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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 March 31, 2000
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 0-24343
ANSWERTHINK CONSULTING GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0750100
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 BRICKELL BAY DRIVE, SUITE 3000
MIAMI, FLORIDA 33131
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(305) 375-8005
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 requirement for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of March 31, 2000, there were 43,794,478 shares of common stock
outstanding.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999 3
Consolidated Statements of Operations for the Quarter ended March 31, 2000 and
April 2, 1999 4
Consolidated Statements of Cash Flows for the Quarter ended March 31, 2000 and
April 2, 1999 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 10
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANSWERTHINK CONSULTING GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,760 $ 27,124
Short-term investments 912 2,432
Accounts receivable and unbilled revenue, net 80,901 72,655
Other receivables 4,595 5,340
Prepaid expenses and other current assets 8,514 8,058
--------- ---------
Total current assets 118,682 115,609
Property and equipment, net 11,876 11,191
Other assets 3,484 3,362
Goodwill, net 80,587 70,551
--------- ---------
Total assets $ 214,629 $ 200,713
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,397 $ 8,982
Accrued expenses and other liabilities 26,801 33,065
Media payable 10,169 16,500
Current portion of notes payable 896 1,896
--------- ---------
Total current liabilities 51,263 60,443
Commitments and contingencies
Shareholders' equity
Preferred stock, $.001 par value, 1,250,000 authorized, none issued and
outstanding -- --
Common stock, $.001 par value, authorized 125,000,000 shares; issued and
outstanding: 43,794,478 shares at March 31, 2000; 42,731,976 shares at
December 31, 1999 44 43
Additional paid-in capital 237,508 219,884
Unearned compensation (699) (815)
Accumulated deficit (73,487) (78,842)
--------- ---------
Total shareholders' equity 163,366 140,270
--------- ---------
Total liabilities and shareholders' equity $ 214,629 $ 200,713
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------
MARCH 31, 2000 APRIL 2, 1999
-------------- -------------
<S> <C> <C>
Net revenues $ 76,297 $ 57,632
Costs and expenses:
Project personnel and expenses 44,954 34,193
Selling, general and administrative expenses 22,538 19,523
Merger related expenses -- 2,500
-------- --------
Total costs and operating expenses 67,492 56,216
-------- --------
Income from operations 8,805 1,416
Other income (expense):
Interest income 359 291
Interest expense (87) (349)
-------- --------
Income before income taxes and extraordinary loss 9,077 1,358
Income taxes 3,722 2,080
-------- --------
Income (loss) before extraordinary loss 5,355 (722)
Extraordinary loss on early extinguishment of debt (net of taxes of $1,408) -- 2,113
-------- --------
Net income (loss) $ 5,355 $ (2,835)
======== ========
Basic net income (loss) per common share:
Income (loss) before extraordinary loss $ 0.14 $ (0.02)
Extraordinary loss on early extinguishment of debt $ -- $ (0.07)
Net income (loss) per common share $ 0.14 $ (0.09)
Weighted average common shares outstanding 37,818 31,337
Diluted net income (loss) per common share:
Income (loss) before extraordinary loss $ 0.12 $ (0.02)
Extraordinary loss on early extinguishment of debt $ -- $ (0.07)
Net income (loss) per common share $ 0.12 $ (0.09)
Weighted average common and common equivalent shares outstanding 45,055 31,337
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------
MARCH 31, 2000 APRIL 2, 1999
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,355 $ (2,835)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Extraordinary loss on early extinguishment of debt -- 2,113
Depreciation and amortization 2,882 2,182
Deferred income taxes (454) 600
Changes in assets and liabilities, net of effects from acquisitions:
Increase in accounts receivable and unbilled revenue (8,246) (7,180)
Decrease in other receivables 746 3,391
Decrease (increase) in prepaid expenses and other current and
non-current assets (267) 13
Increase (decrease) in accounts payable 4,415 (2,686)
Increase (decrease) in accrued expenses and other liabilities (6,264) 543
Decrease in media payable (6,331) (1,878)
-------- --------
Net cash used in operating activities (8,164) (5,737)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,935) (1,041)
Purchases of short-term investments (500) --
Sales and redemptions of short-term investments 2,020 1,000
Cash used in acquisition of businesses, net of cash acquired (4,317) (2,384)
-------- --------
Net cash used in investing activities (4,732) (2,425)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 10,532 7,967
Proceeds from revolving credit facility -- 402
Repayment of revolving credit facility -- (935)
Repayment of notes payable (1,000) (3,448)
Repayment of redeemable subordinated notes -- (8,000)
-------- --------
Net cash provided by (used in) financing activities 9,532 (4,014)
-------- --------
Net decrease in cash and cash equivalents (3,364) (12,176)
Cash and cash equivalents at beginning of period 27,124 36,931
-------- --------
Cash and cash equivalents at end of period $ 23,760 $ 24,755
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements of AnswerThink Consulting Group,
Inc. ("answerTHINK" or the "Company") include the accounts of the Company and
all of its wholly owned subsidiaries. All material intercompany transactions and
balances have been eliminated in consolidation. answerTHINK merged with THINK
New Ideas, Inc. ("THINK New Ideas") in November 1999. The merger with THINK New
Ideas was accounted for using the pooling-of-interests method of accounting. All
prior historical consolidated financial statements presented herein have been
restated to include the financial position, results of operations, and cash
flows of THINK New Ideas.
In the opinion of management, the accompanying consolidated financial
statements reflect all normal and recurring adjustments which are necessary for
a fair presentation of the Company's financial position, results of operations,
and cash flows as of the dates and for the periods presented. The consolidated
financial statements have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission regarding interim financial reporting.
Accordingly, these statements do not include all the disclosures normally
required by generally accepted accounting principles for annual financial
statements and should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1999 included in
the Form 10-K filed by the Company with the Securities and Exchange Commission.
The consolidated results of operations for the quarter ended March 31, 2000 are
not necessarily indicative of the results to be expected for any future period
or for the full fiscal year. Certain prior period amounts have been reclassified
to conform to current period presentation.
2. NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding during
the period. With regard to common shares issued to employees under employment
agreements, the calculation includes only the vested portion of such shares.
Accordingly, common shares outstanding for the basic net income (loss) per share
computation is significantly lower than actual shares issued and outstanding.
Income (loss) per common share assuming dilution is computed by
dividing the net income (loss) by the weighted average number of common shares
outstanding, increased by the assumed conversion of other potentially dilutive
securities during the period. For the quarter ended March 31, 2000, potentially
dilutive securities included 5,345,129 shares of unvested common stock issued
under employment agreements and 1,892,218 shares issuable upon the exercise of
stock options and warrants assuming the treasury stock method. Potentially
dilutive shares were exlcuded from the diluted loss per share calculation for
the quarter ended April 2, 1999 because their effects would have been
anti-dilutive to the loss incurred by the Company. Therefore, the amounts
reported for basic and diluted net loss per share were the same for the quarter.
Potentially dilutive shares which were not included in the diluted loss per
share calculations for the quarter ended April 2, 1999 include 9,275,499 shares
of unvested common stock issued under employment agreements and 1,955,841 shares
issuable upon the exercise of stock options and warrants assuming the treasury
stock method.
6
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. ACQUISITIONS AND NON-CASH INVESTING ACTIVITIES
During the three year period ended December 31, 1999, the Company
acquired thirteen businesses providing information-technology, e-commerce and
marketing services (collectively, the "Acquired Entities") in separate
transactions accounted for as purchase business combinations. Seven of these
acquisitions were completed in 1997, two were completed in 1998 and four were
completed in 1999. During the quarter ended March 31, 2000, the Company paid
additional contingent consideration consisting of shares and cash of
approximately $11.4 million, based on certain of the Acquired Entities achieving
certain performance targets through March 31, 2000, under the respective
acquisition agreements. Such contingent consideration was recorded as additional
goodwill.
4. INCOME TAXES
The Company's effective tax rate for the first quarter of 2000 was 41%
compared to an effective tax rate of 153% for the first quarter of 1999. The
high effective tax rate in the first quarter of 1999 was the result of the
Company incurring non-deductible merger related expenses and the establishment
of a deferred tax liability for triSpan, Inc. as a result of its conversion from
an S corporation to a C corporation in the first quarter of 1999.
5. SECURITIES PURCHASE AGREEMENT
In March 1999, THINK New Ideas entered into a Securities Purchase
Agreement with Capital Ventures International and Marshall Capital Management,
Inc. (the "Purchasers") whereby the Purchasers agreed to purchase shares of
common stock and warrants to acquire shares of common stock for an aggregate
purchase price of up to $11 million. Pursuant to the Securities Purchase
Agreement, on March 5, 1999, THINK New Ideas issued, for proceeds of $6.0
million, 609,799 shares of its common stock at $9.84 per share and warrants to
purchase an additional 121,961 shares of common stock exercisable for a
five-year term, at an exercise price of $14.76.
At any time prior to March 5, 2000, the Purchasers had the right but
not the obligation to purchase 371,353 additional shares of common stock at
$13.46 per share, together with warrants for 1/5 share for each additional share
purchased, exercisable at an exercise price of 150% of the market price on the
date the related additional shares were purchased. Pursuant to the Securities
Purchase Agreement, the additional shares were sold in March 2000 and warrants
to acquire 74,270 shares of common stock, exercisable for a five-year term, were
issued at an exercise price of $36.94.
6. LITIGATION
In February 1999, a Consolidated and Amended Class Action Complaint
("Consolidated Complaint") was filed on behalf of all individuals who purchased
THINK New Ideas' common stock from November 5, 1997 through September 21, 1998.
The suit was previously described in the Company's Form 10-K for the year ended
December 31, 1999. Prior to the merger, THINK New Ideas filed a motion to
dismiss the Consolidated Complaint on a number of grounds and the plaintiffs
filed a motion in opposition. On March 15, 2000, the motion to dismiss the
Consolidated Complaint was granted. The court order granting the motion allowed
the plaintiffs the option to file an amended complaint, and the plaintiffs filed
an amended complaint on April 14, 2000.
The Company is involved in legal proceedings, claims, and litigation
arising in the ordinary course of business not specifically discussed herein. In
the opinion of management, the final disposition of such other matters will not
have a material adverse effect on the financial position or results of operation
of the Company.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION
Certain statements in this Form 10-Q are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from
the results, performance or achievements expressed or implied by the forward
looking statements. Factors that impact such forward looking statements include
our ability to attract additional business, changes in expectations regarding
the information technology industry, our ability to attract and retain skilled
employees, possible changes in collections of accounts receivable, risks of
competition, price and margin trends, changes in general economic conditions and
interest rates. An additional description of our risk factors is set forth in
our Registration Statement on Form S-1 (Registration Form 333-48123) and updated
in our Registration Statement on Form S-3 (Registration Form 333-32342).
OVERVIEW
AnswerThink Consulting Group, Inc. ("answerTHINK") provides Internet
services for clients ranging from Fortune 1000 to Internet start-up companies.
Our practice areas include e-business strategy, interactive marketing and
branding and technology architecture and integration. Our professionals in these
practice areas help our clients improve their business through Internet-enabled
commerce, including online trading communities, customer relationship
management, procurement, human resources and financial management.
In November 1999, answerTHINK merged with THINK New Ideas, Inc. ("THINK
New Ideas"), a provider of interactive marketing, branding and creative web site
development services. The merger with THINK New Ideas was accounted for using
the pooling-of-interests method of accounting. All prior historical consolidated
financial statements presented herein have been restated to include the
financial position, results of operations, and cash flows of THINK New Ideas.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, our results
of operations and the percentage relationship to net revenues of such results:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) QUARTER ENDED
----------------------------------
MARCH 31, 2000 APRIL 2, 1999
---------------- ----------------
<S> <C> <C> <C> <C>
Net revenues $76,297 100.0% $57,632 100.0%
Costs and expenses:
Project personnel and expenses 44,954 58.9% 34,193 59.3%
Selling, general and administrative expenses 22,538 29.6% 19,523 33.9%
Merger related expenses -- -- 2,500 4.3%
---------------- ----------------
Total costs and operating expenses 67,492 88.5% 56,216 97.5%
---------------- ----------------
Income from operations 8,805 11.5% 1,416 2.5%
Other income (expense):
Interest income (expense), net 272 0.4% (58) (0.1%)
---------------- ----------------
Income before income taxes and extraordinary loss 9,077 11.9% 1,358 2.4%
Income taxes 3,722 4.9% 2,080 3.6%
---------------- ----------------
Income (loss) before extraordinary loss 5,355 7.0% (722) (1.2%)
Extraordinary loss on early extinguishment of debt (net of taxes
of $1,408) -- -- 2,113 3.7%
---------------- ----------------
Net income (loss) $ 5,355 7.0% $(2,835) (4.9%)
================ ================
</TABLE>
8
<PAGE>
NET REVENUES. Net revenues for the quarter ended March 31, 2000
increased by $18.7 million or 32.4% over the comparative quarter of 1999. The
increase in net revenues was primarily attributable to an increase in the
average size of our engagements and to the companies we acquired.
PROJECT PERSONNEL AND EXPENSES. Project personnel costs and expenses
consist primarily of salaries, benefits and bonuses for consultants. Project
personnel and expenses increased 31.5% to $45.0 million for the first quarter of
2000 from $34.2 million in the comparative of 1999. The increase in project
personnel and expenses was primarily due to an increase in the number of our
consultants resulting from both internal hiring and acquisitions. Project
personnel and expenses as a percentage of net revenues were comparable between
the first quarter of 2000 and the first quarter of 1999 at 58.9% and 59.3%,
respectively.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased 15.4% to $22.5 million in the first quarter of
2000 from $19.5 million in the first quarter of 1999. The increase in selling,
general and administrative expenses primarily related to an increase in selling
costs related to the higher sales volume and additional amortization expense
associated with our 1999 acquisitions and additional contingent consideration
paid for business acquisitions. Selling, general and administrative expenses as
a percentage of net revenues decreased to 29.6% in the first quarter of 2000
from 33.9% in the comparative quarter of 1999. This decrease was primarily
attributable to the higher revenue levels during 2000 as well as cost savings
attributable to the elimination of redundancies in infrastructures and support
systems of our acquired companies.
MERGER RELATED EXPENSES. Merger related expenses were $2.5 million for
the quarter ended April 2, 1999. These expenses related primarily to our merger
with triSpan, Inc. ("triSpan") in February 1999, which was accounted for as a
pooling-of-interests. The expenses included investment banking, legal and
accounting fees as well as the costs of combining operations and eliminating
duplicate facilities.
INTEREST INCOME (EXPENSE), NET. Net interest income totaled $272,000 in
the quarter ended March 31, 2000 compared to $58,000 of net interest expense in
the comparative quarter of 1999. Interest expense was higher in the first
quarter of 1999 as a result of the subordinated notes and other notes payable,
assumed in connection with the triSpan merger, that were repaid immediately
after our merger with triSpan on February 26, 1999.
INCOME TAXES. Our effective tax rate for the first quarter of 2000 was
41% compared to an effective tax rate of 153% for the first quarter of 1999. The
high effective tax rate in the first quarter of 1999 was the result of incurring
non-deductible merger related expenses and the establishment of a deferred tax
liability for triSpan as a result of its conversion from an S corporation to a C
corporation in the first quarter of 1999.
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT. The extraordinary
loss on early extinguishment of debt was a result of the repayment of
subordinated notes in the first quarter of 1999 that were assumed in connection
with our triSpan merger. These notes, which had a face amount of $8.0 million
and a stated interest rate of 8.0%, were originally issued at a substantial
discount and were due on June 26, 2003. Immediately following our merger with
triSpan, we repaid these notes in full, which resulted in an extraordinary loss
of $2.1 million, net of a $1.4 million tax benefit.
LIQUIDITY AND CAPITAL RESOURCES
answerTHINK has primarily funded its operations with cash flow
generated from operations and the proceeds from its initial public offering. In
addition, we have a revolving credit facility for $20.0 million. The credit
facility is unsecured and contains, among other things, the maintenance of
certain financial covenants such as a minimum level of tangible net worth,
maximum leverage ratio, and minimum ratio of earnings to interest expense. At
March 31, 2000, we had no borrowings under this credit facility. At March 31,
2000, we had approximately $24.7 million in cash, cash equivalents and
short-term investments compared to $29.6 million at December 31, 1999.
9
<PAGE>
Net cash used in operating activities was $8.2 million for the quarter
ended March 31, 2000 compared to $5.7 million used during the comparable period
of 1999. During the quarter ended March 31, 2000, net cash used in operating
activities was primarily attributable to an $8.2 million increase in accounts
receivable and unbilled revenue, a $6.3 million decrease in accrued expenses and
other liabilities and a $6.3 million decrease in media payable, partially offset
by our operating income and a $4.4 million increase in accounts payable. Media
payables represent media placement costs owed to media providers on behalf of
our customers. Amounts in media payables which have been billed to our customers
are included in other receivables. The level of media payables and the related
receivables will vary with the timing of our customer's media campaigns. During
the quarter ended April 2, 1999, net cash used in operating activities was
primarily attributable to increases in accounts receivable and unbilled revenue,
and decreases in accounts payable and media payable, which were partially offset
by our net income, excluding the effects of non-cash charges, and decreases in
other receivables and prepaid expenses and other current and non-current assets.
Net cash used in investing activities was $4.7 million for the quarter
ended March 31, 2000 compared to $2.4 million used during the comparative
quarter of 1999. The use of cash for investing activities in 2000 was primarily
attributable to $4.3 million of additional contingent consideration paid for
certain prior acquisitions and $1.9 million of purchases of property and
equipment, offset by net sales and redemptions of short-term investments of $1.5
million. In the comparable quarter of 1999, the primary uses of investing
activities were $2.4 million used in the acquisition of businesses and $1
million used for the purchase of property and equipment, offset by sales and
redemptions of short-term investments of $1.0 million.
Net cash provided by financing activities was $9.5 million for the
quarter ended March 31, 2000 compared to $4.0 million used in financing
activities during the comparable quarter of 1999. The primary source of cash
from financing activities during the quarter ended March 31, 2000 was $10.5
million of proceeds from the sale of common stock as a result of exercises of
stock options and warrants and the employee stock purchase plan. This was offset
by a repayment of $1.0 million of notes payable. The use of cash for financing
activities during 1999 was primarily the result of the repayment of $8.0 million
of subordinated notes, which were assumed in connection with the triSpan merger,
as well as the repayment of other notes payable totaling $3.4 million, partially
offset by the sale of common stock as a result of the employee stock purchase
plan and exercises of stock options.
We currently believe that available funds and cash flows generated by
operations, if any, will be sufficient to fund our working capital and capital
expenditures requirements for at least the next twelve months. Thereafter, we
may need to raise additional funds. We may decide to raise additional funds
sooner in order to fund more rapid expansion, to develop new or enhanced
products and services, to respond to competitive pressures or to acquire
complementary businesses or technologies. We cannot assure you, however, that
additional financing will be available when needed or desired on terms favorable
to us or at all.
YEAR 2000
The "Year 2000 Issue" refers to the problem of many computer programs
using the last two digits to represent a year rather than four digits (i.e.,
"99" for 1999). As of the date of this filing, our systems have functioned
properly with respect to dates starting in the Year 2000 and, to date, our
clients have not informed us of any Year 2000 problems associated with the
solutions we developed for them. However, we may incur significant costs if
unanticipated internal or external Year 2000 compliance problems arise. The cost
associated with these unanticipated problems, or our failure to correct any
unanticipated Year 2000 problems in a timely manner, could have a material
adverse effect on our business, financial condition, results of operations and
prospects for growth.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not believe that there is any material market risk exposure with
respect to derivative or other financial instruments, which would require
disclosure under this item.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In February 1999, a Consolidated and Amended Class Action Complaint
("Consolidated Complaint") was filed on behalf of all individuals who
purchased THINK New Ideas' common stock from November 5, 1997 through
September 21, 1998. The suit was previously described in answerTHINK's
Form 10-K for the year ended December 31, 1999. Prior to the merger,
THINK New Ideas filed a motion to dismiss the Consolidated Complaint on
a number of grounds and the plaintiffs filed a motion in opposition. On
March 15, 2000, the motion to dismiss the Consolidated Complaint was
granted. The court order granting the motion allowed the plaintiffs the
option to file an amended complaint, and the plaintiffs filed an
amended complaint on April 14, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
NUMBER EXHIBIT
------ -------
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by answerTHINK during the
quarter ended March 31, 2000.
11
<PAGE>
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.
ANSWERTHINK CONSULTING GROUP, INC.
Date: May 15, 2000 By: /s/ John F. Brennan
-------------------------------------
John F. Brennan
Executive Vice President and Chief
Financial Officer
12
<PAGE>
EXHIBIT INDEX
NUMBER EXHIBIT
------ -------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 2000, and consolidated statement of
operations for the three months ended March 31, 2000 and is qualified in its
entirety by reference to such consolidated financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 23,760
<SECURITIES> 912
<RECEIVABLES> 82,285
<ALLOWANCES> 1,384
<INVENTORY> 0
<CURRENT-ASSETS> 118,682
<PP&E> 24,399
<DEPRECIATION> 12,523
<TOTAL-ASSETS> 214,629
<CURRENT-LIABILITIES> 51,263
<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 163,322
<TOTAL-LIABILITY-AND-EQUITY> 214,629
<SALES> 0
<TOTAL-REVENUES> 76,297
<CGS> 0
<TOTAL-COSTS> 44,954
<OTHER-EXPENSES> 22,538
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> 9,077
<INCOME-TAX> 3,722
<INCOME-CONTINUING> 5,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,355
<EPS-BASIC> 0.14
<EPS-DILUTED> 0.12
</TABLE>
