-----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, CxLdODYpfbekJ9+BPIrOHX4Mx2R5fU10qzCmoIBaQZfpsMUrG53I0R2gBDrYEBIa SlRL/xZehbZyrVouFxS75w== 0000928385-96-000251.txt : 19960402 0000928385-96-000251.hdr.sgml : 19960402 ACCESSION NUMBER: 0000928385-96-000251 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-09233 FILM NUMBER: 96542762 BUSINESS ADDRESS: STREET 1: 4050 LEGATO RD CITY: FAIRFAX STATE: VA ZIP: 22033 BUSINESS PHONE: 7032678000 10-K405 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 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 of Incorporation: Delaware I.R.S. Employer 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 Securities Registered Pursuant to Section 12(b) of the Act: None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock Par Value $0.01 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X ----- The aggregate market value of voting stock held by non-affiliates of the Registrant as of March 22, 1996 was $962,365,740. As of March 22, 1996, 40,471,879 shares of common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE 1. Pursuant to Form 10-K General Instruction G(2), registrant hereby incorporates by reference those portions of the American Management Systems, Incorporated 1995 Financial Report necessary to respond to items 5, 6, 7, and 8 of this Form 10-K. 2. Pursuant to Form 10-K General Instruction G(3), registrant hereby incorporates by reference those portions of the American Management Systems, Incorporated definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 1996 necessary to respond to items 10, 11, 12, and 13 of this Form 10-K. i CONTENTS
Page ---- Part I Item 1. Business..................................................... 1 Item 2. Properties................................................... 4 Item 3. Legal Proceedings............................................ 4 Item 4. Submission of Matters to a Vote of Security Holders.......... 4 Part II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters.............................. 5 Item 6. Selected Financial Data...................................... 5 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 5 Item 8. Financial Statements and Supplementary Data.................. 5 Item 9. Changes in Accountants and Disagreements with Accountants on Accounting and Financial Disclosure........... 5 Part III Item 10. Directors and Executive Officers of the Registrant........... 6 Item 11. Executive Compensation....................................... 6 Item 12. Security Ownership of Certain Beneficial Owners and Management............................................... 6 Item 13. Certain Relationships and Related Transactions............... 6 Part IV Item 14. Exhibits, Financial Statements and Schedules, and Reports on Form 8-K...................................... 7
ii PART I ITEM 1. BUSINESS OVERVIEW With 1995 revenues of $632 million, the business of American Management Systems, Incorporated and its wholly-owned subsidiaries ("AMS" or the "Company") is to partner with clients to achieve breakthrough performance through the intelligent use of information technology. AMS provides a full range of consulting services from strategic business analysis to the full implementation of solutions that produce genuine results on time and within budget. AMS measures success based on the results and business benefits achieved by its clients. AMS is a trusted business partner for many of the largest and most respected organizations in the markets in which it specializes. Each year, approximately 85% of the Company's business comes from clients it worked with in previous years. Organizations in AMS's target markets -- telecommunications firms; financial services institutions; state and local governments and education organizations; federal government agencies; and other corporate clients -- have a crucial need to exploit the potential benefits of information and systems integration technology. The Company helps clients fulfill this need by continuing to build a professional staff which is composed of experts in the necessary technical and functional disciplines; managers who can lead large, complex systems integration projects; and business and computer analysts who can devise creative solutions to complex problems. Another significant component of AMS's business is the development of proprietary software products, either with its own funds or on a cost-shared basis with other organizations. These products are principally licensed as elements of custom tailored systems, and, to a lesser extent, as stand-alone applications. The Company expensed $19.4 million in 1995, $20.4 million in 1994 and $18.7 million in 1993 for research and development associated with proprietary software. As a percentage of services and products (S&P) revenues, license and maintenance fee revenues were less than 15% during each of the last three years. In order to serve clients, outside of the U.S.A., AMS has expanded internationally by establishing eleven subsidiaries or branches. Exhibit 21 of this Form 10-K provides a complete listing of all AMS subsidiaries (and branches), showing name, year organized or acquired, and place of incorporation. Services and products revenues attributable to non-US operations of AMS were approximately $170.0 million in 1995, $92.1 million in 1994, and $52.8 million in 1993. Additional information on revenues, operating profits, and assets attributable to AMS's geographic areas of operation is provided in Note 11 of the consolidated financial statements appearing in Exhibit 13 of this Form 10-K. Founded in 1970, AMS services clients worldwide. AMS's approximately 5,400 full-time employees are located at its headquarters in Fairfax, Virginia and in offices in 48 cities throughout North America and Europe. 1 TELECOMMUNICATIONS FIRMS AMS markets systems consulting and integration services for order processing, customer care, billing, accounts receivable, and collections, both for local exchange and interexchange carriers and for cellular telephone companies. Most of the Company's work involves developing and implementing customized capabilities using AMS's application software products as a foundation. FINANCIAL SERVICES INSTITUTIONS AMS provides information technology consulting and systems integration services to money center banks, major regional banks, insurance companies, and other large financial services firms. The Company specializes in corporate and international banking, consumer credit management, global custody and securities control systems, and bank management information systems. STATE AND LOCAL GOVERNMENTS AND EDUCATION AMS markets systems consulting and integration services and application software products to state, county, and municipal governments for financial management, revenue management, human resources, social services, and public safety functions. The Company also markets services and application software products to universities and colleges. FEDERAL GOVERNMENT AGENCIES The Company's clients include civilian and defense agencies and aerospace companies. Assignments require knowledge of agency programs and management practices as well as expertise in computer systems integration. AMS's work for defense agencies often involves specialized knowledge in engineering and logistics. OTHER CORPORATE CLIENTS The Company also solves information systems problems for the largest firms in other industries. AMS has systems integration and operations contracts with several large organizations and intends to pursue more. AMS provides technical training and technical consulting services in software technology for large scale business systems. PEOPLE People are AMS's most important asset and its success depends on its ability to attract and motivate especially well-qualified people. The Company's largest investment in recent years has been in recruiting, assimilating, and developing its people. AMS recruited and successfully assimilated approximately 1,800 new staff members in 1995, including 340 in Europe. Over one-half of the new staff members came from its college and university recruiting program. AMS recruits individuals for a career and hires a balanced mix of recent university graduates and experienced professionals who have demonstrated extraordinary technical, analytical, or management skills. A large number have advanced degrees in management, computer science, public policy, or engineering. 2 Individuals are assigned to one of the Company's market-oriented groups to develop expertise in the areas needed for solving its clients' problems. Performance, in terms of productivity, quality of work, and creativity in solving problems, determines an individual's advancement. This motivates staff members to increase their knowledge of AMS's clients' businesses and industries, to stay current with the technology most suited to AMS's clients, and to develop the consulting and managerial skills needed to produce results. COMPETITIVE FACTORS AMS's competition comes primarily from the management services units of large public accounting firms and consulting and systems integration firms. In addition, prospective clients may decide to do projects with their in-house staff. AMS seeks to meet this competition by exploiting its industry-specific knowledge, its expertise with important business functions and with new technologies, its proprietary computer application products, and its experience in managing very large design and implementation projects. Although price is always a factor in clients' decisions, it is typically not the major factor. Other important factors are proven experience, the capabilities of the proposed computer application products, the quality of the proposed staff, and the proposed completion time for the project. MARKETING, CONTRACTS, AND SIGNIFICANT CUSTOMERS Marketing is done principally by the senior staff (executive officers, vice presidents, senior principals, and principals) and by a relatively small number of full-time salespersons for each large market. In the U.S. Government markets, AMS replies selectively to requests for proposals, concentrating on those closely related to previous work done for the same or similar customers. Certain of the Company's software products and computer services are sold by a small group of full-time salespersons and, for those products and services, AMS advertises in trade publications and exhibits at industry conventions. For large systems integration projects, AMS typically contracts for one phase (design, development, and implementation) at a time. Many contracts may be canceled by the customer on short notice. Most contracts with federal government agencies allow for termination for the convenience of the government and for an annual audit. No contracts are subject to renegotiation. AMS generally contracts either on the basis of reimbursement of costs plus a fixed fee, a fixed or ceiling price for each phase, unit rates for time and materials used, or services sold at unit prices. In most cases, AMS receives monthly or per deliverable progress payments. In 1995, the Company worked on projects directly for 72 U.S. Government clients, representing a total of $82.4 million, or 14.7%, of services and products revenues. No other customer accounted for 10% or more of services and products revenues in 1995. 3 ITEM 2. PROPERTIES Headquartered in Virginia, the Company's principal operations in Fairfax occupy approximately 276,000 square feet of office space under a lease expiring in 2007, approximately 18,000 square feet under a lease expiring in 2000, and approximately 84,000 square feet under a lease expiring in 2004. The Company's Arlington operations relocated in early 1996 to a 264,000 square foot facility in Fairfax, under a lease expiring in 2011. The Company has other long-term office lease commitments, many with renewal options, at locations throughout the United States, totaling approximately 554,000 square feet under leases expiring through 2011. The Lakewood, Colorado and the New York City offices are the largest of the regional office locations. The Lakewood location has approximately 74,000 square feet under a lease expiring in 1996 (which will be relocated to a 126,000 square foot facility under leases expiring through 2011), approximately 14,000 square feet under a lease expiring in 1997, and approximately 27,000 square feet under a lease expiring in 1999. The New York City location is comprised of approximately 49,000 square feet under leases expiring in 1996 and 2003. Additionally, the Company's international staff occupies approximately 88,000 square feet of office space outside of the U.S. locations under leases expiring through 2003. With regard to its operating environment, the Company is provided with a mainframe processor environment at the IBM Dedicated Processor Center in Irving, Texas. In addition to the peripherals, power, and environmentals provided by the Dedicated Processor Center, the Company owns other mainframe peripheral equipment and microcomputers, and leases an IBM communications processor. The Company believes its facilities and equipment continue to be adequate for its business as currently conducted. ITEM 3. LEGAL PROCEEDINGS As reported in AMS's Form 10-Q for the quarter ended September 30, 1995 and filed November 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 denied any liability by Andersen. AMS claimed that no trade secret protection exists in the concepts cited by Andersen and that AMS has utilized no confidential information of Andersen. AMS claimed that Andersen defamed AMS and attempted to interfere with AMS's contracts and opportunities by disseminating false statements regarding AMS. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of 1995. 4 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Market information for the Company's common stock contained in the Company's 1995 Financial Report is incorporated herein by reference in accordance with General Instruction G(2) of Form 10-K. ITEM 6. SELECTED FINANCIAL DATA Selected financial data contained in the Company's 1995 Financial Report is incorporated herein by reference in accordance with General Instruction G(2) of Form 10-K. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis of financial condition and results of operations contained in the Company's 1995 Financial Report is incorporated herein by reference in accordance with General Instruction G(2) of Form 10-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the Company, together with the report thereon of Price Waterhouse LLP, and the supplementary financial information, contained in the Company's 1995 Financial Report, are incorporated herein by reference in accordance with General Instruction G(2) of Form 10-K. ITEM 9. CHANGES IN ACCOUNTANTS AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 5 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information relating to the directors and executive officers of the Company contained in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 1996, is incorporated herein by reference. The Company's definitive Proxy Statement will be filed within 120 days after the close of the Company's fiscal year in accordance with General Instruction G(3) of Form 10-K. ITEM 11. EXECUTIVE COMPENSATION Information relating to executive compensation contained in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 1996, is incorporated herein by reference. The Company's definitive Proxy Statement will be filed within 120 days after the close of the Company's fiscal year in accordance with General Instruction G(3) of Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information relating to the security ownership of certain beneficial owners and management contained in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 1996, is incorporated herein by reference. The Company's definitive Proxy Statement will be filed within 120 days after the close of the Company's fiscal year in accordance with General Instruction G(3) of Form 10-K. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information relating to certain relationships and related transactions contained under the headings "Principal Stockholders", "Compensation Committee Interlocks and Insider Participation" and "Certain Transactions" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 1996, is incorporated herein by reference. The Company's definitive Proxy Statement will be filed within 120 days after the close of the Company's fiscal year in accordance with General Instruction G(3) of Form 10-K. 6 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. FINANCIAL STATEMENTS The consolidated financial statements of American Management Systems, Incorporated and subsidiaries filed are as follows: Consolidated Statements of Operations for 1995-93 Consolidated Balance Sheets as of December 31, 1995 and 1994 Consolidated Statements of Cash Flows for 1995-93 Consolidated Statements of Changes in Stockholders' Equity for 1995-93 Notes to Consolidated Financial Statements Report of Independent Accountants 2. FINANCIAL STATEMENT SCHEDULES The financial statement schedules of American Management Systems, Incorporated and subsidiaries filed are as follows: Report of independent accountants on financial statement schedules Schedule II - Valuation and Qualifying Accounts for 1995- 1993 All other schedules are omitted because they are not applicable, or the required information is shown in the financial statements or the notes thereto or in Management's Discussion and Analysis of Financial Condition and Results of Operations. Individual financial statements of the Company and each of its subsidiaries are omitted because the Company is primarily an operating company, and all subsidiaries included in the consolidated financial statements being filed, in the aggregate, do not have a minority equity interest in and/or indebtedness to any person other than the Company or its consolidated subsidiaries in amounts which together exceed five percent of the total assets as shown by the most recent year-end consolidated balance sheet. 7 3. EXHIBITS The exhibits to the Annual Report on Form 10-K of American Management Systems, Incorporated filed are as follows: 3. Articles of Incorporation and By-laws 3.1 Second Restated Certificate of Incorporation of the Company. 3.2 By-laws of the Company, (incorporated herein by reference to Exhibit 3 of the Company's 1992 Annual Report on Form 10-K). 10. Material Contracts 10.1 1992 Amended and Restated Stock Option Plan E, as amended (incorporated herein by reference to Exhibit B to the Company's definitive Proxy Statement filed on April 17, 1995). 10.2 Outside Directors Stock-for-Fees Plan (incorporated herein by reference to Exhibit C to the Company's definitive Proxy Statement filed on April 17, 1995). 11. Computation of Net Income per Common Share 13. 1995 Financial Report 21. Subsidiaries of the Company 23. Consent of Independent Accountants (b) REPORTS ON FORM 8-K None. 8 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors of American Management Systems, Incorporated Our audits of the consolidated financial statements referred to in our report dated February 14, 1996 appearing on page 19 of the 1995 Financial Report of American Management Systems, Incorporated (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE LLP Washington, D.C. February 14, 1996 9 Schedule II VALUATION AND QUALIFYING ACCOUNTS (In millions)
1995 1994 1993 ----------------------------------------------------------------- Allowance for Doubtful Accounts ------------------------------- Balance at Beginning of Period $ 3.3 $ 1.8 $ 1.5 Allowance Accruals 1.6 1.5 1.0 Charges Against Allowance 0.0 0.0 (0.7) ----- ----- ----- Balance at End of Period $ 4.9 $ 3.3 $ 1.8 ===== ===== =====
10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on the 29th of March, 1996. American Management Systems, Incorporated by s/Philip M. Giuntini --------------------------------------- Philip M. Giuntini President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following officers and directors of Registrant in the capacities and on the date indicated. Signature Title Date --------- --------------- ------------- (i) Principal Executive Officer: s/Paul A. Brands Chief Executive March 29, 1996 ------------------------------ Paul A. Brands Officer (ii) Principal Financial Officer: s/Frank A. Nicolai Secretary and March 29, 1996 ------------------------------ Frank A. Nicolai Treasurer (iii) Principal Accounting Officer: s/James E. Marshall Controller March 29, 1996 ------------------------------ James E. Marshall (iv) Directors: s/Daniel J. Altobello Director March 29, 1996 ------------------------------ Daniel J. Altobello 11 Signature Title Date --------- -------------- -------------- s/Paul A. Brands Director March 29, 1996 ---------------------------- Paul A. Brands s/James J. Forese Director March 29, 1996 ---------------------------- James J. Forese s/Philip M. Giuntini Director March 29, 1996 ---------------------------- Philip M. Giuntini s/Patrick W. Gross Director March 29, 1996 ---------------------------- Patrick W. Gross s/Dorothy Leonard-Barton Director March 29, 1996 ---------------------------- Dorothy Leonard-Barton s/W. Walker Lewis Director March 29, 1996 ---------------------------- W. Walker Lewis s/Frederic V. Malek Director March 29, 1996 ----------------------------- Frederic V. Malek s/Frank A. Nicolai Director March 29, 1996 ----------------------------- Frank A. Nicolai s/Charles O. Rossotti Director March 29, 1996 ----------------------------- Charles O. Rossotti 12 EXHIBIT INDEX
Exhibit Number Description - -------- ----------- 3.1 Second Restated Certificate of Incorporation of the Company 3.2 By-laws of the Company, (incorporated herein by reference * to Exhibit 3 of the Company's 1992 Annual Report on Form 10-K). 10.1 1992 Amended and Restated Stock Option Plan E, as amended * (incorporated herein by reference to Exhibit B to the Company's definitive Proxy Statement filed on April 17, 1995). 10.2 Outside Directors Stock-for-Fees Plan (incorporated herein by * reference to Exhibit C to the Company's definitive Proxy Statement filed on April 17, 1995). 11. Computation of Net Income per Common Share 13. 1995 Financial Report 21. Subsidiaries of the Company 23. Consent of Independent Accountants
____________ * Previously filed. EX-3.1 2 CERTIFICATE OF INCORPORATION EXHIBIT 3.1 SECOND RESTATED CERTIFICATE OF INCORPORATION OF AMERICAN MANAGEMENT SYSTEMS, INCORPORATED PURSUANT TO SECTION 245 OF THE DELAWARE GENERAL CORPORATION LAW AMERICAN MANAGEMENT SYSTEMS, INCORPORATED, a corporation organized and existing under the laws of the State of Delaware hereby certifies as follows: 1. The original Certificate of Incorporation of American Management Systems, Incorporated was filed with the Secretary of State on February 2, 1970. 2. A Restated Certificate of Incorporation of American Management Systems, Incorporated was filed with the Secretary of State on July 27, 1979. 3. This Second Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Restated Certificate of Incorporation of this Corporation as heretofore amended or supplemented and there is no discrepancy between those provisions and the provisions of this Second Restated Certificate of Incorporation. 4. This Second Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance with Section 245 of the General Corporation Law of the State of Delaware. 5. This Second Restated Certificate of Incorporation shall become effective upon its filing with the Secretary of the State of Delaware. 6. The text of the Restated Certificate of Incorporation as amended or supplemented heretofore is hereby restated without further amendments or changes to read as herein set forth in full: FIRST: The name of the Corporation is AMERICAN MANAGEMENT SYSTEMS, INCORPORATED. SECOND: Its registered office in the State of Delaware is to be located at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The nature of the business of the Corporation and the objects or purposes proposed to be transacted, promoted or carried on by it in any part of the world, are to carry on any business and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, including, but without limitation: To engage in and provide all types of business and professional consulting services in developing computer-based information and analysis for planning and management. To devise, formulate, contract for or conduct market, financial or business research, studies, surveys and tests; to create and utilize business systems, methods, controls, layouts and plans; to assemble and supply personnel and staff, all as required or deemed advisable for a solution of marketing, financial, business or management problems of any corporation, association, partnership, syndicate, entity, person or governmental, municipal or public authority, domestic or foreign, located in or organized under the laws of any authority in any part of the world, or to an improvement in function or to an increase in efficiency or profit of any of the foregoing, whether in relation to management, administration, maintenance, manufacture, production, display, inventory, marketing, sales, distribution or otherwise; and, generally, to furnish, render, perform and provide -2- all kinds and types of professional assistance to business, financial and industrial organizations and governmental authorities not specifically prohibited by statute or law. To establish, maintain and furnish services related to the collection, processing, maintenance and retrieval of information, data, records and communications of all kinds, including the development, installation and operation of programs, procedures and equipment necessary to effect or carry out any of the foregoing. To prepare, develop and establish computer programming libraries and manuals of operation and maintenance; to establish training programs in computer and other technical fields; and to instruct and train operating and maintenance crews for computers, electronic and electro-mechanical systems and equipment. To research, develop, invent, design, engineer, manufacture, produce, process, extract, construct, erect, assemble, experiment with, alter, improve, remodel, equip, install, repair, maintain, manage, operate, purchase, lease, or otherwise acquire, hold, use, import, export, trade and deal in, distribute, mortgage, pledge, convey, sell or otherwise dispose of any computers, electronic systems, equipment, components, electrical and electro-mechanical apparatus, data processing equipment, cables, motors, meters, supplies, parts, appliances, tools, goods, wares, merchandise, commodities, articles of commerce, and any and all other contrivances or things whatsoever, producing, utilizing, related to or connected with any of the foregoing. To enter into any contracts, and to erect, buy, lease or otherwise acquire, own, maintain, operate, sell, exchange and otherwise dispose of any property, real or personal, tangible or intangible, relating to the foregoing. To do everything necessary, proper, advisable or convenient for the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers herein set forth and to do every other act and thing incidental thereto or connected therewith, provided the same be not forbidden by the laws of the State of Delaware. FOURTH: Section 1. Authorized Shares. The total authorized capital stock of the ----------------- Corporation shall be 104,000,000 shares, consisting of 4,000,000 shares of Preferred Stock, par value $.10 per share (herein called the "Preferred Stock"), and 100,000,000 shares of Common Stock, par value $0.01 per share (herein called the "Common Stock"). The designations, preferences, relative, participating, optional or other special rights, -3- qualifications, limitations, restrictions, voting powers and privileges of each class of the Corporation's capital stock shall be as follows: Section 2. Preferred Stock. --------------- (a) Issuance in Series. The Preferred Stock may be issued in such one or ------------------ more series as shall from time to time be created and authorized to be issued by the Board of Directors as hereinafter provided. (b) Authority of the Board of Directors. The Board of Directors is hereby ----------------------------------- expressly authorized, by resolution or resolutions from time to time adopted providing for the issuance of Preferred Stock, to the extent not fixed by the provisions hereinafter set forth or otherwise provided by law, to determine that any series of the Preferred Stock shall be without voting powers and to fix and state the voting powers, full or limited, if any, the designations, powers, preferences and relative, participating, optional and other special rights, if any, of the shares of each series of Preferred Stock, and the qualifications, limitations and restrictions thereof, including (but without limiting the generality of the foregoing) any of the following with respect to which the Board of Directors shall determine to make affirmative provisions: (i) the number of shares to constitute such series and the distinctive name and serial designation thereof; (ii) the annual dividend rate or rates and the date on which the first dividend on shares of such series shall be payable and all subsequent dividend payment dates; -4- (iii) whether dividends are to be cumulative or non-cumulative, the participating or other special rights, if any, with respect to the payment of dividends and the date from which dividends on all shares of such series issued prior to the record date for the first dividend shall be cumulative; (iv) whether any series shall be subject to redemption and, if so, the manner of redemption and redemption price or prices for such series, which may consist of a redemption price or scale of redemption prices applicable only to redemption for a sinking fund (which terms as used in this clause shall include any fund or provisions for the periodic purchase or retirement of shares), and a different redemption price or scale of redemption prices applicable to any other redemption; (v) the amount or amounts of preferential or other payment to which any series is entitled over any other series or class or over the Common Stock on voluntary or involuntary liquidation, dissolution or winding up; (vi) whether or not the shares of such series shall be subject to the operation of a purchase, retirement or sinking fund, and, if so, whether such purchase, retirement or sinking fund shall be cumulative or non-cumulative, the extent to and the manner in which such fund shall be applied to the purchase or redemption of the shares of such series for retirement or for other corporate purposes and the terms and provisions relative to the operation thereof and the extent to which the charges therefor are to have priority over the payment of dividends on any other series or class of the Common Stock; -5- (vii) the terms, if any, upon which shares of such series shall be convertible into, or exchangeable for, or shall have rights to purchase or other privileges to acquire shares of stock of any other class or classes or of any other series of the same or any other class or classes, including the price or prices or the rate or rates of conversion, exchange, purchase or acquisition and the terms of adjustment, if any; (viii) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or making of other distributions on, and upon the purchase, redemption, or other acquisition of the Common Stock or any other series or class or classes of stock of the Corporation ranking on a parity with or junior to the shares of such series either as to dividends or upon liquidation; and (ix) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock (including additional shares of such series or of any other series or of any other class) ranking on a parity with or prior to the shares of such series either as to dividends or upon liquidation. (c) Before the Corporation shall issue any shares of Preferred Stock of any series authorized as hereinbefore provided, a certificate setting forth a copy of the resolution or resolutions with respect to such series adopted by the Board of Directors of the Corporation pursuant to the foregoing authority vested in said Board shall be made, filed and recorded in accordance with the then applicable requirements, if any, of the laws of the State of Delaware, or, if no certificate is then so required such certificate shall be signed and acknowledged on behalf of the Corporation by the chairman or vice-chairman of the Board of Directors or the Corporation's president or a -6- vice-president and its corporate seal shall be affixed thereto and attested by its secretary or an assistant secretary and such certificate shall be filed and kept on file at the registered office of the Corporation in the State of Delaware and in such other place or places as the Board of Directors shall designate. (d) Shares of any series of Preferred Stock which shall be issued and thereafter acquired by the Corporation through purchase, redemption, conversion or otherwise, shall return to the status of authorized but unissued Preferred Stock of the same series unless otherwise provided in the resolution or resolutions of the Board of Directors. Unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issue thereof, the number of authorized shares of stock of any such series may be increased or decreased (but not below the number of shares thereof then outstanding) by resolution or resolutions of the Board of Directors and the filing of a certificate complying with the requirements referred to in subparagraph (d) above. In case the number of shares of any such series of Preferred Stock shall be decreased, the shares representing such decrease shall, unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance thereof, resume the status of authorized but unissued Preferred Stock, undesignated as to series. Section 3. Voting Rights. ------------- (a) Preferred Stock. In addition to the voting rights required by law and --------------- Restated Certificate of Incorporation, as the same may be amended from time to time, the holder of shares of any series of Preferred Stock shall be entitled to such voting rights, if any, as are provided by -7- the resolution or resolutions of the Board of Directors creating the series of Preferred Stock of which such shares are a part. (b) Common Stock. Except as required by law and this Restated Certificate ------------ of Incorporation, as the same may be amended from time to time, and except as provided by the resolution or resolutions of the Board of Directors creating or amending any series of Preferred Stock, the holders of Common Stock of the Corporation shall have the right to vote for the election of directors (other than for any director then permitted to be elected by the separate vote of classes or series of capital stock of the Corporation to the exclusion of the holders of the Common Stock) and on all other matters submitted to a vote of shareholders generally and each holder thereof shall be entitled to one vote for each share of such Common Stock held by such holder. Section 4. Common Stock. ------------ (a) Dividends. The holder of each share of Common Stock shall be entitled --------- to receive dividends, when and as declared by the Board of Directors of the Corporation, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property, or in shares of Common Stock. No dividends other than dividends payable only in shares of Common Stock shall be paid on the Common Stock if cash dividends in full to which all outstanding shares of the Preferred Stock shall then be entitled for the then current dividend period and where such dividends are cumulative for all past dividend periods shall not have been paid or been declared and set apart for payment, as provided in Section 2 of this Article FOURTH. -8- (b) Rights of Common Stock on Dissolution, Liquidation, etc. In the event ------------------------------------------------------- of any dissolution, liquidation or winding-up of the affairs of the Corporation, the holders of the Common Stock shall be entitled, after payment or provision for payment of the debts and other liabilities of the Corporation, and the amounts to which the holders of the Preferred Stock shall be entitled, to share equally in the remaining net assets of the Corporation. (c) Reservation of Common Stock. The Corporation shall at all times --------------------------- reserve and hold available out of its authorized but unissued Common Stock solely for the purpose of effecting the conversion or exchange of the shares of the Preferred Stock the full number of shares of Common Stock then deliverable upon conversion or exchange of all shares of Preferred Stock at the time outstanding. Section 5. Issue of and Consideration for Capital Stock. The authorized -------------------------------------------- but unissued shares of Common Stock may be issued for such consideration, not less than the par value thereof, as may be fixed from time to time by the Board of Directors; the authorized but unissued shares of Preferred Stock may be issued for such consideration, not less than the par value thereof, as may be fixed from time to time by the Board of Directors. Section 6. Negation of Equitable Interests in Shares or Rights. The --------------------------------------------------- Corporation shall be entitled to treat the record holder of any shares of the Corporation as the owner thereof for all purposes, including all rights deriving from such shares, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares, on the part of any other person, including, but without limiting the generality thereof, a purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such -9- purchaser, assignee, transferee or other person becomes the record holder of such shares, whether or not the Corporation shall have either actual or constructive notice of the interest of such purchaser, assignee, transferee or other person. Any such purchaser, assignee, transferee or other person shall not be entitled to receive notice of the meeting of stockholders; to vote at such meetings; to examine a complete list of the stockholders entitled to vote at meetings; or to own, enjoy, and exercise any other property or rights deriving from such shares against the Corporation, until such purchaser, assignee, transferee or other person has become the record holder of such shares. Section 7. Preemptive Rights. No holder of any of the shares of the ----------------- Preferred Stock or of the Common Stock of the Corporation shall be entitled as of right as such holder to purchase or to subscribe for any unissued stock of any class, or any additional shares of any class to be issued by reason of any increase in the authorized capital stock of the Corporation of any class, or bonds, certificates or indebtedness, debentures or other securities convertible into stock of the Corporation or carrying any right to purchase stock in any class, but any such unissued stock, or such additional authorized issue of any stock or of other securities convertible into stock or carrying any right to purchase stock, may be issued and disposed of pursuant to resolutions of the Board of Directors, to such persons, firms, corporations, or associations and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its discretion. FIFTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal the by-laws of the Corporation subject to the concurrent right of the shareholders to amend the by-laws. -10- SIXTH: The books of the Corporation may be kept (subject to any applicable provision of law) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the Corporation. Elections of directors need not be by written ballot unless the by-laws of the Corporation shall so provide. SEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. EIGHTH: This Corporation and its officers shall have the power to do any lawful act which is necessary or proper to accomplish the purposes of its incorporation and shall have all the powers conferred upon the Corporation under the laws of the State of Delaware, whether or not specified in this Restated Certificate of Incorporation. NINTH: To the fullest extent permitted by the Delaware General Corporation Law as the same now exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this Article Nine by the stockholders of the Corporation only shall be applied prospectively, to the extent that such repeal or modification would, if applied retrospectively, adversely affect any limitation on the personal liability of a director of the Corporation existing immediately prior to such repeal or modification. -11- IN WITNESS WHEREOF, said American Management Systems, Incorporated has caused this Certificate to be signed by Philip M. Giuntini, its President, and attested by Frank A. Nicolai, its Secretary, this 20th day of June, 1995. AMERICAN MANAGEMENT SYSTEMS, INCORPORATED By: /s/ PHILIP M. GIUNTINI --------------------------- Philip M. Giuntini President ATTEST: By: /s/ FRANK A. NICOLAI ---------------------- Frank A. Nicolai Secretary -12- EX-11 3 COMPUTATION OF NET INCOME Exhibit 11 COMPUTATION OF NET INCOME PER COMMON SHARE/1/ (In thousands except per share data)
Year Ended December 31 1995 1994 1993 ------------------------------------------------------------------------------ Weighted Average Common Shares Outstanding 39,737 38,127 35,844 Shares Issuable Upon Exercise of Stock Options 3,500 3,178 3,732 Less Shares Assumed to be Repurchased at Fair Market Value (2,529) (2,574) (2,913) ------- ------- ------- Total Common Equivalent Shares 971 604 819 ------- ------- ------- Total Weighted Average Common and Common Equivalent Shares 40,708 38,731 36,663 ======= ======= ======= Net Income to Common Shareholders $29,200 $23,100 $17,000 ======= ======= ======= Net Income per Common Share $ 0.72 $ 0.60 $ 0.46 ======= ======= =======
________________________ /1/ All share and per share data have been restated to reflect the three-for- two stock split that was effective January 5, 1996. 14 EX-13 4 FINANCIAL REPORT Exhibit 13 AMERICAN MANAGEMENT SYSTEMS, INCORPORATED 1995 FINANCIAL REPORT CONTENTS - ----------------------------------------------------------------------
Business of AMS 1 Financial Statements and Notes 3 Report of Independent Accountants 19 Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Assumptions Underlying Certain Forward-Looking Statements and Factors That May Affect Future Results 24 Five-Year Financial Summary 25 Five-Year Revenues by Target Market 26 Selected Quarterly Financial Data and Information on AMS Stock 27 Other Information 28
BUSINESS OF AMS OVERVIEW With 1995 revenues of $632 million, the business of American Management Systems, Incorporated and its wholly-owned subsidiaries ("AMS" or the "Company") is to partner with clients to achieve breakthrough performance through the intelligent use of information technology. AMS provides a full range of consulting services from strategic business analysis to the full implementation of solutions that provide genuine results, on time and within budget. AMS measures success based on the results and business benefits achieved by its clients. AMS is a trusted business partner for many of the largest and most respected organizations in the markets in which it specializes. Each year, approximately 85% of the Company's business comes from clients it worked with in previous years. Organizations in AMS's target markets -- telecommunications firms; financial services institutions; state and local governments and education organizations; federal government agencies; and other corporate clients -- have a crucial need to exploit the potential benefits of information and systems integration technology. The Company helps clients fulfill this need by continuing to build a professional staff which is composed of experts in the necessary technical and functional disciplines; managers who can lead large, complex systems integration projects; and business and computer analysts who can devise creative solutions to complex problems. Another significant component of AMS's business is the development of proprietary software products, either with its own funds or on a cost-shared basis with other organizations. These products are principally licensed as elements of custom tailored systems and, to a lesser extent, as stand-alone applications. The Company expensed $19.4 million in 1995, $20.4 million in 1994, and $18.7 million in 1993 for research and development associated with proprietary software. As a percentage of services and products (S&P) revenues, license and maintenance fee revenues were less than 15% during each of the last three years. In order to serve clients, outside of the U.S.A., AMS has expanded internationally by establishing eleven subsidiaries or branches. Exhibit 21 of this Form 10-K provides a complete listing of all AMS subsidiaries (and branches), showing name, year organized (acquired), and place of incorporation. Services and products revenues attributable to non-US operations of AMS were approximately $170.0 million in 1995, $92.1 million in 1994, and $52.8 million in 1993. Additional information on revenues, operating profits, and assets attributable to AMS's geographic areas of operation is provided in Note 11 of the consolidated financial statements appearing in Exhibit 13 of this Form 10-K. Founded in 1970, AMS services clients worldwide. AMS's approximately 5,400 full-time employees are located at our headquarters in Fairfax, Virginia and in offices in 48 cities throughout North America and Europe. 1 TELECOMMUNICATIONS FIRMS AMS markets systems consulting and integration services for order processing, customer care, billing, accounts receivable, and collections, both for local exchange and interexchange carriers and for cellular telephone companies. Most of the Company's work involves developing and implementing customized capabilities using AMS's application software products as a foundation. FINANCIAL SERVICES INSTITUTIONS AMS provides information technology consulting and systems integration services to money center banks, major regional banks, insurance companies, and other large financial services firms. The Company specializes in corporate and international banking, consumer credit management, global custody and securities control systems, and bank management information systems. STATE AND LOCAL GOVERNMENTS AND EDUCATION AMS markets systems consulting and integration services, and application software products, to state, county, and municipal governments for financial management, revenue management, human resources, social services, and public safety functions. The Company also markets services and application software products to universities and colleges. FEDERAL GOVERNMENT AGENCIES The Company's clients include civilian and defense agencies and aerospace companies. Assignments require knowledge of agency programs and management practices as well as expertise in computer systems integration. AMS's work for defense agencies often involves specialized expertise in engineering and logistics. OTHER CORPORATE CLIENTS The Company also solves information systems problems for the largest firms in other industries. AMS has systems integration and operations contracts with several large organizations and intends to pursue more. AMS provides technical training and technical consulting services in software technology for large scale business systems. 2 FINANCIAL STATEMENTS AND NOTES American Management Systems, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31 (In millions except per share data) 1995 1994 1993 ________________________________________________________________________________ REVENUES Services and Products $561.5 $408.8 $321.7 Reimbursed Expenses 70.9 51.1 42.3 ------ ------ ------ 632.4 459.9 364.0 EXPENSES Client Project Expenses 348.6 246.9 189.3 Other Operating Expenses 192.3 140.1 115.6 Corporate Expenses 40.8 32.6 28.4 ------ ------ ------ 581.7 419.6 333.3 INCOME FROM OPERATIONS 50.7 40.3 30.7 OTHER (INCOME) EXPENSE Interest Expense 2.3 1.4 0.7 Other Income (1.4) (0.6) (0.7) ------ ------ ------ 0.9 0.8 0.0 INCOME BEFORE INCOME TAXES 49.8 39.5 30.7 INCOME TAXES 20.6 16.1 12.9 NET INCOME 29.2 23.4 17.8 DIVIDENDS AND ACCRETION ON SERIES B PREFERRED STOCK - 0.3 0.8 ------ ------ ------ NET INCOME TO COMMON SHAREHOLDERS $ 29.2 $ 23.1 $ 17.0 ====== ====== ====== WEIGHTED AVERAGE SHARES AND EQUIVALENTS 40.7 38.7 36.7 ====== ====== ====== NET INCOME PER COMMON SHARE $ 0.72 $ 0.60 $ 0.46 ====== ====== ======
________________ See Accompanying Notes to Consolidated Financial Statements. 3 American Management Systems, Inc. CONSOLIDATED BALANCE SHEETS
December 31 (In millions except per share data) 1995 1994 ________________________________________________________________________________ ASSETS - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and Cash Equivalents $ 35.8 $ 34.2 Accounts and Notes Receivable 206.1 141.1 Prepaid Expenses and Other Current Assets 8.9 6.7 ------ ------ 250.8 182.0 FIXED ASSETS Equipment 47.4 52.7 Furniture and Fixtures 14.2 12.1 Leasehold Improvements 11.4 10.6 ------ ------ 73.0 75.4 Accumulated Depreciation and Amortization (35.9) (46.7) ------ ------ 37.1 28.7 OTHER ASSETS Purchased and Developed Computer Software (Net of Accumulated Amortization of $47,700,000 and $41,100,000) 33.0 28.8 Intangibles (Net of Accumulated Amortization of $2,100,000 and $1,600,000) 6.8 7.4 Other Assets (Net of Accumulated Amortization of $4,900,000 and $3,500,000) 9.8 5.3 ------ ------ 49.6 41.5 ------ ------ TOTAL ASSETS $337.5 $252.2 ====== ======
________________ See Accompanying Notes to Consolidated Financial Statements. 4 American Management Systems, Inc. CONSOLIDATED BALANCE SHEETS
December 31 (In millions except per share data) 1995 1994 _______________________________________________________________________________ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------------------------------------------- CURRENT LIABILITIES Notes Payable and Capitalized Lease Obligations $ 23.1 $ 9.5 Accounts Payable 8.6 7.0 Accrued Incentive Compensation 28.3 17.1 Other Accrued Compensation and Related Items 25.3 16.6 Deferred Revenues 26.3 25.7 Other Accrued Liabilities 2.3 3.9 Income Taxes Payable 2.3 1.8 ------ ------ 116.2 81.6 Deferred Income Taxes 19.0 11.0 ------ ------ 135.2 92.6 NONCURRENT LIABILITIES Notes Payable and Capitalized Lease Obligations 20.4 12.9 Other Accrued Liabilities 0.7 0.7 Deferred Income Taxes 5.7 7.7 ------ ------ 26.8 21.3 ------ ------ TOTAL LIABILITIES 162.0 113.9 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, 48,867,891 and 48,301,656 Issued and 40,040,454 and 39,294,780 Outstanding) 0.5 0.5 Capital in Excess of Par Value 65.4 60.2 Retained Earnings 141.8 112.6 Currency Translation Adjustment (0.7) (1.4) Common Stock in Treasury, at Cost (8,827,437 and 9,006,876 Shares) (31.5) (33.6) ------ ------ 175.5 138.3 ------ ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $337.5 $252.2 ====== ======
________________ See Accompanying Notes to Consolidated Financial Statements. 5 American Management Systems, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31 (In millions) 1995 1994 1993 - ---------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 29.2 $ 23.4 $ 17.8 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 30.2 20.7 17.6 Deferred Income Taxes 6.0 5.2 5.1 Provision for Doubtful Accounts 1.6 1.5 1.0 Loss on Disposal of Assets - - 0.1 Changes in Assets and Liabilities: Increase in Trade Receivables (66.5) (41.0) (16.1) (Increase) Decrease in Prepaid Expenses and Other Current Assets (2.3) 1.9 (4.5) (Increase) Decrease in Other Assets (9.1) (1.9) 0.7 Increase in Accrued Incentive Compensation 14.1 5.2 5.3 Increase in Accounts Payable and Other Accrued Compensation and Liabilities 8.7 5.7 1.4 Increase (Decrease) in Deferred Revenues 0.6 11.0 (2.3) Increase in Income Taxes Payable 0.5 1.6 0.2 ------ ------ ------ Net Cash Provided from Operating Activities 13.0 33.3 26.3 ------ ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (22.5) (17.0) (13.3) Purchase of Computer Software (2.3) (1.5) (1.4) Investment in Software Products (13.7) (9.9) (11.7) Other Investments and Intangibles 0.4 (0.1) (9.1) Proceeds from Sale of Fixed Assets and Computer Software 0.5 0.2 0.7 ------ ------ ------ Net Cash Used in Investing Activities (37.6) (28.3) (34.8) ------ ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings 26.5 12.8 15.0 Payments on Borrowings (5.4) (4.5) (6.5) Proceeds from Common Stock Options Exercised 5.3 5.5 2.9 Payments to Acquire Treasury Stock (0.8) - (18.7) Dividends Paid on Preferred Stock - (0.3) (0.8) ------ ------ ------ Net Cash Provided (Used) in Financing Activities 25.6 13.5 (8.1) ------ ------ ------ Increase (Decrease) in Currency Translation Adjustment 0.6 0.1 (0.3) ------ ------ ------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1.6 18.6 (16.9) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 34.2 15.6 32.5 ------ ------ ------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 35.8 $ 34.2 $ 15.6 ====== ====== ====== NON-CASH OPERATING AND FINANCING ACTIVITIES: Treasury Stock Utilized to Satisfy Accrued Incentive Compensation Liability $ 2.9 $ 0.6 $ 2.1 Conversion of Preferred Stock to Common Stock - 8.5 9.2
_______________ See Accompanying Notes to Consolidated Financial Statements. 6 American Management Systems, Inc. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In millions)
Common Stock Capital in Currency Total (Par Value Excess of Translation Retained Treasury Stockholders' $0.01) Par Value Adjustment Earnings Stock Equity - ----------------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1992, as previously reported $0.3 $31.8 $(1.2) $ 72.5 $(17.6) $ 85.8 Effect of January 5, 1996 3-for-2 Stock Split on December 31, 1992 Balances 0.2 (0.2) 0.0 Common Stock Options Exercised - 2.9 2.9 Preferred Stock Converted - 9.2 9.2 Tax Benefit Related to Exercise of Common Stock Options 1.0 1.0 Currency Translation Adjustment (0.3) (0.3) Common Stock Repurchased (18.7) (18.7) Restricted Stock Awarded 2.1 2.1 1993 Net Income 17.8 17.8 Dividends and Accretion on Series B Preferred Stock (0.8) (0.8) ------ ------ ----- ------ ------ ----- Balance, December 31, 1993 0.5 44.7 (1.5) 89.5 (34.2) 99.0 Common Stock Options Exercised - 5.4 5.4 Preferred Stock Converted - 8.5 8.5 Tax Benefit Related to Exercise of Common Stock Options 1.6 1.6 Currency Translation Adjustment 0.1 0.1 Common Stock Repurchased - - Restricted Stock Awarded 0.6 0.6 1994 Net Income 23.4 23.4 Dividends and Accretion on Series B Preferred Stock (0.3) (0.3) ------ ------ ----- ------ ------ ------ Balance, December 31, 1994 0.5 60.2 (1.4) 112.6 (33.6) 138.3 Common Stock Options Exercised - 3.3 3.3 Tax Benefit Related to Exercise of Common Stock Options 1.9 1.9 Currency Translation Adjustment 0.7 0.7 Common Stock Repurchased (0.8) (0.8) Restricted Stock Awarded 2.9 2.9 1995 Net Income 29.2 29.2 ------ ------ ------ ------ ------ ------ Balance, December 31, 1995 $0.5 $65.4 $(0.7) $141.8 $(31.5) $175.5 ====== ====== ====== ====== ====== ======
________________ See Accompanying Notes to Consolidated Financial Statements. 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES The business of American Management Systems, Incorporated and its wholly- owned subsidiaries ("AMS" or the "Company") is to partner with clients to achieve breakthrough performance through the intelligent use of information technology. AMS provides a full range of consulting services from strategic business analysis to the full implementation of systems solutions. The Company's primary target markets include telecommunications firms, financial services institutions, state and local governments and education, federal government agencies and other corporate clients. AMS services clients worldwide through its offices in North America and Europe. A. Revenue Recognition Revenues on fixed-price contracts are recorded using the percentage of completion method based on the relationship of costs incurred to the estimated total costs of the project. Revenues on cost reimbursable contracts and time and material contracts are recorded as labor and other expenses are incurred. Losses on contracts are recorded in the period they are first determined. Revenues from licenses of "off-the-shelf" software products, where the Company has insignificant remaining obligations, are recorded at the time of delivery, less a proportionate amount deferred to cover the costs required to complete the performance of the contract which is later recognized on a percentage of completion basis. In contracts where the Company has significant obligations, all revenues are recognized on a percentage of completion basis. Revenues from software maintenance contracts are recognized ratably over the maintenance period. On benefits-funded contracts, where management believes that there is some uncertainty as to the timing of payments, revenues are deferred (and costs incurred are capitalized) until the client begins to realize the benefits. Revenues for computer services are recorded on the basis of usage at scheduled contract prices per unit of production, or the contract minimum monthly charge, whichever is greater. The costs associated with cost-plus government contracts are subject to audit by the U.S. Government. In the opinion of management, no significant adjustments or disallowances of costs are anticipated beyond those provided for in the financial statements. B. Software Development Costs The Company develops proprietary software products using its own funds, or on a cost-shared basis with other organizations, and records such activities as research and development. These software products are then licensed to customers, either as stand-alone applications, or as elements of custom-built systems. The Company accounts for software development costs in accordance with Statement of Financial Accounting Standards No. 86 -- "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed". For projects fully funded by the Company, significant development costs incurred beyond the point of demonstrated technological feasibility are capitalized and, after the product is available for general release to customers, such costs are amortized on a straight-line basis over a three-year period or other such shorter period as might be required. The Company recorded $9.5 million of amortization in 1995, $8.4 million of amortization in 1994, and $7.7 million in 1993. Unamortized costs were $28.2 million and $24.0 million at December 31, 1995 and 1994, respectively. 8 Including the above mentioned amortization expense, the Company expensed $19.4 million in 1995, $20.4 million in 1994, and $18.7 million in 1993 for research and development. Purchased software licenses will continue to be accounted for as set forth in Note 1.C. C. Fixed Assets, Purchased Computer Software Licenses and Intangibles Fixed assets and purchased computer software licenses are recorded at cost. Furniture, fixtures, and equipment are depreciated over estimated useful lives ranging from 3 to 15 years. Leasehold improvements are amortized ratably over the lesser of the applicable lease term or the useful life of the improvement. For financial statement purposes, depreciation is computed using the straight- line method. Purchased software licenses are amortized over two to five years using the straight-line method. Intangibles are generally amortized over 5 to 15 years. D. Income Taxes Deferred income taxes included in the accompanying financial statements are primarily the result of (i) the use of the accrual method of accounting for financial statement purposes versus the use of a modified accrual method of accounting for income tax purposes, and (ii) for certain assets, the use of different depreciation methods for financial reporting than for tax reporting. E. Net Income per Common Share Net income per common share has been computed using the treasury stock method based on the weighted average number of common shares and equivalent common shares outstanding. All share and per share amounts (except with respect to historical discussions of IBM holdings of common stock and except where otherwise noted) have been adjusted to reflect the Company's three-for-two stock splits, effective January 5, 1996, and October 28, 1994, respectively. F. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short maturity of these instruments. G. Currency Translation For operations outside the United States that prepare financial statements in currencies other than the U.S. dollar, the Company translates income statement amounts at the average monthly exchange rates throughout the year. The Company translates assets and liabilities at year-end exchange rates. The resulting translation adjustments are shown as a separate component of Stockholders' Equity. H. Impact of New Accounting Pronouncements In 1995, the Financial Accounting Standards Board issued two new Statements of Financial Accounting Standards which the Company must adopt in 1996: No. 121 ("SFAS No. 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and No. 123 ("SFAS No. 123") "Accounting for Stock-Based Compensation." The Company intends to implement SFAS No. 121 in 1996, and management expects no material adjustments to the financial statements as a result of implementing this standard. Regarding SFAS No. 123, the Company intends to implement the disclosure requirements in 1996. 9 I. Principles of Consolidation The consolidated financial statements include the accounts of American Management Systems, Incorporated and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. J. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Future actual results could be different due to these estimates. NOTE 2 -- SIGNIFICANT CUSTOMERS Total revenues from the U.S. Government, comprising 72 clients in 1995, 69 clients in 1994, and 74 clients in 1993, were approximately $97.1 million in 1995, $88.5 million in 1994, and $80.1 million in 1993. No other customer accounted for 10% or more of total revenues in 1995, 1994, or 1993. NOTE 3 -- SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK (All share amounts are shown on a historical basis) On September 11, 1989, the Company sold to International Business Machines Corporation ("IBM") 11,700 shares of 7.5% Series A Cumulative Convertible Preferred Stock for $18 million. On November 13, 1989, these shares were exchanged for 1,170,000 shares of 7.5% Series B Cumulative Convertible Preferred Stock ("Series B Shares"), reducing the per share price to $15.38. The Series B Shares entitled the holders to an annual 7.5% cumulative preferred dividend ($1.15 per share). In February 1993, the Company and IBM agreed to restructure IBM's equity relationship with the Company. Under the modified equity agreement, IBM converted 409,500 Series B Shares (equivalent to 35% of the Series B Shares originally issued to IBM) into 614,250 shares of Common Stock on February 5, 1993, whereupon AMS purchased such shares of Common Stock from IBM at a purchase price of approximately $22.64 per share. The modified agreement permitted IBM to sell, at any time before September 10, 1994, such number of shares of Common Stock acquired on conversion of Series B Shares (approximately 264,000 shares of Common Stock at the current conversion ratio) as would reduce IBM's holdings to below five percent of the Company's outstanding voting securities. The Company had a right of first refusal with respect to such proposed sales. In June 1993, the Company exercised such right and acquired 300,000 shares of common stock (on conversion of 200,000 Series B Shares) for $16.00 per share. As of December 31, 1993, these Series B Shares were convertible at any time into Common Shares on a one-for-one and one-half basis and represented a 4.8% interest in the voting power of the Company on a fully diluted basis. In May 1994, IBM converted all of its remaining 560,500 Series B Shares into 840,750 shares of Common Stock. Shortly after conversion IBM sold all of such shares of Common Stock in the open market. Because of the conversions of Series B Shares described above, dividends payable in both 1994 and 1993 decreased from prior years. No dividends were paid to IBM in 1995, $288,000 was paid in 1994, and $834,000 was paid in 1993. 10 NOTE 4 -- ACCOUNTS AND NOTES RECEIVABLE
December 31 (In millions) 1995 1994 - -------------------------------------------------------------------------------- Trade Accounts Receivable Amounts Billed $153.6 $ 98.9 Amounts Not Billed 50.3 42.3 Contract Retention 5.7 3.9 ------ ------ Total 209.6 145.1 Notes Receivable - - Other Receivables 1.4 (0.7) Allowance for Doubtful Accounts (4.9) (3.3) ------ ------ Total $206.1 $141.1 ====== ======
Approximately 9.6% of the December 31, 1995 total accounts receivable balance relates to work performed by the Company under subcontractor agreements between the Company and a prime contractor in the child support enforcement business. These amounts span four different contracts which the prime contractor has with state/local government clients in three states. Additionally, 3.1% of the Company's total accounts receivable balance relates to a contract with a foreign government which has been experiencing cash flow difficulties. The Company expects to receive all funds due from these clients and has received payments in recent months. 11 NOTE 5 -- NOTES PAYABLE AND CAPITALIZED LEASE OBLIGATIONS In December 1993, the Company entered into a multi-currency revolving credit agreement with NationsBank of North Carolina, N.A. (the "NationsBank Agreement") that provides for borrowings of up to $15 million (or the US Dollar "USD" equivalent), less outstanding letters of credit issued by NationsBank, which at December 31, 1995 totaled $1 million. The revolving credit loan bears interest, for USD borrowings, at the lesser of NationsBank's prime rate or 0.50% over the weekly federal funds rate, and for non-USD borrowings, 0.50% over the NationsBank's 30-day LIBOR rate. The credit facility allows certain of the Company's foreign subsidiaries to borrow funds, directly from NationsBank, in their local currencies. In addition, the NationsBank Agreement requires an annual commitment fee equal to 0.25% of the $15 million commitment, payable in quarterly installments. Amounts outstanding under the revolving credit loan on December 31, 1996 are automatically converted to a four-year term note at terms defined in the NationsBank Agreement. In August 1994, the Company and NationsBank negotiated Amendment Number 1 to the NationsBank Agreement, which increased the borrowing capacity from $15 million to $25 million, with a corresponding increase in the annual commitment fee. All other terms of the original agreement remain in force. In July 1994, the Company entered into a separate revolving credit agreement with Wachovia Bank of North Carolina, N.A. (the "Wachovia Agreement") that provides for borrowings of up to $15 million, in USD, and by the parent company only. All other terms, including automatic conversion to a term note, are similar to the NationsBank Agreement. Both revolving credit facilities contain similar covenants with which the Company must comply. These include: (i) maintaining a minimum stockholders' equity (excluding treasury stock) of $80 million, (ii) maintaining a current ratio of at least 1.25 to 1.00, (iii) having a debt/equity ratio that does not exceed 2.0 to 1.0, (iv) maintaining the Company's interest coverage ratio at less than 3.0 to 1.0, and (v) limiting the Company to new money debt borrowings, excluding the revolving credit facilities, of $10 million annually unless the two banks agree to waive this covenant. At December 31, 1995, the Company was in compliance with all covenants. The aggregate weighted average borrowings under the NationsBank Agreement was approximately $15.6 million in 1995, and $2.8 million during 1994, at daily weighted average interest rates of approximately 5.9% in 1995 and 5.3% in 1994. The maximum borrowed under this agreement was $23.5 million in 1995 and $11.6 million during 1994. During 1995 and 1994, there were no borrowings under the Wachovia Agreement. In January 1994, the Company entered into an $8 million, unsecured 5-year term loan, at an interest rate of 5.25%, to finance the purchase of a company. Principal and interest are payable monthly through January 1999. During 1993, the Company entered into two unsecured, 5-year term loans totaling $15 million, at interest rates between 5.25% and 5.40% and with principal and interest payable monthly through 1998. Funds were used to prepay a $5 million unsecured note, bearing interest at 10.75%, and to replace working capital that had been used in reacquiring the Company's Common Stock. Additionally, during 1995 the Company entered into two unsecured, 7-year term loans totaling $15 million, at interest rates between 6.88% and 6.92%, and with principal and interest payable monthly through 2002. Funds were used to replace working capital that had been used in acquiring fixed assets. The Company acquired the necessary waivers to the new money debt borrowing covenant. 12 The following schedule summarizes the total outstanding notes and capitalized lease obligations. Differences between the face value and the fair value are considered immaterial.
December 31 (In millions) 1995 1994 - ------------------------------------------------------------------------------- Revolving Line-of-Credit at December 31, $16.3 $ 4.8 Unsecured Notes With Interest at 5.25% - 6.92% Principal and Interest Payable Monthly Through August 2002 27.2 17.6 ----- ----- Total Notes Payable and Capitalized Lease Obligations $43.5 $22.4 ===== =====
Principal amounts are repayable as shown below: 1996 $23.1 1997 6.7 1998 5.7 1999 2.3 2000 and Beyond 5.7 ------ 43.5 Less Current Portion 23.1 ------ Long-Term Portion $20.4 ======
Interest paid by the Company totaled $2.3 million in 1995, $1.4 million in 1994, and $0.7 million in 1993. 13 NOTE 6 -- EQUITY SECURITIES At December 31, 1995, the Company had a stock option plan, 1992 Amended and Restated stock option Plan E as amended (the "1992 Plan E"), under which the Company was authorized to issue up to 3,375,000 shares of common stock as incentive stock options ("ISOs") or nonqualified stock options ("NSOs"). The 1992 Plan E, which was approved by the shareholders in May 1992, replaced Stock Option Plan E ("Plan E"). Under both plans, the exercise price of an ISO granted is not less than the fair market value of the common stock on the date of grant and for NSOs, the exercise price is either the fair market value of the common stock on the date of the grant or, when granted in connection with one-year performance periods under the Company's incentive compensation program, the exercise price may be determined by a formula selected by the Board or appropriate Board committee that is based on the fair market value of the common stock as of a date, or for a period, that is within three months of the date of grant. In cases where the average market value exceeds the exercise price, the differential is recorded as compensation expense. Under both plans, options expire up to eight years from the date of grant. Options granted are exercisable immediately, in monthly installments, or at a future date, as determined by the appropriate Board committee or as otherwise specified in the plan. At December 31, 1995, there were 828,068 shares available for the grant of future options under the 1992 Plan E. No options remain available for grant under any previous stock option plan. The number of option shares outstanding and exercisable at December 31, 1995, under Plan E and 1992 Plan E combined was 2,307,669 for which the aggregate exercise price was $18,921,821. Additional information with respect to stock options awarded pursuant to such plans is summarized in the following schedule.
Number of Options Exercise Price Shares per Share - ------------------------------------------------------------------------------------- For the Year Ended December 31, 1993: Options Granted 1,048,008 $ 6.83 - $10.11 Options Canceled 16,599 3.55 - 10.11 Options Exercised 720,363 0.87 - 8.72 Balance Outstanding at December 31, 1993 3,638,535 1.91 - 10.11 For the Year Ended December 31, 1994: Options Granted 726,303 8.45 - 11.50 Options Canceled 48,971 3.60 - 10.11 Options Exercised 1,071,819 1.91 - 10.11 Balance Outstanding at December 31, 1994: 3,244,048 3.45 - 11.50 For the Year Ended December 31, 1995: Options Granted 737,752 11.53 - 19.33 Options Canceled 9,486 3.59 - 11.53 Options Exercised 566,235 3.44 - 14.83 Balance Outstanding at December 31, 1995 3,406,079 3.59 - 19.33
At its February 1995 meeting, the Board authorized the Company to expend up to $10,000,000 to repurchase additional shares of its common stock, from time to time, for its stock-based benefit plans or for other corporate purposes. In 1995, the Company repurchased 60,000 shares of its common stock in the open market. In May 1995, the shareholders approved an amendment to the Company's charter, increasing the authorized number of shares of Common Stock from 40,000,000 to 100,000,000. In 1994, the Company did not repurchase, other than fractional shares from the October stock split, any of its common stock. 14 NOTE 7 -- INCOME TAXES
Year Ended December 31 (In millions) 1995 1994 1993 - ------------------------------------------------------------------------------------------------------- Income before income taxes for the year ended December 31 was derived in the following jurisdictions: Domestic $ 42.6 $36.8 $33.5 Foreign 7.2 2.7 (2.8) ------ ----- ----- $ 49.8 $39.5 $30.7 ====== ===== ===== The provision for income taxes is comprised of the following: Current: Federal $ 9.4 $ 7.8 $ 6.8 State 1.8 2.1 1.3 Foreign 3.4 1.0 (0.3) Deferred: Federal 5.4 5.1 4.1 State 0.6 0.2 1.0 Foreign - (0.1) - ------ ----- ----- Total Provision $ 20.6 $16.1 $12.9 ====== ===== ===== Tax expenses were different from the amounts computed by applying the statutory federal income tax rate to income before income taxes. The differences were as follows: Federal Tax Provision Based on Statutory Rates $ 17.4 $13.8 $10.7 Research and Development Tax Credits, Net of Addback (0.5) (0.6) (0.5) State Income Tax, Net of Federal Income Tax Benefit 1.9 1.9 1.5 Other 1.8 1.0 1.2 ------ ----- ----- Actual Tax Provision $ 20.6 $16.1 $12.9 ====== ===== ===== Deferred tax liabilities (assets) were comprised of the following for the years ended December 31: Liabilities: Unbilled Receivables $ 20.4 $15.0 $11.5 Capitalized Software 10.0 9.8 9.4 Other 6.6 3.7 3.3 ------ ----- ----- Total Gross Deferred Tax Liabilities 37.0 28.5 24.2 Assets: Deferred Maintenance Revenue (2.4) (3.3) (4.4) Restricted Stock (3.0) (1.9) (1.7) Accrued Leave Costs (2.2) (1.8) (1.4) Bad Debt Expense (2.2) (1.6) (0.7) Other Deferred Revenue (0.5) (0.1) (0.2) Other (2.0) (1.1) (0.7) ------ ----- ----- Total Gross Deferred Tax Assets (12.3) (9.8) (9.1) ------ ----- ----- Net Deferred Tax Liabilities $ 24.7 $18.7 $15.1 ====== ===== =====
The Company paid income taxes of approximately $16.4 million, $9.1 million, and $11.8 million, in 1995, 1994, and 1993, respectively. 15 NOTE 8 -- EMPLOYEE PENSION PLAN The Company has established a simplified employee pension plan, which became effective January 1, 1980. Contributions are based on the application of a percentage specified by the Company to the qualified gross wages of eligible employees. The Company makes annual contributions to the plan equal to the amount accrued for pension expense. Total expense of the plan was $6.3 million in 1995, $5.2 million in 1994, and $4.5 million in 1993. NOTE 9 -- COMMITMENTS AND CONTINGENCIES The Company occupies production facilities and office space (real property) and uses various pieces of equipment under operating lease agreements, expiring at various dates through the year 2011. The commitments under these agreements, as of December 31, 1995, are summarized in the table below. Payments under the real property leases are generally subject to escalation based upon increases in the Consumer Price Index, operating expenses, and property taxes. Sublease income represents payments due to the Company from third parties under formal sublease agreements covering real property. Operating lease expense for 1995, 1994, and 1993 was approximately $27.9 million, $21.4 million, and $18.6 million, respectively. The Company recorded rental income of $0.5 million in 1995, $0.5 million in 1994, and $0.7 million in 1993, which was principally related to subleases of space not being utilized by the Company. The Company has several loan agreements that restrict or limit: the amount of dividends that can be paid; the selling or pledging of accounts receivable; the transfer of assets to a subsidiary; and the amount of cash that can be used to acquire another business. In addition, these agreements stipulate that the Company must maintain certain financial ratios and minimum levels of shareholders' equity. The Company has an extended leave program for titled employees that provides for compensated leave of eight weeks after seven years of service. The leave is not vested and can be taken only at the discretion of management. Because of the extended period over which the leave accumulates and the highly discretionary nature of the program, the amount of extended leave accumulated at any period end, which will ultimately be taken, is indeterminable. Consequently, the Company expenses such leave as it is taken. As reported in AMS's Form 10-Q for the quarter ended September 30, 1995 and filed November 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 denied any liability by Andersen. AMS claimed that no trade secret protection exists in the concepts cited by Andersen and that AMS has utilized no confidential information of Andersen. AMS claimed that Andersen defamed AMS and attempted to interfere with AMS's contracts and opportunities by disseminating false statements regarding AMS. Management believes that the resolution of this matter will not have a material impact on the financial condition or the results of operations of the Company. 16 Gross Rentals and Maintenance Payments --------------------------------------
Net Rentals and Sublease Maintenance (In millions) Real Property Equipment Total Income Payments - ------------------------------------------------------------------------------------------------ 1996 $ 23.2 $2.4 $ 25.6 $0.1 $ 25.5 1997 22.6 2.1 24.7 0.1 24.6 1998 20.6 0.9 21.5 - 21.5 1999 19.5 0.6 20.1 - 20.1 2000 17.2 0.2 17.4 - 17.4 2001 through 2011 121.1 - 121.1 - 121.1 ------ ---- ------ ------ ------ Total $224.2 $6.2 $230.4 $0.2 $230.2 ====== ==== ====== ====== ======
NOTE 10 -- RELATED PARTY TRANSACTIONS The Company incurred legal fees and reimbursable expenses payable to Shaw, Pittman, Potts & Trowbridge, general counsel to the Company, totaling approximately $2.5 million, $2.0 million, and $1.4 million in 1995, 1994, and 1993, respectively. A member of the firm of Shaw, Pittman, Potts & Trowbridge is the spouse of one of the Company's executive officers. NOTE 11 -- BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION AMS operates in one industry segment -- providing computer and information technology products and services to large clients in targeted vertical markets. However, AMS markets its services and products worldwide and its operations can be grouped into two main geographic areas according to the location of each AMS company. The two groupings consist of United States locations and non-US locations (Canada, England, Belgium, Portugal, Sweden, The Netherlands, Mexico, Spain, Switzerland, Australia, and Germany). Pertinent financial data, by geographic area, is summarized below.
Year Ended December 31 (In millions) 1995 1994 1993 - -------------------------------------------------------------------------------- Services and Products Revenues U.S. Companies $490.1 $356.3 $288.4 Non-US Companies 71.4 52.5 33.3 ------ ------ ------ Consolidated Total 561.5 408.8 321.7 ====== ====== ====== Income (Loss) From Operations U.S. Companies 44.4 37.6 33.6 Non-US Companies 6.3 2.7 (2.9) ------ ------ ------ Consolidated Total 50.7 40.3 30.7 ====== ====== ====== Identifiable Assets U.S. Companies 290.0 231.5 172.6 Non-US Companies 47.5 20.7 12.4 ------ ------ ------ Consolidated Total $337.5 $252.2 $185.0 ====== ====== ======
17 Revenues from AMS's U.S. Companies include export s ales to non-US clients of $98.6 million in 1995, $39.6 million in 1994, and $19.5 million in 1993. As a result, the Company's total non-US services and products revenues were as follows:
Year Ended December 31 (In millions) 1995 1994 1993 - ---------------------------------------------------------------------------------------- Exports By U.S. Companies $ 98.6 $39.6 $19.5 Non-US Companies 71.4 52.5 33.3 ------ ----- ----- Total Non-US Services and Products Revenues $170.0 $92.1 $52.8 ====== ===== ===== Percent of Total Services and Products Revenues 30.3% 22.5% 16.4% ====== ===== =====
18 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of American Management Systems, Incorporated In our opinion, the accompanying consolidated financial statements appearing on pages 3 to 18 of the 1995 Financial Statements present fairly, in all material respects, the financial position of American Management Systems, Incorporated and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Washington, D.C. February 14, 1996 19 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 revenue of major items in the Consolidated Statements of Operations and the percentage change in such items from period to period (see "Financial Statements and Notes"). The effect of inflation and price changes on the Company's revenues, income from operations, and expenses, is comparable to the general rate of inflation in the U.S. economy.
Period-to-Period Percentage of Total Revenue Change --------------------------- ------------------- 1995 1994 vs. vs. 1995 1994 1993 1994 1993 - -------------------------------------------------------------------------------------------------------------------- Revenues Services and Products 88.8% 88.9% 88.4% 37.4% 27.1% Reimbursed Expenses 11.2 11.1 11.6 38.7 20.8 ----- ----- ----- 100.0 100.0 100.0 37.5 26.3 Expenses Client Project Expenses 55.1 53.6 52.0 41.2 30.4 Other Operating Expenses 30.4 30.5 31.8 37.3 21.2 Corporate Expenses 6.5 7.1 7.8 25.2 14.8 ----- ----- ----- 92.0 91.2 91.6 38.6 25.9 Income from Operations 8.0 8.8 8.4 25.8 31.3 Other (Income) Expense 0.1 0.2 0.0 12.5 - ----- ----- ----- Income Before Income Taxes 7.9 8.6 8.4 26.1 28.7 Income Taxes 3.3 3.5 3.5 28.0 24.8 ----- ----- ----- Net Income 4.6 5.1 4.9 24.8 31.5 Dividends and Accretion on Series B Preferred Stock - 0.1 0.2 - (62.5) ----- ----- ----- Net Income to Common Shareholders 4.6 5.0 4.7 26.4 35.9 Weighted Average Shares and Equivalents 5.2 5.4 Net Income per Common Share 20.0 30.4
20 This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain forward-looking statements. In addition, the Company or its representatives from time to time may make, or may have made, forward-looking statements, orally or in writing, including, without limitation, in the MD&A contained in other filings with the Securities and Exchange Commission. The Company wishes to ensure that such forward-looking statements are accompanied by meaningful cautionary statements so as to ensure to the fullest extent possible the protections of the safe harbor established by the Private Securities Litigation Reform Act of 1995. Accordingly, such forward-looking statements made by, or on behalf of, the Company are qualified in their entirety by reference to, and are accompanied by, the discussion in this Form 10-K of important factors that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. REVENUES Services and products revenues ("S&P revenues") increased 37% and 27% during 1995 and 1994 compared to the preceding year. Over 85% of each year's S&P revenues came from clients for whom the Company performed services in prior years. Looking ahead to 1996, the Company expects continued substantial growth; however, at lower rates of increase than was experienced in 1995 and 1994. Business with non-US clients increased 85% and 74% (to $170 million and $92 million) during 1995 and 1994, respectively, and accounted for approximately 51% and 45% of the total S&P revenue increase of the Company for these two years. Business with European clients has dominated the rise in non-US business, increasing 83% (to $139 million) and 166% (to $76 million) in each of the past two years, with revenues from Telecommunications Firms being the principal driver. For the year 1996, the Company expects the rate of increase in non-US business, and European business in particular, to be somewhat lower than the rates of increase realized in 1995. In the Telecommunications Firms market, S&P revenues increased 70% compared to 1994. Over 79% of this increase is attributable to business with non-US clients, which increased 109% during 1995 (to $129 million). Business in this market is characterized by large projects, with relatively few clients. Approximately 80% of the 1995 S&P revenues in this market came from work with 12 clients. Comparing 1994 to 1993, S&P revenues had increased 55% overall, with a 150% increase in non-US business. For 1996, the Company expects the annual growth rate in this market will be below that for 1995 but greater than the Company's overall growth rate. In the Financial Services Institutions target market, 1995 S&P revenues increased 44% over 1994, owing principally to build-ups in business with clients who started large projects in the second half of 1994. Business with non-US clients account for approximately 28% of the revenues in this market ($37 million). Comparing 1994 to 1993, business in this market had increased 53%, with approximately one-fourth of the 1994 increase attributable to the Company's acquisition of Vista Concepts, Inc., which occurred in December 1993. For 1996, the Company expects S&P revenue growth in this market to increase at rates in line with the Company's overall revenue growth. In the State and Local Government and Education target market, S&P revenues increased 17% in 1995 and 24% in 1994. The 1995 increase was fueled by several large contracts with state taxation departments seeking to make substantial improvements in their ability to collect delinquent taxes. On some of these contracts, the Company's fees are paid out of the benefits (increased collections) that the client achieves. For such contracts where the timing of the benefits are uncertain, the Company defers revenues (and profits) until a future date. The Company expects S&P revenues in the State and Local Government and Education market to increase in 1996, at rates in line with the increase in the Company's overall S&P revenues. 21 S&P revenues in the Federal Government Agencies target market increased 9% in 1995, after having decreased 4% in 1994. The Company expects S&P revenues in this target market, for 1996, to increase at approximately the same rate as 1995. S&P revenues from Other Corporate Clients increased 20% in 1995 and 5% during 1994. S&P revenues from this market, which represents business not covered by the Company's other markets, for 1996, are expected to increase at a rate in line with the Company's overall growth in S&P revenues. The largest contributor to the 1995 increase, and projected 1996 increase, is in the Company's business with health care institutions, where 1995 revenues exceeded $13 million. EXPENSES Client project expenses and other operating expenses together increased 39%, approximately the same rate as the S&P revenue growth rate. While some expenses such as, client project, recruiting, staff development, employee relocation, and the European infrastructure, increased at rates greater than the overall Company growth rate, other expenses, such as product support, research and development, and business development, increased at rates below the overall growth rate. Comparing 1994 to 1993, client project and other operating expenses increased 27%, which was also the growth rate in S&P revenues. Looking to 1996, the Company anticipates that these expenses will be more in line with the slower revenue growth. Corporate expenses increased 25% and 15% in 1995 and 1994, respectively. For both years, the slower growth is principally due to the aggregate increases in corporate sponsored technology and training programs, and performance-based compensation accruals at rates slower than the revenue growth. INCOME FROM OPERATIONS Income from operations increased 26% in 1995, compared to 1994. This rate of increase was less than the S&P revenue increase, because 1) the Company invested heavily in building up its staff capacity, and 2) margins at the project level were reduced due to the stress of absorbing so many new people. Comparing 1994 to 1993, income from operations increased 31%, which was slightly greater than the revenue growth rate. For 1996, if the Company is successful in controlling the S&P growth rate, the Company expects profit margins to be greater than the 1995 level. OTHER (INCOME) EXPENSE Interest expense increased 64% in 1995, and 102% in 1994, because of interest payments on additional long-term debt incurred by the Company during 1993, 1994 and 1995. Other income increased 125% in 1995, compared to 1994, due primarily to higher levels of short-term investments throughout 1995, when compared to 1994. INCOME TAXES The Company's effective tax rate for 1995 was 41.4% compared to 40.8% in 1994. The increase in tax rates is primarily due to 1995 losses in a foreign subsidiary, and lower research tax credits. The 1993 effective tax rate was 42.1%. 22 FOREIGN CURRENCY EXCHANGE Approximately 30% of the Company's total S&P revenues in 1995, 23% in 1994, and 16% in 1993, were derived from non-US business. The Company's practice is to negotiate contracts in the same currency in which the predominant expenses are incurred, thereby mitigating the exposure to foreign currency exchange fluctuations. It is not possible to accomplish this objective in all cases, and therefore the Company does take some risk that profits will be impacted by foreign currency exchange fluctuations. However, these risks may be mitigated to the extent to which the Company: 1) successfully negotiates short-term contracts (one year or less), or 2) negotiates provisions that allow pricing adjustments related to currency fluctuations. LIQUIDITY AND CAPITAL RESOURCES The Company provides for its operating cash requirements primarily through funds generated from operations, using bank borrowings primarily for cash and currency management with respect to the short term impact of certain cyclical uses such as annual payments of incentive compensation. At December 31, 1995, the Company's cash and cash equivalents totaled $35.8 million, up from $34.2 million at the end of 1994. For 1995 cash provided from operating activities was $13.0 million. Cash provided from operating activities was lower than expected due to increases in the Company's accounts receivable and to continued delays in collecting accounts receivable related to subcontract work with a prime contractor in the child support enforcement business, and a receivable related to a contract with a foreign government which is experiencing continued cash flow problems. The Company expects to receive all funds due from these clients, and has received payments in recent months. The Company invested over $28.5 million in purchases of fixed assets and software, and in computer software development during 1995. The Company, including its foreign subsidiaries, borrowed an aggregate of $26.5 million. Of this total, $15.0 million represented two 7-year fixed rate borrowings. The remaining net increase in borrowed money debt of $11.5 million consisted of foreign currency borrowings by the Company's foreign subsidiaries under the Company's $25 million revolving line of credit with a U.S. bank, all of which borrowings remained at December 31, 1995. The aggregate weighted average short-term borrowings during 1995 was approximately $15.6 million, at a weighted average interest rate of 5.9%. During 1995, the Company made approximately $5.4 million in installment payments of principal on outstanding debt owed to banks; the Company also received approximately $5.3 million during the period from the exercise of stock options. At December 31, 1995, the Company's debt-equity ratio, as measured by total liabilities divided by common stockholders' equity, was 0.92, up from 0.82 at December 31, 1994. The Company's material unused source of liquidity at the end of 1995 consisted of approximately $22.7 million under its revolving lines of credit. In July 1994, the Company entered into a $15 million revolving credit facility with a second U.S. bank, and in August 1994, increased its other revolving credit facility from $15 million to $25 million. Accordingly, the Company's aggregate borrowing capacity under revolving lines of credit is $40 million. The Company believes that its liquidity needs can be met from the various sources described above. All share and per share amounts (except with respect to historical discussions of IBM holdings of common stock and except where otherwise noted) have been adjusted to reflect the effect of the Company's three-for-two stock splits, effective January 5, 1996 and October 28, 1994, respectively. 23 ASSUMPTIONS UNDERLYING CERTAIN FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS In the next few years, the Company expects growth in both revenues and profits to continue at rates slightly higher than the Company's historical long- term rates, although not at the exceptional rates posted in 1994 and 1995. This more controlled and lower growth should enable the Company to improve its profit margins which were reduced during the last two years owing to heavy investment in building up staff capacity, infrastructure, and the stress of absorbing so many new people. The Company faces a number of risks in continuing to expand even at these more moderate rates; and the principal risks are those of project delivery and staffing. AMS has established a reputation in the marketplace of being a firm which delivers on time and in accordance with specifications regardless of the complexity of the application and the technology. The Company's customers often have a great deal at stake in being able to meet market and regulatory demands. In order to meet our contractual commitments, AMS must continue to be able to successfully recruit, train, and assimilate large numbers of new employees annually. Moreover, this staff must be re-deployed on projects throughout North America, Europe, and other locations. There is also the risk of successfully managing large projects and the risk of a material impact on results because of the unanticipated suspension or cancellation of a large project. The suspension or cancellation of a project could result in a drop in revenues, the need to relocate staff, a potential dispute with a client regarding money owed, and a diminution of AMS's reputation. Certain other risks, including, but not limited to, the Company's increasing international scope of operations, are discussed elsewhere in this Form 10-K. Because the Company operates in a rapidly changing and highly competitive market, additional risks not discussed in this Form 10-K may emerge from time to time. The Company cannot predict such risks or assess the impact, if any, such risks may have no its business. Consequently, the Company's various forward-looking statements, made, or to be made, should not be relied upon as a prediction of actual results. 24 FIVE-YEAR FINANCIAL SUMMARY
Year Ended December 31/1// (In millions except share and per share data) 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS - ------------------------------------------------------------------------------------------------------------------------------- Services and Products Revenues $561.5 $408.8 $321.7 $295.5 $246.4 Total Revenues 632.4 459.9 364.0 332.5 284.4 Client Project Expenses 348.6 246.9 189.3 175.2 153.1 Other Operating Expenses 192.3 140.1 115.6 104.7 94.4 Corporate Expenses 40.8 32.6 28.4 23.2 16.8 ------ ------ ------ ------ ------ Total Operating Expense 581.7 419.6 333.3 303.1 264.3 ------ ------ ------ ------ ------ Income From Operations 50.7 40.3 30.7 29.4 20.1 Other (Income) Expense 0.9 0.8 - - (0.1) ------ ------ ------ ------ ------ Income Before Income Taxes 49.8 39.5 30.7 29.4 20.2 Income Taxes 20.6 16.1 12.9 11.9 7.6 Income Before Cumulative Effect of ------ ------ ------ ------ ------ Change in Accounting Method 29.2 23.4 17.8 17.5 12.6 Cumulative Effect of Change in Accounting for Income Taxes/2/ - - - 1.6 - ------ ------ ------ ------ ------ Net Income 29.2 23.4 17.8 19.1 12.6 Dividends and Accretion on Series B Preferred Stock - 0.3 0.8 1.5 1.5 ------ ------ ------ ------ ------ Net Income per Common Shareholders $ 29.2 $ 23.1 $ 17.0 $ 17.6 $ 11.1 ====== ====== ====== ====== ====== PER COMMON SHARE DATA - ------------------------------------------------------------------------------------------------------------------------------- Income per Common Share Before Cumulative Effect of Change in Accounting Method $ 0.72 $ 0.60 $ 0.46 $ 0.45 $ 0.32 Cumulative Effect per Common Share of Change in Accounting for Income Taxes/3/ - - - 0.05 - ------ ------- ------ ------ ------ Net Income per Common Share $ 0.72 $ 0.60 $ 0.46 $ 0.50 $ 0.32 Weighted Average Shares and Equivalents 40,707,633 38,731,422 36,663,440 35,466,059 34,960,943 Common Shares Outstanding at Year End 40,040,454 39,294,780 36,258,602 35,265,923 33,683,625 FINANCIAL POSITION - ----------------------------------------------------------------------------------------------------------------------------- Total Assets $337.5 $ 252.2 $185.0 $165.9 $146.5 Fixed Assets, Net 37.1 28.7 21.3 16.8 17.2 Working Capital 115.6 89.4 67.3 72.2 48.5 Noncurrent Liabilities 26.8 21.3 19.6 12.0 11.6 Stockholders' Equity 175.5 138.3 99.0 85.8 62.2
____________________________________ /1/ 1991 amounts have been restated in accordance with the Company's adoption, in 1992, of new software revenue recognition principles. Additionally, certain operating expenses for 1991-1993 have been reclassified for comparative purposes. /2/ In 1992, the Company adopted FAS 109 -- Accounting for Income Taxes. /3/ All share and per share data have been restated to reflect the three-for-two stock split that was effective on January 5, 1996. 25 FIVE-YEAR REVENUES BY TARGET MARKET
Year Ended December 31 (In millions)/1/ /2/ 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------ Services and Products Telecommunication Firms $205.2 $120.6 $ 77.8 $ 61.2 $ 32.4 Financial Services Institutions 131.3 91.5 59.9 57.1 49.7 State and Local Governments and Education 95.9 81.6 66.0 59.9 52.5 Federal Government Agencies 95.8 87.5 91.6 89.8 75.2 Other Corporate Clients 33.3 27.6 26.4 27.5 36.6 ------ ------ ------ ------ ------ Total Services and Products Revenues 561.5 408.8 321.7 295.5 246.4 Reimbursed Expenses Revenues 70.9 51.1 42.3 37.0 38.0 ------ ------ ------ ------ ------ Total Revenues $632.4 $459.9 $364.0 $332.5 $284.4 ====== ====== ====== ====== ======
__________________________________ /1/ 1991 amounts have been restated in accordance with the Company's adpotion, in 1992, of new software revenue recognition principles. /2/ Effective in 1993, the Company eliminated Energy Industry Clients as a separately reported market with the revenues reclassified under Federal Government Agencies and Other Corporate Clients. 26 SELECTED QUARTERLY FINANCIAL DATA AND INFORMATION ON AMS STOCK (UNAUDITED) The following summary represents the results of operations for the two years in the period ended December 31, 1995. The common stock of American Management Systems, Inc., is traded in the NASDAQ over-the-counter market under the symbol AMSY. References to the stock prices are the high and low bid prices during the calendar quarters. (In millions except per share data)
Net Income to Net Income Income Before Common per Common Stock Bid Price --------------- Revenues Income Taxes Shareholders Share High Low - ---------------------------------------------------------------------------------------------------------------------- 1995: - ---------------------------------------------------------------------------------------------------------------------- March 31 $135.7 $ 8.3 $ 4.9 $0.12 $14.000 $11.417 June 30 157.5 11.5 6.6 0.16 16.917 12.667 September 30 162.7 12.9 7.5 0.19 18.333 15.500 December 31 176.5 17.1 10.2 0.25 20.500 15.583 1994: - ---------------------------------------------------------------------------------------------------------------------- March 31 $100.3 $ 7.9 $ 4.5 $0.12 $ 9.111 $ 8.167 June 30 109.8 10.1 5.8 0.15 11.111 8.611 September 30 119.1 9.8 5.8 0.15 12.000 9.555 December 31 130.7 11.7 7.0 0.18 12.833 10.250
The Company has never paid any cash dividends on its common stock and does not anticipate paying dividends in the foreseeable future. Its policy is to invest retained earnings in the operation and expansion of its business. Future dividend policy with respect to its common stock will be determined by the Board of Directors based upon the Company's earnings, financial condition, capital requirements, and other then-existing conditions. The Company paid dividends of $288,000 in 1994, and $834,000 in 1993 to the holder of the Series B Preferred Stock. (See Note 3 of "Notes to Consolidated Financial Statements" in this exhibit.) No shares of Series B Preferred Stock remain outstanding, having been converted in 1994. The approximate number of shareholders of record of the Company's common stock as of March 22, 1996 was 957. 27 OTHER INFORMATION TRANSFER AGENT AND REGISTRAR Chemical Mellon Shareholder Services, L.L.C. Ridgefield Park, N.J. INDEPENDENT ACCOUNTANTS Price Waterhouse LLP Washington, D.C. COUNSEL Shaw, Pittman, Potts & Trowbridge Washington, D.C. STOCKHOLDER AND 10-K INFORMATION Financial inquiries should be directed to Frank A. Nicolai, Secretary of the Company, American Management Systems, Incorporated, 4050 Legato Road, Fairfax, Virginia 22033. Telephone (703) 267-8000. A complimentary copy of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission will be provided upon written request. ANNUAL MEETING The annual shareholders meeting has been scheduled for May 10, 1996 in Fairfax, Virginia, for stockholders of record on March 22, 1996. 28 EX-21 5 SUBSIDIARIES Exhibit 21 SUBSIDIARIES OF THE COMPANY The following are all of the subsidiaries of the Registrant and are included in its audited consolidated financial statements filed with its Annual Report on Form 10-K for the fiscal year ended December 31, 1995. Each subsidiary listed is either wholly-owned by the Registrant or by the Registrant and another of its subsidiaries listed below.
Place of Subsidiary (Year Organized or Acquired) Incorporation --------------------------------------- ------------- AMS Equipment, Inc. (1981) Delaware AMS Technical Systems, Inc. (1983) Delaware Branch Office in Seoul (1995) Korea American Management Systems Operations Corporation (1984) Delaware AMS Management Systems Canada Inc. (1983) Canada AMS Management Systems Australia Pty Limited (1989) Australia AMS Management Systems U.K. Ltd. (1989) England Branch Office in Lisbon (1993) Portugal AMS Management Systems Europe, S.A./N.V. (1990) Belgium AMS Management Systems Deutschland GmbH (1990) Germany Vista Concepts, Inc. (Acquired 1993) New York AMS Management Systems Mexico, S.A. de C.V. (1994) Mexico AMSY Management Systems Netherlands B.V. (1994) The Netherlands Nordic Business Management Systems AB (1994) Sweden AMS Management Systems Espana, S.A. (1995) Spain AMS Management Systems (Switzerland) AG (1995) Switzerland
44 EX-23 6 CONSENT Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 2-97992, 33-47661, 33-68426, 333-00563, and 333- 01557) of American Management Systems, Incorporated of our report dated February 14, 1996, appearing on page 19, of the 1995 Financial Report which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on page 9 of this Form 10-K. PRICE WATERHOUSE LLP Washington, D.C. March 29, 1996 45 EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER 31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 35,800 0 206,100 (4,900) 0 250,800 73,000 (35,900) 337,500 135,200 0 0 0 500 175,000 337,500 632,400 632,400 348,600 581,700 900 1,600 2,300 49,800 20,600 29,200 0 0 0 29,200 .72 .72
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