<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 Ended March 31, 1995
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 No. 0-9233
American Management Systems, Incorporated
(Exact name of registrant as specified in its charter)
State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization: Delaware Identification No.: 54-0856778
4050 Legato Road
Fairfax, Virginia 22033
(Address of principal executive office)
Registrant's Telephone No., Including Area Code: (703) 267-8000
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 May 10, 1995, 26,468,603 shares of common stock were outstanding.
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CONTENTS
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Page
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Part 1 Financial Information
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Item 1. Financial Statements ..................................... 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 7
Part II Other Information Required in Report
------------------------------------
Item 1. Legal Proceedings...................................... 10
Item 2. Changes in Securities.................................. 10
Item 3. Defaults Upon Senior Securities........................ 10
Item 4. Submission of Matters to a Vote of Security Holders.... 10
Item 5. Other Information...................................... 10
Item 6. Exhibits and Reports on Form 8-K....................... 10
</TABLE>
<PAGE>
PART 1 FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
The information furnished in the accompanying Consolidated Statements of
Operations, Consolidated Revenues by Market, Consolidated Balance Sheets, and
Consolidated Statements of Cash Flows reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results of
operations and financial condition for the interim periods. The accompanying
financial statements and notes thereto should be read in conjunction with the
financial statements and notes for the year ended December 31, 1994, included in
the American Management Systems, Incorporated (the "Company") Annual Report on
Form 10-K (File No. 0-9233) filed with the Securities and Exchange Commission on
March 30, 1995.
1
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American Management Systems, Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands except per share data)
<TABLE>
<CAPTION>
For the Quarter
Ending March 31,
1995 1994
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<S> <C> <C>
REVENUES
Services and Products .................................. $121,776 $ 87,559
Reimbursed Expenses .................................. 13,978 12,708
-------- --------
135,754 100,267
EXPENSES
Client Project Expenses................................. 75,778 56,054
Other Operating Expenses................................ 42,883 28,832
Corporate Expenses...................................... 8,990 7,428
-------- --------
127,651 92,314
INCOME FROM OPERATIONS.................................... 8,103 7,953
OTHER (INCOME) EXPENSE
Interest Expense........................................ 352 277
Other Income............................................ (502) (189)
-------- --------
(150) 88
INCOME BEFORE INCOME TAXES................................ 8,253 7,865
INCOME TAXES.............................................. 3,383 3,225
-------- --------
NET INCOME................................................ 4,870 4,640
DIVIDENDS AND ACCRETION ON SERIES B PREFERRED STOCK....... - 162
-------- --------
NET INCOME TO COMMON SHAREHOLDERS......................... $ 4,870 $ 4,478
======== ========
WEIGHTED AVERAGE SHARES AND EQUIVALENTS................... 26,938 24,765
======== ========
NET INCOME PER COMMON SHARE $0.18 $0.18
======== ========
</TABLE>
2
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American Management Systems, Incorporated
CONSOLIDATED REVENUES BY MARKET
Unaudited
(In thousands)
<TABLE>
<CAPTION>
For the Quarter
Ending March 31,
1995 1994
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<S> <C> <C>
Financial Services Institutions................. $ 27,742 $ 18,485
Federal Government Agencies..................... 23,025 21,281
State and Local Governments and Education....... 20,093 18,710
Telecommunications Firms........................ 42,254 21,662
Other Corporate Clients......................... 8,662 7,421
-------- --------
Total Services and Products Revenues......... 121,776 87,559
Reimbursed Expenses Revenues.................... 13,978 12,708
-------- --------
Total Revenues.................................. $135,754 $100,267
======== ========
</TABLE>
3
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American Management Systems, Incorporated
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
3/31/95
ASSETS (Unaudited) 12/31/94
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<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents....................................... $ 20,669 $ 34,238
Accounts and Notes Receivable................................... 149,653 141,089
Prepaid Expenses and Other Current Assets....................... 7,666 6,669
-------- ---------
177,988 181,996
FIXED ASSETS
Equipment....................................................... 56,184 52,697
Furniture and Fixtures.......................................... 12,659 12,044
Leasehold Improvements.......................................... 11,727 10,608
-------- --------
80,570 75,349
Accumulated Depreciation and Amortization....................... (49,039) (46,674)
-------- --------
31,531 28,675
OTHER ASSETS
Purchased and Developed Computer Software (Net of Accumulated
Amortization of $44,182,000 and $41,094,000)................... 28,222 28,786
Intangibles (Net of Accumulated Amortization of $1,706,000 and
$1,581,000).................................................... 7,279 7,365
Other Assets (Net of Accumulated Amortization of $3,513,000
and $3,513,000)................................................ 7,998 5,360
-------- --------
43,499 41,511
-------- --------
TOTAL ASSETS..................................................... $253,018 $252,182
======== =========
</TABLE>
4
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American Management Systems, Incorporated
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
3/31/95
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) 12/31/94
--------- --------
<S> <C> <C>
CURRENT LIABILITIES
Notes Payable and Capitalized Lease Obligations................................. $ 14,826 $ 9,424
Accounts Payable................................................................ 8,190 6,988
Accrued Incentive Compensation.................................................. 5,200 17,134
Other Accrued Compensation and Related Items.................................... 19,403 16,603
Deferred Revenues............................................................... 23,000 25,673
Other Accrued Liabilities....................................................... 3,363 3,896
Income Taxes Payable............................................................ - 1,778
-------- ---------
73,982 81,496
Deferred Income Taxes........................................................... 14,146 11,047
-------- ---------
88,128 92,543
NONCURRENT LIABILITIES
Notes Payable and Capitalized Lease Obligations................................. 11,983 12,933
Other Accrued Liabilities....................................................... 735 704
Deferred Income Taxes........................................................... 7,714 7,688
-------- ---------
20,432 21,325
-------- ---------
TOTAL LIABILITIES................................................................ 108,560 113,868
OTHER STOCKHOLDERS' EQUITY
Preferred Stock ($0.10 Par Value, 1,500,000 Shares Authorized,
None Issued or Outstanding)....................................................
Common Stock ($0.01 Par Value, 40,000,000 Shares Authorized,
32,334,603 and 32,201,104 Issued and 26,330,019 and
26,196,520 Outstanding, Respectively).......................................... 323 322
Capital in Excess of Par Value.................................................. 61,332 60,341
Retained Earnings............................................................... 117,453 112,583
Currency Translation Adjustment................................................. (1,072) (1,354)
Common Stock in Treasury, at Cost
(6,004,584 and 6,004,584 Shares)............................................... (33,578) (33,578)
-------- ---------
144,458 138,314
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....................................... $253,018 $252,182
======== ========
</TABLE>
5
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American Management Systems, Incorporated
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
<TABLE>
<CAPTION>
For the Quarter
Ending March 31,
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income..................................................... $ 4,870 $ 4,640
Adjustments to Reconcile Net Income to Net
Cash Provided (Used) in Operating Activities:
Depreciation and Amortization................................ 6,297 4,790
Deferred Income Taxes........................................ 3,125 3,051
Provision for Doubtful Accounts.............................. 400 350
Changes in Assets and Liabilities:
Increase in Accounts Receivable.......................... (8,964) (10,390)
Increase in Prepaid Expenses and Other
Current Assets.......................................... (997) (2,092)
(Increase) Decrease in Other Assets...................... (2,784) 90
Decrease in Accrued Incentive Compensation............... (11,934) (12,488)
Increase (Decrease) in Accounts Payable and Other
Accrued Compensation and Liabilities.................... 3,500 (5,517)
(Decrease) Increase in Deferred Revenue.................. (2,673) 420
Decrease in Income Taxes Payable......................... (1,778) (174)
-------- --------
Net Cash Used in Operating Activities........................ (10,938) (17,320)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets...................................... (6,054) (2,090)
Purchase of Computer Software................................. (749) (383)
Investment in Software Products............................... (1,784) (3,155)
Other Investments and Intangibles............................. 105 (30)
Proceeds from Sale of Furniture, Equipment, and
Computer Software............................................ 125 82
-------- --------
Net Cash Used in Investing Activities....................... (8,357) (5,576)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings.................................................... 5,402 10,237
Payments on Borrowings........................................ (950) (1,017)
Proceeds from Common Stock Options Exercised.................. 992 2,696
-------- --------
Net Cash Provided in Financing Activities................... 5,444 11,916
Increase (Decrease) in Currency Translation Adjustment........ 282 (3)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS...................... (13,569) (10,983)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............... 34,238 15,600
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................... $ 20,669 $ 4,617
======== ========
</TABLE>
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- ---------------------
The following table sets forth for the periods indicated the percentage of
revenues of major items in the Consolidated Statements of Operations and the
percentage of change in such items from period to period.
<TABLE>
<CAPTION>
Percentage of Period-to-
Total Revenues Period Change
-------------- ---------------
Quarter Ended Quarter Ended
March 31, March 31, 1995
vs.
1995 1994 March 31, 1994
---------------- ----------------
<S> <C> <C>
Revenues
Services and Products............................... 89.7% 87.3% 39.1%
Reimbursed Expenses................................. 10.3 12.7 10.0
----- -----
Total............................................... 100.0 100.0 35.4
Expenses
Client Project Expenses............................. 55.8 55.9 35.2
Other Operating Expenses............................ 31.6 28.8 48.7
Corporate Expenses.................................. 6.6 7.4 21.0
----- -----
Total............................................... 94.0 92.1 38.3
Income from Operations................................ 6.0 7.9 1.9
Other (Income) Expense................................ (0.1) 0.1 (270.5)
Income Before Income Taxes............................ 6.1 7.8 4.9
Income Taxes.......................................... 2.5 3.2 4.9
Net Income............................................ 3.6 4.6 5.0
Dividends and Accretion on Series B
Preferred Stock...................................... - 0.2 (100.0)
Net Income to Common Shareholders..................... 3.6 4.4 8.8
Weighted Average Shares and Equivalents/1/............ - - 8.8
Net Income per Common Share/1/........................ - - 0.0
</TABLE>
________________________________
/1/ Due primarily to the May 1994 conversion of preferred stock to common stock
and the resulting increase in outstanding shares, net income per common
share was $0.18, unchanged from the comparable 1994 period.
7
<PAGE>
Results of Operations (continued)
- ---------------------
REVENUES
Services and Products revenues ("S&P Revenues") increased 39% in the first
quarter of 1995 compared to the first quarter of 1994, and all of the Company's
target markets experienced revenue growth. S&P Revenues derived from business
with non-US clients increased 139% (to $33.0 million) and accounted for 56% of
the period-to-period increase. The Company expects S&P Revenues, for the year,
to increase more in line with its historical annual rate of revenue growth.
In the Financial Services Institutions target market, S&P Revenues in the
first quarter of 1995 increased 50% (to $27.7 million) over the comparable 1994
period, owing principally to build-ups in business with clients who started
large projects in the second half of 1994. The Company expects that, for the
remainder of 1995, S&P Revenues in this market will continue to increase at a
rate greater than the Company's overall revenue growth rate.
S&P Revenues in the Federal Government Agencies target market increased 8%
when compared to the first quarter of 1994. The Company expects S&P Revenues in
this market, for the year, to increase at rates lower than the overall growth in
total S&P Revenues.
In the State and Local Governments and Education target market, S&P
Revenues increased 7% compared to 1994. The Company expects S&P Revenue growth
in this market, for the year, to be at a slower growth rate than the overall
growth rate for 1995.
In the Telecommunications market, S&P Revenues in the first quarter of
1995 increased 95% over the comparable 1994 period. This increase is mainly
attributable to international business, which increased 190% to $24.0 million in
S&P Revenues, while US business increased 35% to $18.2 million. The Company
expects revenue growth in this market, for the year, to be ahead of that for the
Company as a whole.
S&P Revenues from Other Corporate Clients increased 17% during the first
quarter of 1995, compared to 1994. This market includes business not covered by
the Company's other markets and the Company expects S&P Revenues in this market
to grow, during the remainder of 1995, at rates below that of the Company
overall.
EXPENSES
Client Project Expenses increased 35% during the first quarter of 1995,
compared to the first quarter of 1994, approximately the same as the increase in
S&P Revenues.
Other Operating Expenses increased 49%, compared to the 1994 period. This
rate of increase is greater than that in S&P Revenues, due primarily to
disproportionately greater increases in infrastructure costs, especially outside
the US. Other Operating Expenses, for the year, should increase at a rate
comparable to that of the S&P Revenue growth.
8
<PAGE>
Corporate Expenses increased 21% compared to the first quarter of 1994.
The Company expects Corporate Expenses to continue to increase at rates slower
than the overall revenue growth rates.
OTHER (INCOME) EXPENSE
Interest Expense increased 27% during the first quarter of 1995, due to
increased borrowing by international subsidiaries under a line of credit
agreement. For the remainder of 1995, Interest Expense will likely increase,
but at a slower rate. Other Income, primarily interest income, increased 166%
in the first quarter of 1995, owing to higher levels of investments in the US.
LIQUIDITY AND CAPITAL RESOURCES
The Company provides for its operating cash requirements primarily through
funds generated from operations, and using bank borrowings primarily for cash
management with respect to the short term impact of certain cyclical uses, such
as annual payments of incentive compensation. At March 31, 1995, the Company's
cash and cash equivalents totaled $20.7 million down from $34.2 million at the
end of 1994. Cash used in operating activities was $10.9 million due
principally to payments made in the first quarter of the year for incentive
compensation and other employee benefits and increases in accounts receivable.
Additionally, the Company invested over $8.6 million in fixed assets and
software purchases, and computer software development. The Company borrowed $5.4
million during the quarter for short-term borrowings by its European
subsidiaries. Additionally the Company made approximately $1.0 million in debt
repayments during the quarter and received approximately $1.0 million from
employees, related to stock options being exercised. As previously reported,
the Company has subcontracts with a prime contractor in the human services
business. At March 31, 1995, the accounts receivable balance related to these
subcontracts is approximately 11% of total accounts receivable. These amounts
span four contracts which the prime contractor has with state/local government
clients, in three different states.
The Company has two line of credit facilities which it can use to generate
working capital, for which the principal need is to finance the growth in
accounts receivable. At March 31, 1995, the Company had $10.2 million
outstanding under one of the line of credit agreements.
At March 31, 1995, the Company's material unused source of liquidity
consisted of approximately $28.8 million available under its revolving lines of
credit. Also at March 31, 1995, the Company's debt-equity ratio, as measured by
total liabilities divided by common stockholders' equity, was 0.75. At December
31, 1994, the debt-equity ratio was 0.82.
The Company believes that its liquidity needs can be met from the
resources described above.
9
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PART II OTHER INFORMATION REQUIRED IN REPORT
------------------------------------
Item 1. Legal Proceedings
-----------------
NONE.
Item 2. Changes in Securities
---------------------
NONE.
Item 3. Defaults Upon Senior Securities
-------------------------------
NONE.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
NONE.
Item 5. Other Information
-----------------
NONE.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
NONE.
10
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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.
AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
Date: May 15, 1995 /s/ Philip M. Giuntini
------------------ -----------------------------------------
Philip M. Giuntini, President
Date: May 15, 1995 /s/ James E. Marshall
------------------ -----------------------------------------
James E. Marshall, Controller
11
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 20,669
<SECURITIES> 0
<RECEIVABLES> 149,653
<ALLOWANCES> 3,660
<INVENTORY> 0
<CURRENT-ASSETS> 177,988
<PP&E> 80,570
<DEPRECIATION> (49,039)
<TOTAL-ASSETS> 253,018
<CURRENT-LIABILITIES> 88,128
<BONDS> 0
<COMMON> 323
0
0
<OTHER-SE> 144,135
<TOTAL-LIABILITY-AND-EQUITY> 253,018
<SALES> 135,754
<TOTAL-REVENUES> 135,754
<CGS> 75,778
<TOTAL-COSTS> 127,651
<OTHER-EXPENSES> (150)
<LOSS-PROVISION> 400
<INTEREST-EXPENSE> 352
<INCOME-PRETAX> 8,253
<INCOME-TAX> 3,383
<INCOME-CONTINUING> 4,870
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,870
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
