<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1999
[_]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 0-23489
Access Worldwide Communications, Inc.
----------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1309227
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2200 Clarendon Blvd., 12th Floor 22201
Arlington, Virginia (Zip Code)
(Address of Principal Executive
Offices)
Registrant's telephone number, including area code 1 (800) 522-3447
Securities registered pursuant to Section 12(b) of the Act:
Title of each class. Name of each exchange on which registered.
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
Title of Class
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 as 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 the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
9,543,932 shares of Common Stock, $.01 par value, as of May 7, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I--Financial Information
Item 1. Financial Statements............................................. 1-5
Consolidated Balance Sheets--March 31, 1999 and December 31, 1998...... 1
Consolidated Statements of Operations--Three Months Ended March 31,
1999 and
March 31, 1998........................................................ 2
Consolidated Statements of Cash Flows--Three Months Ended March 31,
1999 and
March 31, 1998........................................................ 3
Notes to Consolidated Financial Statements............................. 4-5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 6-8
Part II--Other Information............................................... 9
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCESS WORLDWIDE COMMUNICATIONS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 4,085,892 $ 1,912,219
Accounts receivable, net of allowance for
doubtful accounts of $267,242 and $184,801,
respectively.................................. 23,644,781 20,046,495
Billing in excess of costs..................... 468,826 240,287
Other assets................................... 2,474,113 1,715,035
------------ ------------
Total current assets......................... 30,673,612 23,914,036
Property and equipment, net.................... 10,736,327 8,565,188
Other assets................................... 572,603 917,197
Intangible assets, net......................... 73,059,912 71,025,795
------------ ------------
Total assets ................................ $115,042,454 $104,422,216
============ ============
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses.......... $ 7,521,541 $ 6,894,231
Accrued interest and other related party
expenses ..................................... 8,279,540 8,516,293
Accrued salaries, wages and related benefits... 2,101,232 2,007,827
Due to related parties ........................ -- 42,303
Deferred revenue............................... 3,868,088 1,998,486
Current portion of indebtedness................ 50,976 63,431
Current portion of indebtedness -- related
parties....................................... 2,397,019 2,421,770
------------ ------------
Total current liabilities.................... 24,218,396 21,944,341
Long-term portion of indebtedness............... 36,902,978 25,609,170
Long-term portion of indebtedness -- related
parties........................................ 3,785,000 4,238,310
Mandatorily redeemable preferred stock, $.01 par
value: 8% cumulative as of February 10, 1998,
2,000,000 shares authorized, 40,000 shares and
65,000 shares issued and outstanding at March
31, 1999 and December 31, 1998, respectively... 4,000,000 6,500,000
------------ ------------
Total liabilities and mandatorily redeemable
preferred stock............................. 68,906,374 58,291,821
------------ ------------
Common stockholders' equity:
Common stock, $.01 par value: voting:
20,000,000 shares authorized; 9,043,185
shares issued at March 31, 1999 and December
31, 1998; 9,027,730 shares outstanding at
March 31, 1999 and December 31, 1998.......... 90,432 90,432
Additional paid-in capital..................... 58,490,848 58,490,848
Accumulated deficit ........................... (12,387,507) (12,392,763)
Less: cost of treasury stock, 15,455 shares.... (52,530) (52,530)
Deferred compensation.......................... (5,163) (5,592)
------------ ------------
Total common stockholders' equity............ 46,136,080 46,130,395
------------ ------------
Total liabilities, mandatorily redeemable
preferred stock and common stockholders'
equity ..................................... $115,042,454 $104,422,216
============ ============
</TABLE>
1
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
For The Three Months Ended March 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenues ............................................ $22,743,022 $15,691,210
Cost of revenues (exclusive of depreciation)......... 14,383,784 9,109,758
----------- -----------
Gross profit....................................... 8,359,238 6,581,452
Selling, general and administrative expenses
(selling, general
and administrative expenses paid to related parties
are
$220,523, and $224,968, respectively)............... 6,934,640 4,804,163
Amortization expense................................. 767,032 400,390
----------- -----------
Income from operations............................. 657,566 1,376,899
Interest income...................................... 33,912 51,083
Interest expense-related parties..................... (74,227) (496,373)
Interest expense..................................... (423,866) (20,665)
----------- -----------
Income before income taxes and extraordinary item.. 193,385 910,944
Income tax expense................................... 86,443 397,909
----------- -----------
Income before extraordinary item................... 106,942 513,035
Extraordinary charge on extinguishment of debt (net
of applicable
income taxes of $82,195)............................ (101,686) --
----------- -----------
Net income........................................... $ 5,256 $ 513,035
=========== ===========
Earnings per share of common stock ..................
Basic:
Income before extraordinary charge............... $ 0.01 $ 0.07
Extraordinary charge............................. $ 0.01 $ --
Net income....................................... $ 0.00 $ 0.07
Diluted............................................ $ 0.00 $ 0.07
</TABLE>
2
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................ $ 5,256 $ 513,035
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization................... 1,458,475 686,086
Extraordinary charge, net of applicable income
taxes.......................................... 101,686 --
Income tax effect of extraordinary charge....... 82,195 --
Interest expense on mandatorily redeemable
preferred stock................................ -- 101,000
Changes in operating assets and liabilities,
excluding effects from acquisitions:
Accounts receivable ............................ (3,598,286) (2,197,585)
Due to related parties and affiliates........... (134,648) (321,636)
Other assets.................................... (871,034) (707,941)
Accounts payable and accrued expenses........... 545,115 965,167
Accrued interest and related party expenses..... (236,753) (1,849,447)
Accrued salaries, wages and related benefits.... 93,405 551,883
Deferred revenue................................ 1,869,602 482,925
----------- ------------
Net cash used in operating activities .......... (684,987) (1,776,513)
----------- ------------
Cash flows from investing activities:
Additions to property and equipment, net.......... (2,643,508) (1,182,393)
Business acquisitions, net of cash acquired....... (2,801,124) --
----------- ------------
Net cash used in investing activities............. (5,444,632) (1,182,393)
----------- ------------
Cash flows from financing activities:
Change in other assets related to deferred
issuance costs................................... -- (1,919,328)
Payments on capital lease......................... (23,037) (17,783)
Proceeds from notes payable....................... -- 5,500,000
Proceeds from sale of common and preferred stock
................................................. -- 44,640,000
Net borrowings under line of credit facility...... 11,304,390 (5,810,000)
Repayment of related party debt................... (478,061) (36,164,250)
Repurchase of preferred stock..................... (2,500,000) --
----------- ------------
Net cash provided by financing activities....... 8,303,292 6,228,639
----------- ------------
Net increase in cash............................ 2,173,673 3,269,733
Cash and cash equivalents, beginning of period ... 1,912,219 2,014,711
----------- ------------
Cash and cash equivalents, end of period.......... $ 4,085,892 $ 5,284,444
=========== ============
</TABLE>
3
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. For further information, refer to the financial
statements and footnotes included in the Company's Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts included in the financial statements.
In the opinion of management, all adjustments necessary for a fair
presentation of this interim financial information have been included. Such
adjustments consisted only of normal recurring items. The results of
operations for the three months ended March 31, 1999 are not necessarily
indicative of the results to be expected for the year ending December 31,
1999.
2. RECLASSIFICATIONS
Certain reclassifications have been made to the December 31, 1998 financial
statements to conform with the March 31, 1999 presentation.
3. EXTINGUISHMENT OF LINE OF CREDIT
On March 12, 1999, the Company received from a syndicate of financial
institutions (including NationsBank, N.A.), which was arranged by NationsBanc
Montgomery Securities LLC, (i) a revolving credit facility (the "Credit
Facility") of $40,000,000, with a sublimit of $5,000,000 for the issuance of
standby letters of credit and a sublimit of $5,000,000 for swingline loans,
and (ii) a term loan facility of $25,000,000. All of the foregoing bears
interest at formula rates ranging from either (i) the higher of (a) the
Federal Funds Rate plus 0.50% and (b) the prime leading rate charged by
NationsBank, N.A. from time to time, plus an applicable margin ranging from
0.0% to 1.0% or (ii) LIBOR, plus an applicable margin ranging from 1.25% to
2.50%. The Company is required to pay a commitment fee on the unused portions
of the Credit Facility. The Credit Facility is secured by substantially all of
the assets of the Company and has financial covenants. The Company is in
compliance with all financial covenants as of March 31, 1999.
On March 12, 1999, $28,288,089 of the Credit Facility was used to extinguish
the Company's $30,000,000 committed line of credit obtained from NationsBank
on January 20, 1998. In addition, $2,500,000 of the Credit Facility was also
used to redeem 25,000 shares of the Company's preferred stock Series 1998 at a
price of $100 per share. No gain or loss was recorded on the redemption of
shares. (See Note 4 for extinguishment of the committed line of credit)
4. EXTRAORDINARY CHARGE
During the first quarter of the current year, the Company recognized an
extraordinary after-tax charge of $101,686 or $0.01 per share as a result of
the extinguishment of the $30,000,000 committed line of credit obtained from
NationsBank on January 20, 1998 and the related write-off of deferred
financing fees. (See Note 3)
5. INCOME TAXES
The Company's effective tax rate of 44.7% in the first quarter of 1999
differs from the Federal statutory rate due primarily to state income taxes
and non-deductible goodwill amortization.
4
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. EARNINGS PER COMMON SHARE
Earnings per common share are calculated as follows:
<TABLE>
<CAPTION>
For the Three Months Ended March
31,
-----------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
1999
Basic..................................... $ 5,256 9,027,730 $0.00
Effect of dilutive securities:
Stock options........................... -- 154,374 --
Earnout contingency..................... -- 500,743 --
-------- --------- -----
Earnings per share of common stock--
dilutive................................. $ 5,256 9,682,847 $0.00
======== ========= =====
1998
Basic..................................... $513,035 7,567,056 $0.07
Effect of dilutive securities:
Stock options........................... -- 90,896 --
Earnout contingency..................... -- 56,288 --
-------- --------- -----
Earnings per share of common stock--
dilutive................................. $513,035 7,714,240 $0.07
======== ========= =====
</TABLE>
7. SEGMENTS
In accordance with Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information, the
Company's reportable segments are strategic business units that offer
different products and services to different industries throughout the United
States.
The table below presents information about net income/loss and segments used
by the chief operating decision-maker of the Company as of and for the three
months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
Segment
Pharmaceutical Consumer Other Total Reconciliation Total
-------------- ---------- ---------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1999:
Revenues................ $12,465,092 $9,010,453 $1,267,477 $22,743,022 $ -- $ 22,743,022
Gross Profit............ 5,157,155 2,623,810 578,273 8,359,238 -- 8,359,238
EBIT.................... 1,819,424 (84,980) 21,209 1,755,653 (1,098,087) 657,566
Depreciation expense.... 201,952 248,583 12,444 462,979 9,390 472,369
Amortization expense.... 660,595 84,641 21,771 767,007 219,099 986,106
1998:
Revenues................ $ 7,783,016 $7,168,327 $ 739,867 $15,691,210 $ -- $ 15,691,210
Gross Profit............ 3,477,468 2,708,533 395,451 6,581,452 -- 6,581,452
EBIT.................... 810,764 1,127,274 11,727 1,949,765 (572,866) 1,376,899
Depreciation expense.... 156,382 92,107 8,033 256,522 3,826 260,348
Amortization expense.... 294,580 84,819 20,991 400,390 25,348 425,738
</TABLE>
5
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Consumer Pharmaceutical
--------------------- ---------------------
1999 1998 Change 1999 1998 Change
------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data in
Thousands
Revenues......................... $9,010 $7,168 $1,842 $12,465 $7,783 $4,682
Cost of revenues................. 6,387 4,460 1,927 7,308 4,306 3,002
Gross profit..................... 2,623 2,708 (85) 5,157 3,477 1,680
Selling, general and
administrative.................. 2,624 1,496 1,128 2,677 2,372 305
Amortization expense............. 85 85 -- 661 295 366
------ ------ ------ ------- ------ ------
Operating (loss) profit.......... (86) 1,127 (1,213) 1,819 810 1,009
====== ====== ====== ======= ====== ======
</TABLE>
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Revenues for the Company increased $7.1 million, or 44.6%, to $22.7 million
for the three months ended March 31, 1999, compared to $15.7 million for the
three months ended March 31, 1998. Revenues for the Consumer Segment increased
$1.8 million, or 25%, to $9.0 million for the three months ended March 31,
1999, compared to $7.2 million for the three months ended March 31, 1998. The
increase in the Consumer Segment is primarily the result of continued growth
in the business with Sprint. Revenues for the Pharmaceutical Segment increased
$4.7 million, or 60.3%, to $12.5 million for the three months ended March 31,
1999, compared to $7.8 million for the three months ended March 31, 1998. The
acquisition of A.M. Medica contributed additional revenues for the three
months ended March 31, 1999 of approximately $5.1 million. The remaining
decrease of $400,000 is primarily the result of a change in marketing strategy
for one of the major pharmaceutical clients.
Cost of revenues for the Company increased $5.3 million, or 58.2%, to $14.4
million for the three months ended March 31, 1999, compared to $9.1 million
for the three months ended March 31, 1998. Cost of revenues as a percentage of
revenues increased to 63.2% for the three months ended March 31, 1999, from
58.1% for the three months ended March 31, 1998. Cost of revenues as a
percentage of revenues for the Consumer Segment increased to 70.9% for the
three months ended March 31, 1999, from 62.2% for the three months ended March
31, 1998. Labor costs for the Consumer Segment rose as a percentage of
revenues to 61.7% for the three months ended March 31, 1999, from 52.3% for
the three months ended March 31, 1998. The increase was primarily due to
higher labor, training and overtime costs incurred due to technical systems
issues. Cost of revenues as a percentage of revenues for the Pharmaceutical
Segment for the three months ended March 31, 1999 increased to 58.6%, compared
to 55.3% for the three months ended March 31, 1998. Approximately 2.2% of the
increase was the result of the acquisition of A.M. Medica which has a
different cost structure than the other businesses within the Pharmaceutical
Segment. The remaining increase was due to the effect of stable labor costs
compared to lower sales giving rise to an increase in cost of revenues as a
percent of revenues.
Selling, general and administrative expenses for the Company increased $2.1
million, to $6.9 million for the three months ended March 31, 1999, compared
to $4.8 million for the three months ended March 31, 1998. Selling, general
and administrative expenses as a percentage of revenues for the Company
increased slightly to 30.5% for the three months ended March 31, 1999,
compared to 30.6% for the three months ended March 31, 1998. Selling, general
and administrative expenses as a percentage of revenues for the Consumer
Segment increased to 29.1% for the three months ended March 31, 1999, from
20.9% for the three months ended March 31, 1998. Approximately 3.0% of the
increase is attributable to higher depreciation and leasing costs necessary
for the expansion of the facilities in Texas and Florida in order to
accommodate additional consumer services. In addition, the sales force was
increased in order to enhance the growth for the consumer business. The
additional
6
<PAGE>
salaries and related expense, resulted in an increase in selling, general and
administrative expense of 1.1%. Professional fees increased approximately 1.2%
due to the rising number of employees and labor related issues. Selling,
general and administrative expenses as a percentage of revenues for the
Pharmaceutical Segment decreased to 21.5% for the three months ended March 31,
1999, from 30.5% for the three months ended March 31, 1998. The acquisition of
A.M. Medica resulted in a decrease of 8.5% in the selling, general and
administrative expenses as a percentage of revenues. Corporate expenses as a
percentage of revenues increased to 4.8% for the three months ended March 31,
1999, from 3.6% for the three months ended March 31, 1998. The increase is
primarily the result of increases in the corporate infrastructure and the
purchase of resources needed to support the Company's future growth.
Amortization expense for the Company increased $367,000, or 91.8%, to
$767,000 for the three months ended March 31, 1999, compared to $400,000 for
the three months ended March 31, 1998. The Consumer Segment amortization
expense did not change for the three months ended March 31, 1999, compared to
the amortization expense for the three months ended March 31, 1998.
Amortization expense for the Pharmaceutical Segment increased $367,000 due to
the acquisition of A.M. Medica in October 1998.
Net interest expense for the Company was primarily unchanged when comparing
the three months ended March 31, 1999, to the three months ended March 31,
1998.
The extraordinary charge for the three months ended March 31, 1999 is due to
the extinguishment of the $30,000,000 committed line of credit obtained from
NationsBank on January 20, 1998.
Liquidity and Capital Resources
At March 31, 1999, the Company had a working capital of $6.5 million, an
increase of $4.5 million from $2.0 million at December 31, 1998. Cash and cash
equivalents were $4.1 million at March 31, 1999, compared to $2.0 million at
December 31, 1998. The increase in working capital is primarily attributable
to the purchase of A.M. Medica. The purchase price for A.M. Medica was
financed through a draw on the Credit Facility, which is a long term
liability, and stock.
Net cash used in operating activities during the first quarter of 1999 was
$685,000, compared to $1.8 million during the first quarter of 1998. The
decrease in the cash used by operating activities for 1999 was primarily the
result of the decrease in related party debt, which in turn resulted in a
decrease in the accrued interest payable.
The net cash used in investing activities during the first quarter of 1999
was $5.4 million, compared to $1.2 million during the first quarter of 1998.
Cash utilized for capital expenditures increased by $1.5 million, due to the
expansion of the Company's facilities and upgrading computer and telephone
systems. In addition, the Company recorded approximately $2.8 million of
additional purchase price due to the former owners of acquired businesses.
Net cash provided by financing activities was $8.3 million for the first
quarter of 1999, compared to $6.2 million for the first quarter of 1998. $11.3
million of cash provided by financing activities is due to draws made on the
Credit Facility in order to finance the contingent purchase price payment and
working capital. On February 23, 1999, the Board of Directors authorized the
Company to redeem 25,000 shares at a price of $2.5 million of the Company's
preferred stock, Series 1998. In addition, during 1998 the proceeds received
from the initial public offering were used to retire the Credit Facility and
long term related party debt.
The Company expects to meet its short term liquidity requirements through
net cash provided by operations and borrowing under the Credit Facility.
Management believes that these sources of cash will be sufficient to meet the
Company's operating needs and planned capital expenditures for at least the
next twelve months.
Year 2000 Issue
As a rapidly growing outsourced marketing service company, the Company is
dependent on computer systems and applications to conduct its business. Some
computer systems and applications include programming code in which calendar
year data is abbreviated to only two digits. As a result of this design
decision, some of these systems could fail to operate or fail to produce
correct results if "00" is interpreted to mean 1900, rather than 2000. These
problems are commonly referred to as the "Millennium Bug" or "Year 2000
Problem."
7
<PAGE>
The Company has developed and is currently executing a comprehensive risk-
based plan designed to make its computer systems, applications and facilities
Year 2000 ready. The plan covers four stages including (i) identification,
(ii) assessment, (iii) remediation, and (iv) testing.
The Company has completed the process of identifying all of the major
computers, software applications, and related equipment used in connection
with its internal operations that must be modified, upgraded, or replaced to
minimize the possibility of a material disruption to its business. The Company
is currently in the process of the assessment and remediation stages of
modifying, upgrading, and replacing major systems that have been identified as
adversely affected, and expects to complete this process before the end of the
second quarter of 1999. The testing stage is projected to be completed by the
third quarter of 1999.
In addition to computers and related systems, the operation of office
equipment, such as fax machines, photocopiers, telephone switches, security
systems, elevators and other common devices may be affected by the Year 2000
Problem. The Company continues to assess the potential effects of, and cost of
remediating, the Year 2000 Problem on its office equipment.
The Company has incurred costs to date of $188,000 and estimates the total
cost of any required modifications, upgrades, or replacements of its internal
systems to be $262,000. While the estimated cost of these efforts is not
expected to be material to the Company's financial position or any year's
results of operations, there can be no assurance to this effect. The estimated
cost will be monitored and will be revised as additional information becomes
available.
The Company is communicating with its major clients and suppliers to
determine the extent to which the Company's interface systems are vulnerable
to those third parties' failure to remediate their own Year 2000 Problems.
There can be no assurance that these clients and suppliers will resolve any or
all Year 2000 Problems with their systems before the occurrence of a material
disruption to the business of the Company. Any failure of these clients and
suppliers to resolve Year 2000 Problems with their systems in a timely manner
could have a material adverse effect on the Company's business, financial
condition, and results of operations.
The Company expects to identify and resolve all Year 2000 Problems that
could materially adversely affect its business operations. However, since the
number of devices that could be affected and the interactions among these
devices are numerous, management believes that it is not possible to determine
with complete certainty that all Year 2000 Problems affecting the Company have
been identified or corrected.
The Company is developing contingency plans to be implemented as part of its
efforts to identify and correct Year 2000 Problems affecting its internal
systems. The Company expects to complete its contingency plans by third
quarter 1999. Depending on the systems affected, these plans could include
accelerated replacement of affected equipment or software, short to medium-
term use of backup equipment and software, increased work hours for Company
personnel or use of contract personnel to correct on an accelerated schedule
any Year 2000 Problems that arise or to provide manual workarounds for
information systems, and similar approaches. If the Company is required to
implement any of these contingency plans, it could have a material adverse
effect on the Company's financial condition and results of operations.
The discussion of the Company's efforts, and management's expectations,
related to Year 2000 compliance are forward-looking statements. The Company's
ability to achieve Year 2000 compliance and the level of incremental costs
associated therewith, could be adversely impacted by, among other things, the
availability and cost of programming and testing resources, vendors' ability
to modify proprietary software, and unanticipated problems identified in the
ongoing compliance review.
Risk Factors That May Affect Future Results
This report contains certain forward-looking statements which are based on
management's current views and assumptions. These statements are qualified by
reference to "Forward-Looking Statements" in the Company's Annual Report on
Form 10-K, as well as other SEC filings which list important factors that
could cause actual results to differ materially from those discussed in this
report.
8
<PAGE>
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
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.
CULTURALACCESSWORLDWIDE, INC.
Date:
/s/ John Fitzgerald
By: ________________________________
John Fitzgerald, President and
Chief Executive Officer
(principal executive officer)
Date:
/s/ Michael Dinkins
By: ________________________________
Michael Dinkins, Senior Vice
President of Finance and
Administration
and Chief Financial Officer
(principal financial officer)
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,085,892
<SECURITIES> 0
<RECEIVABLES> 23,644,781
<ALLOWANCES> 267,242
<INVENTORY> 0
<CURRENT-ASSETS> 30,673,612
<PP&E> 10,736,327
<DEPRECIATION> 0
<TOTAL-ASSETS> 115,042,454
<CURRENT-LIABILITIES> 24,218,396
<BONDS> 0
4,000,000
0
<COMMON> 90,432
<OTHER-SE> 46,045,648
<TOTAL-LIABILITY-AND-EQUITY> 46,136,080
<SALES> 22,743,022
<TOTAL-REVENUES> 22,743,022
<CGS> 14,383,784
<TOTAL-COSTS> 14,383,784
<OTHER-EXPENSES> 7,701,672
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 498,093
<INCOME-PRETAX> 193,385
<INCOME-TAX> 86,443
<INCOME-CONTINUING> 106,942
<DISCONTINUED> 0
<EXTRAORDINARY> 101,686
<CHANGES> 0
<NET-INCOME> 5,256
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
