UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission file number 1-6002
COMPUTER DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-0882982
(State or other jurisdiction (IRS Employer ID No.)
of incorporation or organization)
ONE CURIE COURT
ROCKVILLE, MARYLAND 20850-4389
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 921-7000
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
The number of outstanding shares of the registrant's Common Stock, par
value $.10 per share, was 5,736,842 on May 8, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Quarter Ended
March 31
1995 1994
Revenues........................................ $57,774,600 $53,531,900
Costs and Expenses:
Salaries, wages and employee benefits......... 36,303,900 36,858,400
Subcontractors................................ 12,423,300 8,838,600
Travel, relocation and subsistence............ 622,800 644,700
Rental of space and equipment................. 1,352,200 848,700
Depreciation and amortization................. 753,100 466,700
Other operating and administrative costs...... 2,751,000 2,494,700
---------- ----------
54,206,300 50,151,800
Income from operations.......................... 3,568,300 3,380,100
Interest and other income....................... 53,400 46,500
--------- ---------
Income before income taxes...................... 3,621,700 3,426,600
Provision for income taxes...................... 1,385,800 1,309,500
--------- ---------
Net Income...................................... $ 2,235,900 $ 2,117,100
========== ==========
Net Income Per Common Share..................... $ .38 $ .35
========== ==========
Dividends per Common Share...................... $ .05 $ .05
========== ==========
The unaudited financial statements presented herein reflect all material
adjustments which in management's opinion are necessary for a fair presentation
of the interim periods.
<PAGE>
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Nine Months Ended
March 31
1995 1994
Revenues........................................ $163,973,900 $153,858,600
Costs and Expenses:
Salaries, wages and employee benefits......... 103,961,800 107,831,400
Subcontractors................................ 35,016,600 23,180,700
Travel, relocation and subsistence............ 1,786,700 1,678,900
Rental of space and equipment................. 3,275,200 2,362,100
Depreciation and amortization................. 2,197,800 1,420,600
Other operating and administrative costs...... 9,287,200 8,693,700
----------- -----------
155,525,300 145,167,400
Income from operations.......................... 8,448,600 8,691,200
Interest and other income....................... 297,600 148,800
----------- -----------
Income before income taxes...................... 8,746,200 8,840,000
Provision for income taxes...................... 3,409,100 3,328,700
----------- -----------
Net Income...................................... $ 5,337,100 $ 5,511,300
=========== ===========
Net Income Per Common Share..................... $ .90 $ .93
=========== ===========
Dividends Per Common Share...................... $ .10 $ .10
=========== ===========
The unaudited financial statements presented herein reflect all material
adjustments which in management's opinion are necessary for a fair presentation
of the interim periods.
<PAGE>
COMPUTER DATA SYSTEMS, INC.
Consolidated Balance Sheets
March 31, June 30,
1995 1994
Assets Unaudited Audited
Current Assets:
Cash and temporary cash investments.............. $ 6,885,400 $ 8,182,100
Trade accounts receivable........................ 47,380,400 42,197,400
Deferred income taxes............................ 738,700 738,700
Income tax refunds receivable.................... 151,400 188,700
Prepaid expenses and deposits.................... 1,354,100 1,271,100
---------- ----------
Total Current Assets......................... 56,510,000 52,578,000
Long-term investments............................ 1,343,400 1,303,600
Intangible assets................................ 1,840,200 1,559,000
Land, building and equipment..................... 21,751,300 21,090,500
Other assets..................................... 847,300 764,800
---------- ----------
Total Assets................................. $82,292,200 $77,295,900
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities......... $15,210,100 $12,312,000
Note payable..................................... 1,600,000
Accrued wages and related benefits............... 15,794,400 12,735,500
Income taxes payable............................. 24,700
---------- ----------
Total Current Liabilities.................... 31,029,200 26,647,500
Long-Term Liabilities:
Note payable..................................... 4,533,300
Deferred compensation............................ 3,579,600 3,414,200
Deferred income taxes............................ 425,700 427,800
---------- ----------
Total Long-Term Liabilities.................. 4,005,300 8,375,300
Shareholders' Equity:
Common Stock, par value $.10..................... 572,400 569,000
Capital in excess of par value................... 5,925,700 5,564,200
Retained earnings................................ 40,759,600 36,139,900
---------- ----------
Total Shareholders' Equity................... 47,257,700 42,273,100
Total Liabilities and Shareholders' Equity... $82,292,200 $77,295,900
========== ==========
The unaudited financial statements presented herein reflect all material
adjustments which in management's opinion are necessary for a fair presentation
of the interim periods.
<PAGE>
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
March 31
1995 1994
Net Income $ 5,337,100 $ 5,511,300
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization....................... 2,197,800 1,420,600
Loss on disposal of equipment....................... 18,500 7,400
Interest on long-term investments................... <53,000> <35,800>
Deferred income taxes............................... <2,100> <69,000>
Deferred compensation............................... 178,600 140,300
Equity in partnership............................... <25,100> 8,700
Net cash provided by <used in> changes in operating
assets and liabilities:
Trade accounts receivable........................... <5,183,000> 4,489,900
Income tax refunds receivable....................... 37,300 13,900
Prepaid expenses and deposits....................... <83,000> <304,200>
Accounts payable and accrued liabilities............ 3,082,700 117,700
Accrued wages and related benefits.................. 3,058,900 3,326,900
Income taxes payable................................ 24,700 <391,000>
--------- ----------
Net cash provided by operating activities 8,589,400 14,236,700
Cash flows from investing activities:
Capital expenditures................................ <2,540,000> <3,205,100>
Proceeds from sale of equipment..................... 4,400 6,500
Partnership distributions........................... 42,500
Purchase of intangible assets....................... <640,100> <189,500>
Purchase of long-term investments................... <171,400>
Purchase of other assets............................ <82,500>
--------- ---------
Net cash <used in> investing activities <3,387,100> <3,388,100>
Cash flows from financing activities:
Payments on long-term debt.......................... <6,133,300> <1,200,000>
Cash dividends...................................... <571,600> <506,800>
Exercise of stock options........................... 219,100 730,800
Payment of deferred compensation.................... <13,200> <68,600>
--------- ---------
Net cash <used in> financing activities <6,499,000> <1,044,600>
Net increase <decrease> in cash and cash equivalents <1,296,700> 9,804,000
Cash and cash equivalents at beginning of period 8,182,100 101,200
--------- ---------
Cash and cash equivalents at end of period $ 6,885,400 $ 9,905,200
========== ==========
The unaudited financial statements presented herein reflect all material
adjustments which in management's opinion are necessary for a fair presentation
of the interim periods.
<PAGE>
COMPUTER DATA SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 1995
A. COMPUTATION OF EARNINGS PER SHARE
Net income per share of common stock is based on the weighted average
number of common and common stock equivalent shares outstanding during each
period.
Average Number of Shares Outstanding
March 31, 1995 March 31, 1994
5,898,029 5,907,804
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
March 31, 1995 vs March 31, 1994 - Nine Months
Revenues for the nine months ended March 31, 1995 were $163,973,900, an
increase of 6% from the prior year's volume of $153,858,600. The increase
resulted primarily from the Department of Education contract and growth on
several contracts in the Professional Services Group partially offset by the
completion of two large Professional Services Group contracts.
Costs and expenses rose at a slightly higher rate than the increase in
revenues. This was primarily the result of corporate investments in software
development, marketing and implementation of Centers of Expertise initiatives.
Income from operations was $8,448,600 compared to $8,691,200 in the prior
period. The decrease was attributable to the increased costs noted above and
lower margins in the initial phases of new contracts in the Processing Services
Group.
Interest and other income increased due principally to a one-time gain of
$115,000, on the unwinding of an interest rate swap associated with the note
payable, repaid in September 1994.
The provision for income taxes increased due to higher federal and state
tax rates applied to the lower income level.
Net income was below last year's comparable period primarily due to the
lower operating operating income and higher tax rates.
<PAGE>
March 31, 1995 vs March 31, 1994 - Quarter to Quarter
Revenues of $57,774,600 for the quarter ended March 31, 1995 increased 8%
from the prior year's quarter of $53,531,900. This increase was due to the new
contracts noted above and the resolution of certain fixed price tasks and other
contract matters.
Costs and expenses increased at a similar rate. The increase was
attributable to the continuing investments noted above offset in part by the
recovery of previously expensed protest-related legal costs.
The increase in income from operations resulted from resolution of the
contract matters noted above and the recovery of the aforementioned protest
costs, combined totalling approximately $1.6 million.
Interest and other income increased due to higher interest rates on
available investment funds.
The provision for income taxes increased due to higher operating income.
Net income increased due to the higher operating income.
Comparison of Financial Condition
March 31, 1995 Compared to June 30, 1994
Total assets increased by $4,996,300 compared to the June 30, 1994
balance. Working capital decreased by $449,700 since June 30, 1994. The
changes are primarily due to the net income for the nine months being retained
in the business, offset by the cash dividends paid during the nine months and
the September 1994 repayment of the $6,133,300 term loan.
Capital expenditures are expected to be approximately $5,000,000 for
fiscal year 1995, including approximately $2,500,000 in support of the Argentina
contract. Capital expenditures on the Argentina contract are expected to total
$8,000,000. The expenditures are expected to be financed through internal
resources and available bank lines of credit.
PART II -- OTHER INFORMATION
ITEMS 1-5. Not Applicable.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
On March 1, 1995 the registrant filed a Current Report on Form 8-K
pursuant to Item 5 thereof, reporting the award of a subcontract for
the Department of Energy as part of the settlement of all litigation
arising from its protest of a previously awarded contract.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in Rockville, Maryland on May 15, 1995.
COMPUTER DATA SYSTEMS, INC.
By /s/ Wyatt D. Tinsley
------------------------------
Wyatt D. Tinsley
Executive Vice President
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CDSI'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000022989
<NAME> COMPUTER DATA SYSTEMS, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-30-1995
<CASH> 6,885,400
<SECURITIES> 0
<RECEIVABLES> 47,380,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,510,000
<PP&E> 34,187,400
<DEPRECIATION> 12,436,100
<TOTAL-ASSETS> 82,292,200
<CURRENT-LIABILITIES> 31,029,200
<BONDS> 0
<COMMON> 572,400
0
0
<OTHER-SE> 46,685,300
<TOTAL-LIABILITY-AND-EQUITY> 82,292,200
<SALES> 0
<TOTAL-REVENUES> 163,973,900
<CGS> 0
<TOTAL-COSTS> 155,525,300
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 8,746,200
<INCOME-TAX> 3,409,100
<INCOME-CONTINUING> 5,337,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,337,100
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
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