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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 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 NUMBER: 0-28074
SAPIENT CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 04-3130648
(State or Other Jurisdiction (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE MEMORIAL DRIVE, CAMBRIDGE, MA 02142
(Address of Principal Executive (Zip Code)
Offices)
</TABLE>
617-621-0200
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of August 3, 1998 there were 25,351,420 shares of Common Stock, $.01 par
value, outstanding.
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SAPIENT CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets as of June 30, 1998 and December
31, 1997.................................................... 3
Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1998 and 1997..................... 4
Consolidated Statements of Cash Flows for the Six Months
Ended
June 30, 1998 and 1997...................................... 5
Notes to Consolidated Financial Statements.................. 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8-10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds................... 11
Item 4 Submission of Matters to a Vote of Security Holders......... 11
Item 5. Other Information........................................... 11
Item 6. Exhibits and Reports on Form 8-K............................ 12
Signatures................................................................ 13
Exhibit 11.1.............................................................. 14
Exhibit 27.1.............................................................. 15
</TABLE>
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SAPIENT CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 68,262,233 $47,314,306
Short term investments................................. 16,852,574 17,091,604
Accounts receivable, less allowance for doubtful
accounts of $425,000 and $350,000, respectively....... 22,005,451 16,217,444
Unbilled revenues on contracts......................... 17,647,357 9,070,470
Deferred income tax asset.............................. 34,914 34,914
Prepaid expenses and other current assets.............. 2,393,793 1,638,840
------------ -----------
Total current assets.............................. 127,196,322 91,367,578
Property and equipment, net................................. 7,659,025 6,315,454
Other assets................................................ 260,017 330,211
------------ -----------
Total assets...................................... $135,115,364 $98,013,243
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank.................................. $ -- $ 208,242
Accounts payable....................................... -- 15,004
Accrued expenses....................................... 1,533,372 1,924,444
Accrued compensation................................... 3,345,297 3,453,050
Accrued income taxes payable........................... 2,090,595 3,074,553
Deferred revenues on contracts......................... 4,734,667 6,307,903
------------ -----------
Total current liabilities......................... 11,703,931 14,983,196
Deferred income taxes....................................... 121,212 121,212
Other long term liabilities................................. 956,411 909,689
------------ -----------
Total liabilities................................. 12,781,554 16,014,097
------------ -----------
Stockholders' equity:
Preferred stock, par value $.01 per share, 5,000,000
authorized and none outstanding at June 30, 1998 and
December 31, 1997..................................... -- --
Common stock, par value $.01 per share, voting,
100,000,000 shares authorized, 25,262,653 issued at
June 30, 1998; 40,000,000 shares authorized,
24,206,570 shares issued at December 31, 1997......... 252,626 242,066
Additional paid-in capital............................. 88,487,156 57,478,844
Retained earnings...................................... 33,594,028 24,278,236
------------ -----------
Total stockholders' equity........................ 122,333,810 81,999,146
------------ -----------
Total liabilities and stockholders' equity........ $135,115,364 $98,013,243
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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SAPIENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues............................... $35,350,203 $20,798,395 $66,080,667 $38,978,326
Operating expenses:
Project personnel costs........... 16,966,959 9,995,123 31,678,948 18,669,669
Selling and marketing............. 2,631,367 1,138,212 4,446,657 2,259,361
General and administrative........ 8,473,450 5,241,523 16,488,746 9,816,348
----------- ----------- ----------- -----------
Total operating expenses..... 28,071,776 16,374,858 52,614,351 30,745,378
Income from operations................. 7,278,427 4,423,537 13,466,316 8,232,948
Interest income, net................... 702,277 572,436 1,280,553 1,089,379
----------- ----------- ----------- -----------
Income before income taxes............. 7,980,704 4,995,973 14,746,869 9,322,327
Income taxes........................... 2,928,917 1,899,997 5,432,866 3,520,387
----------- ----------- ----------- -----------
Net income................... $ 5,051,787 $ 3,095,976 $ 9,314,003 $ 5,801,940
=========== =========== =========== ===========
Basic net income per share............. $ 0.20 $ 0.13 $ 0.38 $ 0.24
=========== =========== =========== ===========
Diluted net income per share........... $ 0.18 $ 0.12 $ 0.34 $ 0.22
=========== =========== =========== ===========
Weighted average common shares......... 25,134,991 23,844,854 24,740,475 23,783,212
Weighted average common share
equivalents.......................... 2,862,813 2,041,764 2,798,903 2,078,018
----------- ----------- ----------- -----------
Weighted average common shares and
common share equivalents............. 27,997,804 25,886,618 27,539,378 25,861,230
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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SAPIENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------
JUNE 30, JUNE 30,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 9,314,003 $ 5,801,940
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization.......................... 1,571,039 856,280
Deferred income taxes.................................. -- (97,089)
Changes in assets and liabilities:
Increase in accounts receivable, net................. (5,788,007) (2,961,704)
Increase in unbilled revenues on contracts........... (8,576,887) (1,075,636)
Increase in prepaid expenses and other current
assets.............................................. (754,953) (555,556)
Decrease in other assets............................. 71,983 --
(Decrease) increase in accounts payable.............. (15,004) 265,177
Decrease in accrued expenses......................... (391,072) (493,648)
Decrease in accrued compensation..................... (107,753) (22,874)
Decrease in income taxes payable..................... (983,958) (754,146)
(Decrease) increase in deferred revenues on
contracts....................................... (1,573,236) 77,388
Increase in other long term liabilities........... 46,722 173,809
----------- -----------
Net cash (used from) provided by operating activities....... (7,187,123) 1,213,941
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment........................ (2,914,610) (3,153,799)
Sale of short term investments............................ 239,030 3,316,723
----------- -----------
Net cash (used in) provided by investing activities....... (2,675,580) 162,924
----------- -----------
Cash flows from financing activities:
Proceeds from stockholders for notes receivable........... -- --
Proceeds from exercise of stock options................... 717,843 142,450
Proceeds from public stock offering......................... 29,296,406 --
Proceeds from employee stock purchase plan.................. 1,004,623 589,511
Principal payments on notes payable to bank................. (208,242) (126,461)
----------- -----------
Net cash provided by financing activities......... 30,810,630 605,500
----------- -----------
Increase in cash and cash equivalents....................... 20,947,927 1,982,365
Cash and cash equivalents, at beginning of period........... 47,314,306 50,301,285
----------- -----------
Cash and cash equivalents, at end of period................. $68,262,233 $52,283,650
=========== ===========
Supplemental disclosures for cash flow information:
Cash paid during the period for income taxes.............. $ 6,416,824 $ 4,348,635
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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SAPIENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by Sapient Corporation (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 1997
included in the Company's Annual Report on Form 10-K. The accompanying
consolidated financial statements reflect all adjustments (consisting solely of
normal, recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of results for the interim periods presented.
The results of operations for the three and six month periods ended June 30,
1998 are not necessarily indicative of the results to be expected for any future
period or the full fiscal year.
On December 15, 1997, the Company acquired all of the outstanding common
stock of EXOR in exchange for 611,738 shares of Common Stock. The Company's
financial statements have been restated for all periods presented to reflect the
acquisition of EXOR, which has been accounted for as a pooling of interests.
(2) SHORT TERM INVESTMENTS
Short term investments represent available-for-sale securities, which are
recorded at fair market value. The difference between fair market value and cost
is not material. Realized gains and losses from sales of available-for-sale
securities were not material for any period presented.
(3) EARNINGS PER SHARE
During 1997, the Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings per Share" (SFAS 128). SFAS 128 establishes a
different method of computing net income per share than previously required
under the provisions of Accounting Principles Board Opinion No. 15, "Earnings
per Share" and requires restatement of all prior periods presented. Under SFAS
128, the Company presents both basic net income per share and diluted net income
per share. Basic net income per share is based on the weighted average number of
shares outstanding during the period. Diluted net income per share reflects the
per share effect of dilutive common stock equivalents.
(4) CAPITAL STOCK
The Company's Board of Directors declared a two-for-one stock split on
February 20, 1998 effected as a 100 percent stock dividend which was distributed
on March 9, 1998. All financial results and share information have been restated
to reflect the effect of the stock dividend.
On April 7, 1998, the Company completed a public offering of Common Stock
which resulted in the issuance of 653,125 shares of Common Stock. Proceeds to
the Company, net of underwriting discounts and costs of the offering, were
approximately $29.3 million.
(5) CONTINGENT LIABILITIES
The Company has certain contingent liabilities that arise in the ordinary
course of its business activities. The Company accrues liabilities when it is
probable that future expenditures will be made and such expenditures can be
reasonably estimated.
The Company is in arbitration with a former employee who alleges breach of
certain contractual and other violations resulting from his termination as an
employee. Management denies that it breached any obligations or duties to this
former employee, and asserts that the Company has meritorious defenses. The
Company plans to vigorously contest these claims. Although the Company does not
expect the claim to have a material adverse effect on the Company's business,
results of operations or financial condition, an adverse
5
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judgment or settlement could have a material adverse effect on the operating
results reported by the Company for the period in which any such adverse
judgment or settlement occurs.
(6) NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). SFAS 130 establishes standards for reporting comprehensive income and its
components in the body of the financial statements. Comprehensive income
includes net income as currently reported under Generally Accepted Accounting
Principles and also considers the effect of additional economic events that are
not required to be recorded in determining net income but are rather reported as
a separate component of stockholders' equity. These events include certain
foreign currency transactions and related hedging activities accounted for under
Statement of Financial Accounting Standards No. 52 "Foreign Currency
Translation" and unrealized gains and losses on investments in marketable
securities accounted for under Statement of Financial Accounting Standards No.
115 "Accounting for Certain Investments in Debt and Equity Securities." The
Company plans to adopt SFAS 130 in 1998. The effect of adopting SFAS 130 and
reporting comprehensive income is not expected to be material to the Company.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information," which establishes standards for reporting
information about operating segments in annual and interim financial statements
issued to shareholders. This Statement also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The Company plans to adopt this Statement in 1998.
6
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SAPIENT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Sapient is a leading provider of business and information technology
solutions implemented on a fixed-price, fixed-timeframe basis. Using
client/server and Web-based technologies, Sapient offers a variety of services
designed to help clients rapidly achieve their business objectives, including
implementation and integration of packaged software solutions, custom software
development, implementation of enterprise resource planning ("ERP") systems,
production support, and business and operational consulting. Sapient targets
clients in information-intensive industries, including Financial Services,
Energy Services, Manufacturing, Communications and Government.
Sapient delivers services using its proprietary QUADD (Quality Design and
Delivery) discipline. QUADD is a workshop-based methodology that emphasizes
active client participation to help visualize, prioritize and create
time-critical business and technology solutions. The Company believes that the
QUADD discipline is an important competitive differentiator that allows Sapient
and its clients to better understand the clients' business needs, and to design,
develop, integrate and implement solutions that address those needs. The QUADD
process consists of four stages: RIP workshop, Design, Implementation and
Production. The RIP (Rapid Implementation Plan) workshop is designed to rapidly
identify the client's needs and develop a strategy and action plan to meet those
needs. The Design workshop focuses on outlining the proposed process changes and
required information technology solutions. The Implementation stage primarily
involves the development and testing of the new applications or enhancements to
third-party packaged software applications or existing Sapient-developed
solutions. The Production stage primarily involves the maintenance, enhancement
and support of the solution after it is operational.
The Company's revenues and earnings may fluctuate from quarter to quarter
based on the number, size and scope of projects in which the Company is engaged,
the contractual terms and degree of completion of such projects, any delays
incurred in connection with a project, employee utilization rates, the adequacy
of provisions for losses, the accuracy of estimates of resources required to
complete ongoing projects, general economic conditions and other factors. In
addition, revenues from a large client may constitute a significant portion of
the Company's total revenues in a particular quarter.
On December 15, 1997, the Company acquired all of the outstanding common
stock of EXOR in exchange for 611,738 shares of Common Stock. The Company's
financial statements have been restated for all periods presented to reflect the
acquisition of EXOR, which has been accounted for as a pooling of interests.
The Company's Board of Directors declared a two-for-one stock split on
February 20, 1998 effected as a 100 percent stock dividend which was distributed
on March 9, 1998. The Company's financial statements have been restated for all
periods presented to reflect the effect of the stock dividend.
On April 7, 1998, the Company completed a public offering of Common Stock
which resulted in the issuance of 653,125 shares of Common Stock. Proceeds to
the Company, net of underwriting discounts and costs of the offering, were
approximately $29.3 million.
7
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RESULTS OF OPERATIONS
The following table sets forth the percentage of revenues of certain items
included in the Company's consolidated statements of income.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues.................................................. 100% 100% 100% 100%
Operating expenses:
Project personnel costs.............................. 48 48 48 48
Selling and marketing................................ 7 6 7 6
General and administrative........................... 24 25 25 25
--- --- --- ---
Total operating expenses........................ 79 79 80 79
Income from operations.................................... 21 21 20 21
Interest income........................................... 2 3 2 3
Income taxes.............................................. 9 9 8 9
--- --- --- ---
Net income................................................ 14% 15% 14% 15%
=== === === ===
</TABLE>
Revenues
Revenues for the second quarter of 1998 increased 70% over revenues for the
second quarter of 1997. For the first six months of the year, revenues increased
70% over the comparable period of the prior year. The increase in revenues
reflects increases in both the size and number of client projects. Unbilled
revenues on contracts increased from $9.1 million at December 31, 1997 to $17.7
million at June 30, 1998 primarily as a result of several large projects which
began in the fourth quarter of 1997. By June 30, 1998, the Company had recorded
revenue on several of these new projects which exceeded the amounts of the
deposits received by the Company at the beginning of the projects. Future
billings for these projects are tied to the achievement of contractual
milestones, which occur throughout the life of the projects. In the second
quarter of 1998, the Company's five largest clients accounted for approximately
34% of its revenues. During this period, there were no clients who accounted for
more than 10% of such revenues. For the first six months of 1998 the Company's
five largest clients accounted for approximately 37% of its revenues. During
this period, there were no clients who accounted for more than 10% of such
revenues.
Project Personnel Costs
Project personnel costs consist primarily of salaries and employee benefits
for personnel dedicated to client assignments and direct expenses incurred to
complete projects that were not reimbursed by the client. These costs represent
the most significant expense the Company incurs in providing its services. The
increase in project personnel costs for the three and six month periods ended
June 30, 1998 was primarily due to an increase in project personnel from 548 at
June 30, 1997 to 846 at June 30, 1998. Project personnel costs remained constant
as a percentage of revenues at 48% for the second quarter of 1998 and 1997 and
for the first six months of 1998 and 1997.
Selling and Marketing
Selling and marketing costs consist primarily of salaries, employee
benefits, travel expenses of selling and marketing personnel and promotional
costs. Selling and marketing costs increased as a percentage of revenues from 6%
in the second quarter of 1997 to 7% in the second quarter of 1998. For the first
six months of 1998 and 1997, selling and marketing costs increased as a
percentage of revenues from 6% to 7%. The increase was primarily due to
investments made by the Company in a new corporate identity program, an increase
in the level of compensation paid to the Company's selling and marketing team
and an increase in the amount of business development travel expenses. The
dollar increase in the three and six month periods ended June 30, 1998 was
primarily the result of an increase in the number of selling and marketing
personnel, from 30 employees at June 30, 1997 to 42 employees at June 30, 1998.
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General and Administrative
General and administrative costs consist primarily of expenses associated
with the Company's management, finance and administrative groups, including
personnel devoted to recruiting and training project personnel, and occupancy
costs. The increase in general and administrative costs for the three and six
month periods ended June 30, 1998 was primarily due to an increase in total
costs associated with employees hired during 1998, along with an increase in
occupancy costs related to significant expansion in the Company's office space
and increased depreciation costs related to the Company's increased investments
in property and equipment. The Company's total headcount increased from 677 at
June 30, 1997 to 1,035 at June 30, 1998. As a percentage of revenues, general
and administrative costs decreased to 24% for the three months ended June 30,
1998 from 25% for the comparable period in 1997. The decrease as a percentage of
revenues was primarily a result of improvements in the hiring process. General
and administrative costs remained constant at 6% for the six month periods
ending June 30, 1998 and June 30, 1997.
Interest Income
Interest income for the three and six month periods ended June 30, 1998 was
derived from the Company's investments of the proceeds from its public stock
offerings, which were invested primarily in tax-exempt, short-term municipal
bonds.
Provision for Income Taxes
Income tax expense represents combined federal and state income taxes at an
effective rate during the quarter ended June 30, 1998 and 1997 of 36.7% and
38.0%, respectively.
Liquidity and Capital Resources
The Company has primarily funded its operations from cash flow generated
from operations and the proceeds from its public stock offerings. In addition,
the Company has a bank revolving line of credit providing for borrowings of up
to $5.0 million. Borrowings under this line of credit, which expires on August
31, 1998, bear interest at the bank's prime rate. The line of credit includes
covenants relating to the maintenance of certain financial ratios, and limits
the payment of dividends. At June 30, 1998, the Company had no bank borrowings
outstanding and no material capital commitments.
Cash and cash equivalents increased to $68.3 million at June 30, 1998, from
$47.3 million at December 31, 1997. The increase was primarily due to proceeds
from a public offering of Common Stock completed in April 1998. Offsetting this
during the second quarter were investments in additional property and equipment
related to office expansions, tax payments and an increase in accounts
receivable. At June 30, 1998, $16.9 million was invested in tax-exempt,
short-term municipal bonds which mature in less than 12 months, compared to
$17.1 million which was invested in similar instruments as of December 31, 1997.
On April 7, 1998, the Company completed a public offering of Common Stock
which resulted in the issuance of 653,125 of Common Stock. Proceeds to the
Company, net of underwriting discounts and costs of the offering, were
approximately $29.3 million.
The Company believes that the cash provided from operations, borrowings
available under its revolving line of credit or any replacement facility and the
net proceeds of its public offerings of common stock will be sufficient to meet
the Company's working capital and capital expenditure requirements for at least
the next 18 months.
The Company has reviewed its internal computer systems and their capability
of recognizing the Year 2000 and years thereafter. The Company believes that the
Year 2000 issue will not pose significant constraints on the Company's
operations. The cost to convert any remaining internal systems is not expected
to have a material impact on the Company's financial condition or results of
operations.
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PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
There has been no change to the information previously provided by the
Company on Form SR for the period ended July 3, 1996, as amended, relating to
securities sold by the Company pursuant to Registration Statements on Form S-1
(Registration Nos. 333-1586 and 333-3204) and a Registration Statement on Form
S-3 (Registration No. 333-47889).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on May 8, 1998, the
following proposals were adopted by the votes specified below:
(i) The election of two Class II Directors (J. Stuart Moore and Darius
W. Gaskins) to serve until the year 2001. Mr. Gaskins received a total of
20,729,882 shares of Common Stock voting in favor, with 18,923 shares
withheld from the vote. Mr. Moore received a total of 20,730,332 shares of
Common Stock voting in favor with 18,473 shares withheld from the vote. In
addition to the directors listed above who were elected at the meeting, the
terms of the following directors continued after the meeting: R. Stephen
Cheheyl, Carl S. Sloane, Jerry A. Greenberg and Bruce D. Parker.
(ii) The approval of an amendment to the Company's Amended and
Restated Certificate of Incorporation increasing the number of authorized
shares of Common Stock from 40,000,000 to 100,000,000. A total of
19,292,000 shares of Common Stock were voted in favor of this proposal,
1,454,630 shares were voted against this proposal and 1,175 shares
abstained from voting.
(iii) The approval of the Company's 1998 Stock Incentive Plan and the
reservation of 2,000,000 shares of Common Stock for issuance thereunder. A
total of 16,871,808 of Common Stock shares were voted in favor of this
proposal, 1,987,936 shares were voted against this proposal, 3,105 shares
abstained from voting and there were a total of 1,885,956 broker non-votes.
(iv) The approval of an amendment to the Company's 1996 Employee Stock
Purchase Plan increasing the number of shares of Common Stock reserved for
purchase thereunder from 300,000 to 660,000 and increasing the number of
offerings from six to twelve. A total of 18,871,086 shares of Common Stock
were voted in favor of this proposal, 9,512 shares were voted against this
proposal, 3,995 shares abstained from voting and there were a total of
1,864,212 broker non-votes.
(v) The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the current fiscal year. A total of
20,742,092 shares of Common Stock were voted in favor of this proposal,
4,982 shares were voted against this proposal and 1,731 shares abstained
from voting.
ITEM 5. OTHER INFORMATION
Stockholder Proposals for 1999 Annual Meeting
As set forth in the Company's Proxy Statement for its 1998 Annual Meeting
of Stockholders, stockholder proposals submitted pursuant to Rule 14a-8 under
the Exchange Act for inclusion in the Company's proxy materials for its 1999
Annual Meeting of Stockholders must be received by the Secretary of the Company
at the principal offices of the Company no later than December 10, 1998.
In addition, the Company's by-laws require that the Company be given
advance notice of stockholder nominations for election to the Company's Board of
Directors and of other business which stockholders wish to present for action at
an annual meeting of stockholders (other than matters included in the Company's
proxy statement in accordance with Rule 14a-8). The required notice must be made
in writing and received by the Secretary of the Company at the principal offices
of the Company not less than 60 days nor more than 90 days prior to the 1999
Annual Meeting; provided, however, that if less than 70 days notice or prior
public disclosure of the date of the 1999 Annual Meeting is given to
stockholders, to be timely, notice must be so
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received not later than the close of business on the 10th day following the date
on which the notice of the meeting was mailed or such public disclosure was
made, whichever occurs first. The 1999 Annual Meeting is currently expected to
be held on May 7, 1999. Assuming that this date does not change, in order to
comply with the time periods set forth in the Company's by-laws, appropriate
notice would need to be provided no earlier than February 6, 1999 and not later
than March 8, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11.1 Computation of shares used in computing Basic and Diluted Net
Income per Share
27.1 Financial data schedule.
(b) Reports on Form 8-K.
The Company did not file any Reports on Form 8-K during the quarter ended
June 30, 1998.
.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAPIENT CORPORATION
Date: August 11, 1998 By /s/ JERRY A. GREENBERG
-----------------------------------
JERRY A. GREENBERG
CO-CHIEF EXECUTIVE OFFICER
CO-CHAIRMAN OF THE BOARD
Date: August 11, 1998 By /s/ SUSAN D. JOHNSON
-----------------------------------
SUSAN D. JOHNSON
CHIEF FINANCIAL OFFICER
12
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EXHIBIT 11.1
SAPIENT CORPORATION
ARTICLE 6.01 OF REGULATION S-K
COMPUTATION OF SHARES USED IN COMPUTING BASIC AND DILUTED NET INCOME PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- -------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income............................... $ 5,051,787 $ 3,095,976 $ 9,314,003 $ 5,801,940
Basic Net Income per Share:
Weighted average common shares
outstanding....................... 25,134,991 23,844,854 24,740,475 23,783,212
Shares used in computing per share
amount............................ 25,134,991 23,844,854 24,740,475 23,783,212
----------- ----------- ----------- -----------
Basic net income per share.......... $ 0.20 $ 0.13 $ 0.38 $ 0.24
=========== =========== =========== ===========
Diluted Net Income per Share:
Weighted average common shares
outstanding....................... 25,134,991 23,844,854 24,740,475 23,783,212
Dilutive stock options.............. 2,862,813 2,041,764 2,798,903 2,078,018
----------- ----------- ----------- -----------
Shares used in computing per share
amount............................ 27,997,804 25,886,618 27,539,378 25,861,230
----------- ----------- ----------- -----------
Diluted net income per share........ $ 0.18 $ 0.12 $ 0.34 $ 0.22
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 68,262,266 68,262,266
<SECURITIES> 16,852,574 16,852,574
<RECEIVABLES> 22,005,451 22,005,451
<ALLOWANCES> 425,000 425,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 127,196,322 127,196,322
<PP&E> 13,856,172 13,856,172
<DEPRECIATION> 6,197,147 6,197,147
<TOTAL-ASSETS> 135,115,364 135,115,364
<CURRENT-LIABILITIES> 11,703,931 11,703,931
<BONDS> 0 0
0 0
0 0
<COMMON> 254,032 254,032
<OTHER-SE> 122,079,778 122,079,778
<TOTAL-LIABILITY-AND-EQUITY> 135,115,364 135,115,364
<SALES> 35,350,203 66,080,667
<TOTAL-REVENUES> 35,350,203 66,080,667
<CGS> 0 0
<TOTAL-COSTS> 28,071,776 52,614,351
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 702,277 1,280,553
<INCOME-PRETAX> 7,980,704 14,746,869
<INCOME-TAX> 2,928,917 5,432,866
<INCOME-CONTINUING> 5,051,787 9,314,003
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,051,787 9,314,003
<EPS-PRIMARY> 0.20 .38
<EPS-DILUTED> 0.18 .34
</TABLE>
