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, 1996
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 $0.10 per share, was 5,781,844 on May 10, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Quarter Ended
March 31
---------------------
1996 1995
---- ----
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,199,300 $ 57,774,600
------------- -------------
Costs and Expenses:
Salaries, wages and employee benefits . . . . . . . . . . . . . 34,526,300 36,303,900
Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . 20,060,700 12,423,300
Travel, relocation and subsistence . . . . . . . . . . . . . . . 620,300 622,800
Rental of space and equipment . . . . . . . . . . . . . . . . . 396,200 1,352,200
Depreciation and amortization . . . . . . . . . . . . . . . . . 868,900 753,100
Other operating and administrative costs . . . . . . . . . . . . 3,313,500 2,751,000
59,785,900 54,206,300
------------- -------------
Income from operations . . . . . . . . . . . . . . . . . . . . . . 4,413,400 3,568,300
Interest and other income, net . . . . . . . . . . . . . . . . . . (81,200) 53,400
------------- -------------
Income before income taxes . . . . . . . . . . . . . . . . . . . . 4,332,200 3,621,700
Provision for income taxes . . . . . . . . . . . . . . . . . . . . 1,682,900 1,385,800
------------- -------------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,649,300 $ 2,235,900
============= =============
Net Income per Common Share . . . . . . . . . . . . . . . . . . . . $ .44 $ .38
============= =============
Dividends per Common Share . . . . . . . . . . . . . . . . . . . . $ .06 $ .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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Nine Months Ended
March 31
-------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 185,255,500 $ 163,973,900
-------------- --------------
Costs and Expenses:
Salaries, wages and employee benefits . . . . . . . . . . . . . 100,428,000 103,961,800
Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . 57,548,400 35,016,600
Travel, relocation and subsistence . . . . . . . . . . . . . . . 2,064,200 1,786,700
Rental of space and equipment . . . . . . . . . . . . . . . . . 1,694,200 3,275,200
Depreciation and amortization . . . . . . . . . . . . . . . . . 2,492,200 2,197,800
Other operating and administrative costs . . . . . . . . . . . . 9,794,200 9,287,200
-------------- --------------
174,021,200 155,525,300
-------------- --------------
Income from operations . . . . . . . . . . . . . . . . . . . . . . 11,234,300 8,448,600
Interest and other income, net . . . . . . . . . . . . . . . . . . 258,000 297,600
-------------- --------------
Income before income taxes . . . . . . . . . . . . . . . . . . . . 11,492,300 8,746,200
Provision for income taxes . . . . . . . . . . . . . . . . . . . . 4,480,200 3,409,100
-------------- --------------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,012,100 $ 5,337,100
============== ==============
Net Income per Common Share . . . . . . . . . . . . . . . . . . . . $ 1.18 $ .90
============== ==============
Dividends per Common Share . . . . . . . . . . . . . . . . . . . . $ .11 $ .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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPUTER DATA SYSTEMS, INC.
Consolidated Balance Sheets
(Unaudited)
March 31, June 30,
1996 1995
Assets Unaudited Audited
--------- -------
<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 554,700 $ 1,237,000
Trade accounts receivable . . . . . . . . . . . . . . . . 66,712,100 52,236,900
Deferred income taxes . . . . . . . . . . . . . . . . . . 456,600 456,600
Income tax refunds receivable . . . . . . . . . . . . . . 145,000 151,400
Prepaid expenses and deposits . . . . . . . . . . . . . . 1,344,200 1,948,300
-------------- --------------
Total Current Assets . . . . . . . . . . . . . . . . 69,212,600 56,030,200
Long-term investments . . . . . . . . . . . . . . . . . . 1,647,100 1,584,800
Land, building and equipment . . . . . . . . . . . . . . . 32,117,000 26,452,900
Other assets . . . . . . . . . . . . . . . . . . . . . . . 941,600 855,100
-------------- --------------
Total Assets . . . . . . . . . . . . . . . . . . . . $ 103,918,300 $ 84,923,000
============== ==============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities . . . . . . . . . $ 25,239,400 $ 15,652,600
Accrued wages and related benefits . . . . . . . . . . . . 14,686,400 14,363,800
Income taxes payable . . . . . . . . . . . . . . . . . . . 115,800
-------------- --------------
Total Current Liabilities . . . . . . . . . . . . . 40,041,600 30,016,400
-------------- --------------
Long-Term Liabilities:
Note payable . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
Deferred compensation . . . . . . . . . . . . . . . . . . 4,083,000 4,245,500
Deferred income taxes . . . . . . . . . . . . . . . . . . 580,600 599,500
-------------- --------------
Total Long-Term Liabilities . . . . . . . . . . . . 7,163,600 4,845,000
-------------- --------------
Stockholders' Equity:
Common Stock, par value $.10 . . . . . . . . . . . . . . . 577,200 573,800
Capital in excess of par value . . . . . . . . . . . . . . 6,283,400 6,014,500
Retained earnings . . . . . . . . . . . . . . . . . . . . 49,852,500 43,473,300
-------------- --------------
Total Stockholders' Equity . . . . . . . . . . . . . 56,713,100 50,061,600
-------------- --------------
Total Liabilities and Stockholders' Equity . . . . . $ 103,918,300 $ 84,923,000
============== ==============
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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
March 31
-------------------------
1996 1995
---- ----
<S> <C> <C>
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,012,100 $ 5,337,100
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 2,492,200 2,197,800
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (18,900) (2,100)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 234,300 178,600
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90,500) (59,600)
Net cash provided by (used in) changes in operating assets and
liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,468,800) (5,145,700)
Prepaid expenses and deposits . . . . . . . . . . . . . . . . . . . . . . 604,100 (83,000)
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . 9,785,800 3,082,700
Accrued wages and related benefits . . . . . . . . . . . . . . . . . . . . 249,100 3,058,900
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,800 24,700
-------------- -------------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . 5,915,200 8,589,400
-------------- -------------
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,255,900) (3,180,100)
Proceeds from sale of equipment. . . . . . . . . . . . . . . . . . . . . . 59,800 4,400
Purchase of long-term investments . . . . . . . . . . . . . . . . . . . . (174,400) (171,400)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43,100) (40,000)
-------------- -------------
Net cash (used in) investing activities . . . . . . . . . . . . . . . . . . . . (8,413,600) (3,387,100)
-------------- -------------
Cash flows from financing activities:
Payment on note payable . . . . . . . . . . . . . . . . . . . . . . . . . (6,133,300)
Borrowings on note payable . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (633,000) (571,600)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . 272,400 219,100
Payment of deferred compensation . . . . . . . . . . . . . . . . . . . . . (323,300) (13,200)
-------------- -------------
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . 1,816,100 (6,499,000)
-------------- -------------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . (682,300) (1,296,700)
-------------- -------------
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . 1,237,000 8,182,100
-------------- -------------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . $ 554,700 $ 6,885,400
============== =============
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.
</TABLE>
<PAGE>
COMPUTER DATA SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
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, 1996 March 31, 1995
-------------- --------------
5,928,024 5,898,029
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
---------------------
March 31, 1996 vs March 31, 1995 - Nine Months
Revenues for the period were $185,255,500 versus $163,973,900 for the prior
year. The 13% increase in revenues was attributable to expansion on the
Department of Education contract and certain Professional Services contracts.
Costs and expenses grew by 12%. Costs and expenses increased in line with
the growth in revenues offset by the absence of costs of the Argentine
proposal, reduced i.e.FARS development costs and proposal protest costs incurred
in the prior year.
Income from operations rose due to improved contract margins, higher
margins on licensing revenues, and the lower costs noted above.
Interest and other income, net decreased due to higher investment gains
more than offset by increased interest expense due to larger borrowings under
the Company's line of credit arising from equipment commitments on the Argentine
contract and accounts receivable growth.
The provision for income taxes increased as a result of the higher
operating income.
Net income rose due to the higher operating margins on the expanding
contract base.
March 31, 1996 vs March 31, 1995 - Three Months
Revenues for the quarter ended March 31, 1996 were $64,199,300 as compared
to the comparable quarter last year of $57,774,600. The 11% increase in
revenues was attributable primarily to continuing expansion of the Department of
Education contract and other existing contracts.
Costs and expenses rose at a slightly lower rate compared to the increase
in revenues. Expenses increased by 10% due to the growth on existing contracts.
<PAGE>
Income from operations rose due to improved contract margins on the growing
contract base and increased licensing revenues.
Interest and other income, net decreased due to the lower available
investment balances and increased borrowings on the Company's line of credit
during the quarter.
The provision for income taxes increased as a result of the higher
operating income.
Net income was above last year's comparable quarter due to improved
operating margins on the expanding contract base.
Comparison of Financial Condition
---------------------------------
March 31, 1996 Compared to June 30, 1995
Total assets increased to $103,918,300 from $84,923,000 at June 30, 1995.
Working capital increased by approximately $3,157,200 since June 30, 1995. The
increase is attributed primarily to the retention of earnings after payment of
dividends. Borrowings under the Company's three-year revolving line of credit
were used to fund accounts receivable growth.
Capital expenditures for the year are expected to be in the $9,000,000
range.
PART II -- OTHER INFORMATION
ITEMS 1-5. Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
On April 11, 1996, the registrant filed a Current Report on Form 8-K
pursuant to Item 5 thereof, reporting the appointment of Peter A.
Bracken as President and Chief Executive Officer, effective May 13,
1996.
<PAGE>
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, 1996.
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>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CDSI'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MARCH 31, 1996 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-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 554,700
<SECURITIES> 0
<RECEIVABLES> 66,712,100
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 69,212,600
<PP&E> 32,117,000
<DEPRECIATION> 2,492,200
<TOTAL-ASSETS> 103,918,300
<CURRENT-LIABILITIES> 40,041,600
<BONDS> 0
0
0
<COMMON> 577,200
<OTHER-SE> 56,135,900
<TOTAL-LIABILITY-AND-EQUITY> 103,918,300
<SALES> 0
<TOTAL-REVENUES> 185,255,500
<CGS> 0
<TOTAL-COSTS> 174,021,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170,886
<INCOME-PRETAX> 11,492,300
<INCOME-TAX> 4,480,200
<INCOME-CONTINUING> 7,012,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,012,100
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
