase was principally due to the completion, during the second quarter of 1995, of a performance-based contract with a client, which was being accounted for under the completed contracts method. The Company expects S&P Revenue growth in this market for the year to be at a slower growth rate than the Company's overall growth rate for 1995. In the Telecommunications market, S&P Revenues increased 58% in the third quarter and 78% in the first nine months of 1995 over the comparable 1994 periods. This increase is mainly attributable to international business, which increased 59% to $34.1 million in S&P Revenues in the quarter, and 115% to $88.4 million in the first nine months. The Company expects revenue growth in this market for the year to continue to outpace that of the Company as a whole. S&P Revenues from Other Corporate Clients increased 68% during the third quarter and 32% during the first nine months of 1995, compared to 1994. This market grouping includes business not covered by the Company's other markets, including business which may at some point be treated as a separate target market. The Company expects S&P Revenues in this market to grow, for the year as a whole, at rates below that of the Company overall. 8 Expenses Client Project Expenses increased 48% during the third quarter and 46% during the first nine months of 1995, compared to the same 1994 periods. These expenses increased at rates greater than S&P Revenues, due principally to assimilating new staff onto client projects. The Company expects these expenses for the year to increase at rates greater than the S&P Revenue growth of the Company. Other Operating Expenses increased 21% in the quarter and 34% for the first nine months, compared to the same 1994 periods. The nine month rate of increase is in line with the increase in S&P Revenues, and the Company expects these expenses for the year to increase at a rate below that of the S&P Revenue growth, owing primarily to a leveling of certain expenses in the second half of the year. Corporate Expenses increased 26% and 29% during the quarter and the first nine months, respectively, compared to the third quarter and the first nine months of 1994. The Company expects Corporate Expenses to continue to increase at rates slower than the overall revenue growth rates. Other (Income) Expense Interest Expense increased 45% during the third quarter and 31% during the first nine months of 1995, due to increased borrowing by international subsidiaries under a line of credit agreement and additional term debt borrowings during the third quarter of 1995. Other Income, primarily interest income, increased 109% in the third quarter and 159% for the first nine months of 1995, owing to higher levels of investments and higher interest rates in the US. LIQUIDITY AND CAPITAL RESOURCES The Company provides for its operating cash requirements primarily through funds generated from operations, and using bank borrowings primarily for cash management with respect to the short term impact of certain cyclical uses, such as annual payments of incentive compensation and financing capital acquisitions. At September 30, 1995, the Company's cash and cash equivalents totaled $35.5 million, up from $34.2 million at the end of 1994. Cash provided from operating activities was $0.9 million due principally to payments made in the first quarter of the year for incentive compensation and other employee benefits and increases in accounts receivable. Additionally, the Company invested over $31.1 million in fixed assets and software purchases, and computer software development. The Company borrowed an additional $33.1 million during the first nine months; $18.1 million for short-term borrowings by its European subsidiaries, and $15.0 million in long-term term debts. Additionally, the Company made approximately $3.7 million in debt repayments during the first nine months and received approximately $1.8 million from employees, related to stock options being exercised. As previously reported, the Company has subcontracts with a prime contractor in the human services business. At September 30, 1995, the accounts receivable balance related to these subcontracts is approximately 9% of total accounts receivable. These amounts span four contracts which the prime contractor has with state/local government clients, in three different states. 9 The Company has two line of credit facilities which it can use to generate working capital, for which the principal need is to finance the growth in accounts receivable. At September 30, 1995, the Company had $22.8 million outstanding under one of the line of credit agreements. At September 30, 1995, the Company's material unused source of liquidity consisted of approximately $16.2 million available under its revolving lines of credit. Also at September 30, 1995, the Company's debt-equity ratio, as measured by total liabilities divided by common stockholders' equity, was 0.94. At December 31, 1994, the debt-equity ratio was 0.82. The Company believes that its liquidity needs can be met from the resources described above. 10 Part II OTHER INFORMATION REQUIRED IN REPORT ------------------------------------ Item 1. Legal Proceedings ----------------- As reported in AMS's Form 10-Q for the quarter ended June 30, 1995 and filed August 14, 1995, Andersen Consulting LLP ("Andersen") sued AMS on July 20, 1995 claiming copyright infringement and appropriation of trade secrets, and seeking injunctive relief as well as damages. On August 25, 1995 the United States District Court for the Southern District of New York, in which the suit is pending, denied Andersen's request for a preliminary injunction based on Andersen's delay in filing suit. AMS has vigorously contested Andersen's claims. On August 30, 1995, AMS served its answer together with counterclaims against Andersen. In its answer, AMS has denied any liability to Andersen. AMS believes that no trade secret protection exists in the concepts cited by Andersen and that AMS has utilized no confidential information of Andersen. AMS has claimed that Andersen defamed AMS and attempted to interfere with AMS's contracts and opportunities by disseminating false statements regarding AMS. 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 -------------------------------- (a) Exhibits None. 11 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. AMERICAN MANAGEMENT SYSTEMS, INCORPORATED Date: November 14, 1995 /s/ Philip M. Giuntini ----------------- ------------------------------------------ Philip M. Giuntini, President Date: November 14, 1995 /s/ James E. Marshall ----------------- ------------------------------------------ James E. Marshall, Controller 12 EX-27 2 EXHIBIT 27
5 This schedule contains summary financial information extracted from the September 30, 1995 financial statements and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 35,542 0 187,993 4,454 0 229,002 70,941 (34,038) 313,539 121,233 0 324 0 0 161,477 313,539 455,921 455,921 259,038 422,969 230 1,200 1,236 32,722 13,743 18,979 0 0 0 18,979 0.70 0.70
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