8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 23, 2003

American Management Systems, Incorporated

(Exact name of registrant as specified in its charter)

Delaware	0-9233	54-0856778
(State or other Jurisdiction of Incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

4050 Legato Road
                     Fairfax, Virginia                    
(Address of Principal Executive Offices) 22033
(Zip Code)

Registrant’s telephone number, including area code: (703) 267-8000

                                        Not Applicable                                        
(Former name or former address, if changed since last report)

ITEM 7.                   FINANCIAL STATEMENTS AND EXHIBITS

(c)	Exhibits.
	99.1	Press Release dated October 23, 2003 with respect to the Registrant’s financial results for the third quarter ended September 30, 2003. This exhibit is being furnished pursuant to Item 12 of this Form 8-K.

ITEM 12.                DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On October 23, 2003, the Registrant announced financial results for the third quarter ended September 30, 2003. A copy of the press release announcing the results is attached hereto as Exhibit 99.1. The press release attached as Exhibit 99.1 is being furnished to the Securities and Exchange Commission and shall not be deemed filed.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
	By:	/s/ James C. Reagan
		James C. Reagan Executive Vice President and Chief Financial Officer
Date: October 23, 2003

EX-99.1 3 w90939exv99w1.htm EXHIBIT 99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

NASDAQ: AMSY

Investor Relations Contact:
Ronald Schillereff
703-267-5140
ronald.schillereff@ams.com

Media Relations Contact:
Charlene Wheeless
703-267-7075
charlene.wheeless@ams.com

AMS REPORTS Q3 2003 RESULTS
AMS Earns $0.20 Per Share; Continues Growth Path

FAIRFAX, Va., October 23, 2003 – American Management Systems, Incorporated (NASDAQ: AMSY), a global business and IT consulting firm, today announced third quarter 2003 earnings of $8.6 million, $0.20 per diluted share, compared to earnings of $8.3 million, $0.20 per diluted share, in the third quarter of 2002 and a loss of $46.6 million, $(1.10) per diluted share, in the second quarter of 2003.

Revenues for the third quarter of 2003 were $248.1 million compared to $247.5 million for the third quarter of 2002 and $232.0 million for the second quarter of 2003. Revenues and earnings were both positively impacted by the acquisition of R. M. Vredenburg & Co. on August 1, 2003.

“AMS performed well in the third quarter. We delivered on earnings expectations and again reported sequential revenue growth. Additionally, the benefits of our restructuring continue to materialize in the form of improving profitability, ongoing cost containment and strong balance sheet fundamentals,” said AMS Chairman and Chief Executive Officer Alfred T. Mockett. He added, “I am cautiously optimistic about the future and confident that we are on the right track. We have a solid base of business which is growing steadily, further bolstered by strong results from the Vredenburg acquisition.”

Results in the third quarter were also positively impacted by a decrease in the Company’s quarterly effective tax rate. This decrease is a result of the reduction in the third quarter of certain non-deductible expenses expected for the tax year 2003. This adjustment decreased income tax expense in the third quarter by $0.7 million, and increased earnings per share by $0.02.

AMS Q3 2003 Results – October 23, 2003—2

Revenue excluding the impact of Vredenburg was $233.6 million, demonstrating modest quarter over quarter organic growth, though $1.4 million below prior guidance. Excluding the impact of Vredenburg, earnings for the third quarter were at the high end of prior guidance at $6.7 million, $0.16 per diluted share¹.

The third quarter gross margin of 37.5% increased slightly over the second quarter gross margin of 37.1%. The third quarter margin was diluted by the acquired Vredenburg business, which contributed at a margin of approximately 31% during the third quarter. Excluding the impact of Vredenburg, the gross margin increased by approximately 0.8% over the second quarter of 2003¹.

Capital expenditures for software development were $13.7 million in the third quarter and $13.2 million in the second quarter of 2003 primarily related to an initiative to replatform and upgrade core product offerings sold to Federal and Financial Services customers.

Conference Call
AMS will hold a conference call to review third quarter results at 8:00 a.m. Eastern Time on Thursday, October 23, 2003 that will be accessible by dialing 913-981-5507. An audio replay of the call will be available from 11:00 a.m. on October 23, 2003 through 12:00 midnight, November 6, 2003 by dialing 719-457-0820 and entering pass code 531357. The call may also be accessed via a live webcast on the AMS website at www.ams.com. The webcast will be available for replay through October 23, 2004.

About AMS
AMS is a premier business and IT consulting firm to the government, financial services, and communications industries around the globe. AMS combines IT ingenuity and industry IQ to drive high-performance results. Known for its delivery and service excellence for more than 30 years, AMS specializes in enterprise resource planning, credit risk management, customer relationship management, and enterprise security. AMS applies both proprietary and partner technologies, and provides solutions through business consulting, systems integration, and outsourcing. Founded in 1970, AMS is headquartered in Fairfax, Va., and has offices worldwide. The company is traded on the NASDAQ National Market under the symbol AMSY. For detailed information about AMS, visit www.ams.com.

# # #

Investors are cautioned that this release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, relating to our operations that are based on management’s current expectations, estimates and projections. Words such as “anticipates,” “believes,” “expects,” “estimates,” “intends,” and similar expressions are used to identify these forward-looking statements. These statements are subject to risks, uncertainty and changes in circumstances. Forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Actual results may differ materially from what is expressed or forecast in these forward-looking statements. The reasons for this include changes in general economic and political conditions, including fluctuations in exchange rates, and the factors discussed in AMS’s Annual Report on Form 10-K for the year ended December 31, 2002. The Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s estimates or views as of any subsequent date.

¹ See attached Reconciliation of Non-GAAP Financial Measures

AMS Q3 2003 Results – October 23, 2003—3

American Management Systems, Incorporated
CONSOLIDATED CONDENSED INCOME STATEMENTS
Unaudited
(In thousands, except per share data)

		For the Three Months						For the Nine Months
		Ended September 30,						Ended September 30,
		2003			2002			2003			2002
REVENUES		$	248,122		$	247,480		$	707,105		$	750,607
EXPENSES:
	Cost of Revenues		155,067			143,369			435,952			437,867
	Selling, General and Administrative		77,471			82,290			232,199			239,508
	Research and Development		2,892			5,981			9,907			19,809
	Restructuring Charge		—			6,000			24,785			22,087
	Software Asset Impairments		—			—			9,555			—
	Contract Litigation Settlement Expense		—			—			45,489			—
INCOME (LOSS) FROM OPERATIONS			12,692			9,840			(50,782	)		31,336
OTHER (INCOME) EXPENSE, NET:
	Interest Expense (Income)		338			(1,074	)		852			19
	Other (Income) Expense		(130	)		870			(426	)		1,179
			208			(204	)		426			1,198
INCOME (LOSS) BEFORE INCOME TAXES			12,484			10,044			(51,208	)		30,138
INCOME TAXES			3,852			1,707			(19,459	)		9,946
NET INCOME (LOSS)		$	8,632		$	8,337		$	(31,749	)	$	20,192
WEIGHTED AVERAGE SHARES OUTSTANDING
	Basic		42,348			42,169			42,309			42,032
	Diluted		42,733			42,372			42,309			42,460
EARNINGS (LOSS) PER SHARE
	Basic	$	0.20		$	0.20		$	(0.75	)	$	0.48
	Diluted	$	0.20		$	0.20		$	(0.75	)	$	0.48

Certain amounts from prior year have been reclassified for comparative purposes.

AMS Q3 2003 Results – October 23, 2003—4

American Management Systems, Incorporated
CONSOLIDATED REVENUES BY MARKET
Unaudited
(In thousands)

	For the Three Months				For the Three Months				For the Nine Months
	Ended June 30,				Ended September 30,				Ended September 30,
	2003		2002		2003		2002		2003		2002
Federal Government Agencies	$	84,503	$	84,511	$	101,219	$	86,639	$	271,645	$	254,825
State and Local Governments and Education		65,518		70,040		65,852		68,634		192,752		210,199
Communications, Media and Entertainment		43,159		52,975		44,790		45,689		130,546		151,866
Financial Services Institutions		31,662		28,803		30,132		30,366		92,062		89,949
Other Corporate Clients		7,169		15,368		6,129		16,152		20,100		43,768
Total Revenues	$	232,011	$	251,697	$	248,122	$	247,480	$	707,105	$	750,607

AMS Q3 2003 Results – October 23, 2003—5

American Management Systems, Incorporated
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)

				September 30, 2003
ASSETS				(Unaudited)		December 31, 2002
CURRENT ASSETS:
	Cash and Cash Equivalents			$	55,394	$	136,191
	Accounts Receivable, Net				251,421		212,098
	Prepaid Expenses and Other Current Assets				29,601		35,126
		Total Current Assets			336,416		383,415
NONCURRENT ASSETS:
	Property and Equipment (Net of Accumulated Depreciation and Amortization of $48,799 and $44,751)				22,568		24,518
	Purchased and Developed Computer Software (Net of Accumulated Amortization of $155,890 and $136,591)				116,501		90,797
	Goodwill, Net				60,600		24,331
	Cash Value of Life Insurance				25,307		29,830
	Other Assets				25,732		69,605
			Total Noncurrent Assets		250,708		239,081
TOTAL ASSETS				$	587,124	$	622,496

AMS Q3 2003 Results – October 23, 2003—6

American Management Systems, Incorporated
CONSOLIDATED CONDENSED BALANCE SHEETS — continued
(In thousands, except share data)

			September 30, 2003
LIABILITIES AND STOCKHOLDERS’ EQUITY			(Unaudited)			December 31, 2002
CURRENT LIABILITIES:
	Accounts Payable		$	30,670		$	17,118
	Accrued Compensation and Related Items			48,975			52,674
	Deferred Revenues			18,321			26,115
	Accrued Liabilities			16,788			14,592
	Accrued Restructuring Charge			13,004			7,988
	Income Taxes Payable			368			1,061
	Deferred Income Taxes			1,454			17,159
		Total Current Liabilities		129,580			136,707
NONCURRENT LIABILITIES:
	Deferred Compensation and Other Noncurrent Liabilities			30,359			36,364
	Deferred Income Taxes			20,588			20,044
	Accrued Restructuring Charge			9,844			9,356
		Total Noncurrent Liabilities		60,791			65,764
TOTAL LIABILITIES				190,371			202,471
STOCKHOLDERS’ EQUITY:
	Preferred Stock ($0.10 Par Value; 4,000,000 Shares Authorized, None Issued or Outstanding)			—			—
	Common Stock ($0.01 Par Value; 200,000,000 Shares Authorized, 51,057,214 and 51,057,214 Issued and 42,351,969 and 42,324,218 Outstanding)			510			510
	Capital in Excess of Par Value			82,298			80,309
	Unearned Compensation			(847	)		(2,146	)
	Retained Earnings			353,314			385,063
	Accumulated Other Comprehensive Loss			(6,455	)		(14,915	)
	Treasury Stock, at Cost (8,705,245 and 8,732,996 Shares)			(32,067	)		(28,796	)
		Total Stockholders’ Equity		396,753			420,025
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	587,124		$	622,496

AMS Q3 2003 Results – October 23, 2003—7

American Management Systems, Incorporated
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)

			For the Nine Months
			Ended September 30,
			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income			$	(31,749	)	$	20,192
Adjustments to Reconcile Net (Loss) Income to Net Cash (Used in) Provided by Operating Activities
	Depreciation			5,138			5,701
	Amortization			25,042			27,118
	Stock Compensation Expense			1,070			2,446
	Deferred Income Taxes			(20,324	)		333
	(Increase) Decrease in Cash Surrender Value of Life Insurance			(1,355	)		840
	Loss on Disposal of Assets			405			324
	Provision for Doubtful Accounts			750			—
	Software Asset Impairments			9,555			—
	Contract Litigation Asset Write-off			30,489			—
	Changes in Assets and Liabilities, Net of Acquisition:
		(Increase) Decrease in Accounts Receivable		(21,403	)		19,311
		Decrease in Prepaid Expenses and Other Assets		19,106			4,170
		Increase (Decrease) in Accounts Payable and Accrued Liabilities		4,225			(5,526	)
		Decrease in Accrued Compensation and Related Items		(21,241	)		(5,292	)
		Decrease in Deferred Revenue		(8,478	)		(13,196	)
		Decrease (Increase) in Accrued Restructuring Charge		5,504			(1,380	)
		Decrease in Income Taxes Payable		(755	)		(13,947	)
Net Cash (Used in) Provided by Operating Activities				(4,021	)		41,094
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment				(2,542	)		(1,069	)
Purchase and Development of Computer Software				(40,347	)		(19,227	)
Acquisition, Net of Cash Acquired				(43,896	)		—
Other Assets				5,627			(1,100	)
Net Cash Used in Investing Activities				(81,158	)		(21,396	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Employee Stock Purchase Plan and Common Stock Options Exercised				3,649			6,889
Payments to Acquire Treasury Stock				(5,019	)		(2,948	)
Net Cash (Used in) Provided by Financing Activities				(1,370	)		3,941
Effect of Exchange Rate Changes on Cash				5,752			1,779
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(80,797	)		25,418
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				136,191			53,347
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	55,394		$	78,765

AMS Q3 2003 Results – October 23, 2003—8

American Management Systems, Incorporated
Reconciliation of Non-GAAP Financial Measures
Unaudited
(In thousands)

Earnings, diluted earnings per share, and gross margins excluding the impact of Vredenburg are reported in the press release in order to provide information comparable to prior periods. This information is also used by management in evaluating its ongoing business in relation to prior forecasts. Management believes that the presentation of this information is useful to investors as it provides clarity regarding the current period earnings impact of the Vredenburg acquisition.

Earnings and Diluted Earnings per Share Reconciliation

		For the Three Months
		Ended September 30, 2003
Income Before Income Taxes		$	12,484
Less:
	Vredenburg Income Before Income Taxes		3,256
Income Before Income Taxes, as adjusted			9,228
Income Taxes, as adjusted			2,506
Net Income, excluding Vredenburg		$	6,722
Weighted Average Shares and Equivalents			42,733
Diluted Earnings Per Share, as adjusted		$	0.16

Gross Margin Reconciliation

		Gross Margin		Gross Margin
		(Dollars)		(Percentage)
For the Three Months Ended September 30, 2003:
Gross Margin		$	93,055		37.5	%
Less:
	Vredenburg Gross Margin		4,457		30.7	%
Gross Margin, excluding Vredenburg			88,598		37.9	%
For the Three Months Ended June 30, 2003:
Gross Margin			86,173		37.1	%
Gross Margin Increase from June 30, 2003 to September 30, 2003, excluding Vredenburg		$	2,425		0.8	%

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