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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 15, 1999
AMERICAN MANAGEMENT SYSTEMS, INCORPORATED
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 0-9233 54-0856778
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(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer
Identification No.)
4050 Legato Road
Fairfax, Virginia 22033
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(Address of Principal Executive Offices) (Zip Code)
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(703) 267-8000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Attached is a press release issued by the Registrant on July 15, 1999. The
press release is incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press Release, Dated July 15, 1999
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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 hereunto duly authorized.
AMERICAN MANAGEMENT SYSTEMS,
INCORPORATED
By: /s/ Nancy M. Yurek
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Nancy M. Yurek
Controller
Date: July 20, 1999
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EXHIBIT INDEX
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Exhibit
Number Description
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99.1 Press Release, Dated July 15, 1999
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[AMERICAN MANAGEMENT SYSTEMS LETTERHEAD]
FOR IMMEDIATE RELEASE NASDAQ TICKER SYMBOL: AMSY
July 15, 1999 Contact: Ronald Schillereff
American Management Systems
(703) 267-5140
Laurie Stone
American Management Systems
(703) 267-5053
AMS ANNOUNCES STRONG SECOND QUARTER REVENUE GROWTH
BUT $11.8 MILLION AFTER-TAX RESERVE REDUCES EARNINGS
Fairfax,Va. --- American Management Systems (AMS) today announced second quarter
1999 revenues of $305 million, up 22% over 1998 second quarter revenues of $251
million. For the first six months of 1999, revenues were $596 million, 26%
greater than the comparable 1998 period. Including an $11.8 million after-tax
reserve, 1999 second quarter earnings were $4.6 million ($0.10 per share
diluted), down 62% from 1998 second quarter earnings of $12.0 million ($0.28 per
share diluted). For the first six months of 1999, earnings were $20.4 million
($0.47 per share diluted), down 3% from 1998 first half earnings of $21.0
million ($0.49 per share diluted).
Absent the above-mentioned after-tax reserve, second quarter 1999 earnings would
have increased 37%, and the first six months 1999 earnings would have risen by
53%, both over the comparable 1998 periods.
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July 15, 1999 - Page 2
During the second quarter 1999, the Company recorded an after-tax provision of
$11.8 million ($0.27 per share diluted) to cover ongoing disputes on a contract
between an AMS subsidiary and Bezeq, the Israeli telephone company. This
contract was signed in 1997 and has been problematic since that time. Until very
recently, management believed that the differences could be resolved and that
work could be performed within the reserves established in 1998. Events in the
last week now make this most unlikely. At the end of the first half of 1999 the
cumulative reserves represent management's judgement of the total expected
impact of this dispute on AMS's consolidated financial statements.
Paul A. Brands, AMS chairman and chief executive officer, said, "I am very
pleased with the continued strong performance of our fundamental business in the
quarter and for the first half...significant revenue growth, substantially
expanded margins, and an excellent increase in earnings. Unfortunately, given
the difficulties associated with the Bezeq project, it is prudent for us to
establish a reserve to cover the total expected cost in resolving this issue.
This reserve puts the last of the 1996-97 Telecom problems behind us and enables
all of us to focus on profitable projects and on the many excellent market
opportunities we have as we continue to grow the business."
Revenues in the second quarter of 1999 increased over 28% compared to the same
1998 period in all of the Company's target markets, with the exception of the
financial institutions market. Business in the telecommunications market and the
state and local government market increased in excess of 32%, primarily
attributable to work beginning on a number of recent, large contract awards. For
the first half of 1999, revenues increased in all markets except financial
institutions. The state and local government market revenues increased 51% and
telecommunication business increased 30%. The decreases in the financial
institutions market were mainly due to delays in
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July 15, 1999 - Page 3
starting new engagements. International business, which represents 18% of AMS's
total revenues, increased 7% in the second quarter and 8% for the first half of
1999, when compared to the same 1998 periods.
AMS is a world-class international business and information technology
consulting firm. As one of the 20 largest consulting firms worldwide, AMS
provides a full range of services and solutions: eCommerce, customer value
management, business re-engineering, change management, knowledge management,
systems integration, and systems development and implementation. Founded in
1970, AMS is headquartered in Fairfax, Virginia, with over 8,000 employees and
57 offices worldwide. AMS had 1998 revenues of $1.1 billion.
To the extent that the foregoing discussion includes forward-looking statements,
they should be considered in light of the risks inherent in AMS's business, as
discussed in the company's public documents filed with the SEC and statements
made by senior management.
AMS can be found on the World Wide Web at amsinc.com
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July 15, 1999 -- Page 4
American Management Systems, Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS(1)
Unaudited
(In millions except per share data)
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For the Quarter For the Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
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REVENUES ................................................... $ 305.3 $ 250.7 $ 596.2 $ 473.7
EXPENSES
Client Project Expenses ............................... 166.1 141.1 318.8 264.4
Other Operating Expenses .............................. 87.9 71.4 177.3 139.4
Corporate Expenses .................................... 22.1 17.3 43.0 32.9
Provision for Specific Contract ....................... 20.0 - 20.0 -
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296.1 229.8 559.1 436.7
INCOME FROM OPERATIONS ..................................... 9.2 20.9 37.1 37.0
OTHER (INCOME) EXPENSE
Interest (Income) Expense ............................. 0.2 0.6 0.1 1.1
Other (Income) Expense ................................ 0.1 - 1.0 0.4
Loss on Investments in Other Companies ................ 1.1 - 1.4 -
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1.4 0.6 2.5 1.5
INCOME BEFORE INCOME TAXES ................................. 7.8 20.3 34.6 35.5
INCOME TAXES ............................................... 3.2 8.3 14.2 14.5
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NET INCOME ................................................. $ 4.6 $ 12.0 $ 20.4 $ 21.0
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WEIGHTED AVERAGE SHARES .................................... 42.5 42.3 42.3 42.1
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BASIC NET INCOME PER SHARE ................................. $ 0.11 $ 0.29 $ 0.48 $ 0.50
======= ======= ======= =======
WEIGHTED AVERAGE SHARES AND EQUIVALENTS .................... 43.2 43.1 43.2 42.9
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DILUTED NET INCOME PER SHARE ............................... $ 0.10 $ 0.28 $ 0.47 $ 0.49
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(1) Certain amounts have been reclassified for comparative purposes.
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July 15, 1999 -- Page 5
American Management Systems, Incorporated
CONSOLIDATED REVENUES BY MARKET(1)
Unaudited
(In millions)
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For the Quarter For the Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
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Telecommunications Firms....................... $ 84.0 $ 63.5 $158.3 $121.8
Financial Services Institutions................ 47.4 53.6 94.2 100.1
State and Local Governments and Education...... 83.4 63.1 171.6 113.8
Federal Government Agencies.................... 74.7 58.3 139.7 112.8
Other Corporate Clients........................ 15.8 12.2 32.4 25.2
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Total Revenues................................. $305.3 $250.7 $596.2 $473.7
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(1) Certain amounts have been reclassified for comparative purposes.
