<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1997
Registration No._____________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 06-1320610
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
304 VASSAR STREET, CAMBRIDGE, MA 02139 (617) 374-9800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
ARTHUR M. TOSCANINI
Chief Financial Officer
304 Vassar Street
Cambridge, MA 02139
(617) 374-9800
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
----------
COPY TO:
Steven C. Browne, Esq.
TESTA, HURWITZ & THIBEAULT, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
(617) 248-7000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
----------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of MAXIMUM MAXIMUM
Shares Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Share/(1)/ Offering Price/(1)/ Registration Fee/(2)/
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $ .01 par value 3,255,731 shares $37.50 $122,089,912.50 $36,016.52
- -------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights/(3)/ - - - -
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
/(2)/ Pursuant to Rule 457(c) of the Securities Act of 1933, the registration
fee has been calculated based upon the average of the high and low prices
per share of the Common Stock of Cambridge Technology Partners
(Massachusetts), Inc. (the "Company") on the Nasdaq National Market on
December 18, 1997.
/(3)/ Pursuant to the Company's Rights Agreement, one right to purchase a unit
of preferred stock of the Company (each a "Preferred Stock Purchase Right"
or "Right") is deemed to be delivered with each share of Common Stock
issued by the Company. The Rights currently are not separately
transferable apart from the Common Stock, nor are they exercisable until
the occurrence of certain events. Accordingly, no independent value has
been attributed to the Rights.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 23, 1997
PROSPECTUS
3,255,731 SHARES
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
COMMON STOCK
-----------------------
This Prospectus relates to the sale of up to 3,255,731 shares (the
"Shares") of the common stock, par value $.01 per share (the "Common Stock"), of
Cambridge Technology Partners (Massachusetts), Inc. ("Cambridge Technology
Partners" or the "Company") by certain stockholders of the Company
(collectively, the "Selling Stockholders"). The Selling Stockholders may sell
the Shares from time to time at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Selling Stockholders may effect these transactions by selling the Shares to or
through broker-dealers, who may receive compensation in the form of discounts or
commissions from the Selling Stockholders or from the purchasers of the Shares
for whom the broker-dealers may act as an agent or to whom they may sell as
principal, or both. See "Selling Stockholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares. The Company has agreed to bear all of the expenses in connection with
the registration and sale of the Shares (other than selling commissions).
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "CATP." On December 18, 1997, the last reported sale price for
the Common Stock of the Company on the Nasdaq National Market was $38.125 per
share.
-----------------------
SEE "RISK FACTORS" ON PAGE 6 FOR INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO OR SOLICITATION OF ANY PERSON IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT BE LAWFULLY MADE.
-----------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
The date of this Prospectus is .
--------------- -----
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at 7 World Trade Center, New York, New York 10048, and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Common Stock of the Company is traded on the Nasdaq
National Market. Reports, proxy statements and other information concerning the
Company may be inspected at the offices of the National Association of
Securities Dealers, Inc. located at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including all amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Common Stock offered hereby. This Prospectus does not contain all information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information regarding the Company and the Common Stock offered hereby, reference
is hereby made to the Registration Statement and to the exhibits and schedules
filed therewith. Statements contained in this Prospectus regarding the contents
of any agreement or other document filed as an exhibit to the Registration
Statement are necessarily summaries of such documents, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement for a more complete description of the matters involved.
The Registration Statement, including the exhibits and schedules thereto, may be
inspected at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and copies of all or any part thereof
may be obtained from such office upon payment of the prescribed fees. In
addition, the Commission maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests for such copies should be directed to Arthur M.
Toscanini, Chief Financial Officer, Cambridge Technology Partners, 304 Vassar
Street, Cambridge, Massachusetts 02139 (telephone: (617) 374-9800).
2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated in this Prospectus by reference (File No.
0-21040):
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
3. The Company's Current Reports on Form 8-K dated July 1, 1997, November
20, 1997 and December 8, 1997.
4. The description of the Company's Common Stock, $.01 par value per
share, contained in the Registration Statement on Form 8-A filed under
the Exchange Act with the Commission on December 24, 1992, including
any amendment or report filed for the purpose of updating such
description.
5. The description of the preferred stock purchase rights which accompany
each share of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A filed under the Exchange Act with
the Commission on July 1, 1997, including any amendment or report
filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
of the Shares, shall be deemed to be incorporated by reference in this
Prospectus and made a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or in any Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
3
<PAGE>
THE COMPANY
Cambridge Technology Partners (Massachusetts), Inc. ("Cambridge Technology
Partners" or the "Company") is an international consulting and systems
integration firm which provides services for strategic consulting, process
innovation, custom and package software deployment (including Enterprise
Resource Planning Applications), networking and training to rapidly deliver
strategic business information systems. The Company provides the majority of
its services on a fixed-price, fixed-timetable model with client involvement at
all stages of the process. In performing its services, the Company employs a
rapid development methodology using an iterative approach and features
facilitated workshops that bring together key client users, executives and
information technology ("IT") professionals to achieve consensus on the business
case, strategic objectives, and functionality of a software application. The
Company believes that this approach permits the delivery of results in
unprecedented time frames - typically within three to twelve months.
The Company's IT and management consulting services are offered at the
enterprise-wide, specific business process and application software levels of an
organization. Upon the completion of initial management consulting engagements,
the Company typically designs and develops one or more strategic software
applications, which often include custom and third-party package software, and
then rolls-out such applications to the organization's end-users. These
software applications are selected and designed to achieve a competitive
advantage, enhance the efficiency and functionality of specific business
processes, and support financial goals. The Company may also assist its clients
in providing end-user training for managing the organizational changes that
accompany the roll-out of new applications and the assimilation of such
applications into production environments. The Company also provides
enterprise-wide consulting services, including network consulting and IT
strategy services, to help clients establish their internal IT strategies and
implement the recommended technology solutions.
The Company's principal offices are located at 304 Vassar Street,
Cambridge, Massachusetts 02139 and the Company's telephone number is (617) 374-
9800.
4
<PAGE>
RECENT DEVELOPMENTS
On November 24, 1997, the Company acquired all of the outstanding share
capital and options to acquire ordinary shares of Peter Chadwick Holdings
Limited, a company organized under the laws of England ("Peter Chadwick"),
pursuant to that certain Share and Option Purchase Agreement, dated as of
November 24, 1997 (the "Purchase Agreement"), by and among the Company and the
parties listed therein (the "Acquisition") in exchange for 3,255,731 shares of
the Company's Common Stock. The Acquisition has been accounted for under the
"pooling-of-interests" method. Upon the closing of the Acquisition, each of
Quentin Baer and Ian Clarkson (each an officer of Peter Chadwick) became an
executive vice president of the Company. Each of the Selling Stockholders
acquired his, her or its Shares as a result of the Acquisition.
Peter Chadwick is a U.K.-based management consulting firm which specializes
in the implementation of operational strategies and performance improvement
programs. The Acquisition provides the Company with additional consulting
capabilities, industry experience and geographic reach. Peter Chadwick's 325
professionals will augment the Company's existing management consulting staff
resulting in approximately 500 professionals worldwide. Peter Chadwick also
brings additional consulting services, including change implementation services,
to the Company's service offerings. Together, the Company and Peter Chadwick
will have the ability to provide end-to-end business transformation services to
clients by identifying opportunities for business operations change,
implementing those changes and deploying supporting applications.
5
<PAGE>
RISK FACTORS
This Prospectus includes forward-looking statements which involve risks and
uncertainties, particularly as to net revenues and profits, capital
expenditures, future liquidity needs, working capital needs, and project
personnel costs, general and administrative expenses, sales and marketing
expenses, and other costs as a percentage of net revenues. The Company's actual
future results may differ significantly from those stated in any forward-looking
statements. While it is impossible to identify each factor and event that
could affect the Company's results, in addition to the other information in this
Prospectus and the information incorporated in this Prospectus by reference, the
following investment considerations should be considered carefully in evaluating
the Company and its business before purchasing the Common Stock offered hereby.
Difficulty of Integrating Peter Chadwick. The Acquisition was completed on
- ----------------------------------------
November 24, 1997. The successful integration of the Company and Peter Chadwick
is important to the future financial performance of the combined enterprise.
The anticipated benefits of the Acquisition may not be achieved unless, among
other things, the operations of Peter Chadwick are successfully combined with
those of the Company in a timely manner. The diversion of the attention of
management, and any difficulties encountered in the transition process, could
have an adverse impact on the revenues and operating results of the combined
enterprise. There can be no assurance that the Company will be able to
successfully integrate Peter Chadwick into the operations of the Company.
Management of Growth. The Company is currently experiencing a period of growth
- --------------------
which has placed, and could continue to place, a strain on the Company's
financial and other resources. The Company's ability to manage its staff and
facilities growth effectively will require it to continue to improve its
operational, financial and other internal systems, and to train, motivate and
manage its employees. If the Company's management is unable to manage growth
effectively and new employees are unable to achieve anticipated performance
levels, the Company's results of operations could be adversely affected.
Potential investors should consider the risks, expenses and difficulties
frequently encountered in connection with the operation and development of an
expanding business.
Attraction and Retention of Employees. The Company's business involves the
- -------------------------------------
delivery of professional services and is labor-intensive. The Company's success
will depend in large part upon its ability to attract, retain and motivate
highly skilled employees, particularly project managers and client managers and
other senior technical personnel. Qualified project managers are in
particularly great demand and are likely to remain a limited resource for the
foreseeable future. Although the Company expects to continue to attract
sufficient numbers of highly skilled employees and to retain existing project
managers, client managers and other senior personnel for the foreseeable future,
there can be no assurance that the Company will be able to do so. The loss of a
significant number of the Company's project managers, client managers and other
6
<PAGE>
senior personnel could have a material adverse impact on the Company, including
its ability to secure and complete engagements.
Variability of Quarterly Operating Results. Variations in the Company's
- ------------------------------------------
revenues and operating results occur from time to time as a result of a number
of factors, such as the significance of client engagements commenced and
completed during a quarter, the number of working days in a quarter, employee
hiring and utilization rates, acceptance and profitability of the Company's
services in new territories, and integration of companies acquired. The timing
of revenues is difficult to forecast because the Company's sales cycle is
relatively long in the case of new clients and may depend on factors such as the
size and scope of assignments and general economic conditions. Because a high
percentage of the Company's expenses are relatively fixed, a variation in the
timing of the initiation or the completion of client assignments, particularly
at or near the end of any quarter, can cause significant variations in operating
results from quarter to quarter and could result in losses. The Company's
engagements generally are terminable without client penalty. An unanticipated
termination of a major project could require the Company to maintain or
terminate under-utilized employees, resulting in a higher than expected number
of unassigned persons or higher severance expenses. While professional staff
must be adjusted to reflect active projects, the Company must maintain a
sufficient number of senior professionals to oversee existing client projects
and participate with the Company's sales force in securing new client
assignments. Because substantially all of the Company's engagements are
performed on a fixed-price basis, the Company also bears the risk of cost
overruns and inflation. In addition, in order to meet client demand, the
Company expects to continue to increase its professional staff and to open
additional sales and operations offices in 1998. Although the Company's plans
to open offices and hire personnel are driven in response to increased demand
for the Company's information technology consulting and software development
services, a portion of these expenses will be incurred in anticipation of
increased demand. Operating results and liquidity may be adversely affected if
market demand and revenues do not increase as anticipated.
Competition. The information technology consulting and software development
- -----------
market comprises a large number of participants, is subject to rapid changes,
and is highly competitive. The market includes participants from a variety of
market segments, including systems consulting and integration firms, contract
programming companies, application software firms, the professional service
groups of computer equipment companies such as Hewlett-Packard Company, IBM, and
Digital Equipment Corporation, facilities management and MIS outsourcing
companies, "Big Four" accounting firms, and general management consulting firms.
The Company's competitors also include companies such as Andersen Consulting,
Technology Solutions Corporation, American Management Systems, Cap Gemini
America, the consulting division of Computer Sciences Corporation, Electronic
Data Systems Corporation, Sapient Corporation, the Renaissance Solutions Group
of The Registry, Inc. and Claremont Technology Group, Inc. The Company also
faces competition from information services organizations within potential
clients. Some participants in the information technology consulting and software
development market have significantly greater financial, technical and marketing
resources and greater name recognition than Cambridge Technology Partners, and
generate greater systems consulting and integration revenues than does Cambridge
Technology Partners. In addition, the
7
<PAGE>
custom software development and systems integration market is highly fragmented
and served by numerous firms, many of which serve only their respective local
markets. The Company believes that its ability to compete depends in part on a
number of competitive factors outside its control, including the ability of its
competitors to hire, retain and motivate senior project managers, the ownership
by competitors of software used by potential clients, the development by others
of software that is competitive with the Company's products and services, the
price at which others offer comparable services, and the extent of its
competitors' responsiveness to customer needs.
International Operations. The Company derived approximately $91.7 million and
- ------------------------
$89.7 million, or 34% and 31% of its total revenues, from customers outside of
the United States and Canada in 1996 and in the nine months ended September 30,
1997, respectively (giving effect to the Acquisition, as if it had been
completed at the beginning of the reported periods). The Company's
international business is subject to a number of risks, including difficulties
in building and managing foreign operations, difficulties in translating its
methodologies into foreign languages, market acceptances of the Company's
services, fluctuations in the value of foreign currencies, and unexpected
regulatory, economic or political changes in foreign markets. There can be no
assurance that these factors will not adversely affect the Company and its
financial results.
Intellectual Property Rights. The Company's success is dependent upon its
- ----------------------------
software development and consulting methodology and other proprietary
intellectual property rights. The Company relies upon a combination of trade
secret, nondisclosure and other contractual arrangements and technical measures,
and copyright and trademark laws to protect its proprietary rights. The Company
presently holds no patents or registered copyrights. The Company generally
enters into confidentiality agreements with its employees, consultants, clients
and potential clients and limits access to, and distribution of, its proprietary
information. There can be no assurance that the steps taken by the Company in
this regard will be adequate to deter misappropriation of its proprietary
information or that the Company will be able to detect unauthorized use and take
appropriate steps to enforce its intellectual property rights. The Company's
business includes the development of custom software in connection with specific
client engagements. Ownership of such software is generally assigned to the
client. The Company also develops object-oriented software components that can
be reused in software application development and certain foundation and
application software projects, or software "tools," most of which remain the
property of the Company. Although the Company believes that its services and
products do not infringe on the intellectual property rights of others, there
can be no assurance that such a claim will not be asserted against the Company
in the future.
USE OF PROCEEDS
The proceeds from the sale of each Selling Stockholder's Shares will belong to
such Selling Stockholder. The Company will not receive any of the proceeds from
such sales of the Shares.
8
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
number of shares of Common Stock of the Company beneficially owned before this
offering by each Selling Stockholder and the maximum number of Shares that each
Selling Stockholder may offer and sell pursuant to this Prospectus. Other than
Parnib Belgie NV, which owns approximately 1.2% of the outstanding shares of the
Company's Common Stock prior to this offering, each of the Selling Stockholders
owns less than 1% of all of the outstanding shares of Common Stock of the
Company prior to this offering. Since the Selling Stockholders may sell all,
some or none of their Shares, no estimate can be made of the aggregate number or
percentage of shares of Common Stock of the Company that each Selling
Stockholder will own upon completion of the offering to which this Prospectus
relates. See "Plan of Distribution."
The Shares offered by this Prospectus may be offered from time to time by
and for the respective accounts of the Selling Stockholders named below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED BEFORE
THIS OFFERING AND OFFERED
SELLING STOCKHOLDERS PURSUANT TO THIS PROSPECTUS
- -------------------- -----------------------------
<S> <C>
Thomas Aldridge 15,321
Quentin Baer(1)(8) 2,430
Fens Limited(2) 273,566
Fanmore Investments Limited(3) 87,173
St. Helier Trust Company Limited(4) 7,476
Eagle Place Trustees Limited 13,266
Michael Bligh 4,920
Jonathan Burton 19,681
Charles Cable 9,840
Emma Carpenter 19,681
Ronald Chan 4,920
Stephen Cheetham 10,355
Ian Clarkson(5)(8) 196,405
Arrow Nominees, Inc.(6) 241,464
Peter Clements(8) 144,059
Dereck Clow 19,681
Kevin Cornwell 4,920
Anthony Court 4,920
Renaud Cuignet 7,660
Jurgen Deiss 14,760
David Delvin 19,681
Alois Deubert 42,259
Charles Donald 2,794
Timothy Durston 9,840
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED BEFORE
THIS OFFERING AND OFFERED
SELLING STOCKHOLDERS PURSUANT TO THIS PROSPECTUS
- -------------------- -----------------------------
<S> <C>
Jermyn Trustees (Jersey) Limited 165,820
Stefan Falckenberg 4,920
Malcom Glyn(8) 49,582
Hans Grapenthin 19,681
Gavin Hall 4,920
Paul Heagren 14,760
David Henderson 9,840
Marc Henrie 482
Rupert Hucker 9,840
Mark Hughes 9,840
Peter Isaac 22,582
Thomas Kollermeier 2,410
Wolfram Kurshener 2,554
Charles Landry 11,045
Daniel Lechanteaux 1,205
Piers Lightfoot 10,958
Neil Loxley 4,920
Steven Marples 15,701
Simon Marshall 19,681
Keith Milburn 8,756
Peter Mounsey 39,844
Ivor Osborne 9,840
Parnib Belgie NV 620,915
Salwinder Puarr 17,712
Richard Raya 11,070
Gustavo Rojas 241
Darnley Assets Limited 9,840
Marie-Claude Rondot 1,275
Gunter Schneider 21,406
Alfred Schuler 6,796
Bernard Shaw(8) 164,930
Jane Smart 10,119
Helen-Laura Smith 39,844
David Smith 73,803
Oliver Staudacher 19,681
Sean Stevens 4,920
Garry Sutton(8) 96,697
Martin Thompson 180
Sean Tipping 88,564
Michael Trenouth(8) 142,213
James Trice(8) 48,892
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED BEFORE
THIS OFFERING AND OFFERED
SELLING STOCKHOLDERS PURSUANT TO THIS PROSPECTUS
- -------------------- -----------------------------
<S> <C>
Mark Turek 4,920
John Van Daalen 75,062
Gerard Van Kemmel(7)(8) 51,413
Nicolaus Von Baillou 10,906
Dominic Wakefield 26,533
Michael Warren 6,204
Alex Watson 19,681
Emile Weekers 44,876
Andrew Wells 1,105
Terence White 4,920
Owen Williams 4,920
Paul Whysall 9,840
---------
TOTAL: 3,255,731
=========
</TABLE>
---------------------
(1) Quentin Baer is an Executive Vice President of the Company. Mr. Baer is also
among the class of beneficiaries that may receive a beneficial interest in
all or some or none of the 273,566, 87,173 and 7,476 Shares held under the
name of Fens Limited, Fanmore Investments Limited and St. Helier Trust
Company, respectively, pursuant to the terms of certain trust arrangements,
as more fully described in footnotes 2, 3 and 4 herein.
(2) Fens Limited is owned by the trustees of the Jersey Baer Trust, a trust of
which Quentin Baer is a beneficiary (the "Jersey Baer Trust").
(3) Fanmore Investments Limited is owned by the trustees of the 1995 Baer Trust
(the "1995 Baer Trust"), a trust of which Quentin Baer, his wife, children
and such other persons as may later be added by the trustees of such trust
are beneficiaries.
(4) St. Helier Trust Company Limited are the trustees of the Quentin Baer
Grandchildren's Settlement, a trust of which Quentin Baer, his wife,
children and such other persons as may later be added by the trustees of
such trust are beneficiaries (the "QB Trust," and together with the Jersey
Baer Trust and the 1995 Baer Trust, the "Baer Trusts").
(5) Ian Clarkson is an Executive Vice President of the Company. Mr. Clarkson is
also among the class of beneficiaries that may receive a beneficial interest
in all or some or none of a portion of the Shares (up to 174,245 Shares)
held under the name of Arrow Nominees, Inc. pursuant to certain trust
arrangements, as more fully described in footnote 6 herein. Mr. Clarkson
disclaims beneficial ownership of such Shares.
(6) Arrow Nominees, Inc. are the nominees for the trustees of The Ian Clarkson
Interest in Possession Settlement, dated May 31, 1988, a trust of which Ian
Clarkson, his wife and children are beneficiaries (the "Clarkson Trust"),
and pursuant to the terms of the Clarkson Trust, Ian Clarkson may be
allocated, as a beneficiary thereof, a beneficial interest in all or some or
none of a portion of the Shares held under the name of Arrow Nominees, Inc.
(up to 174,245 Shares), which allocation among the beneficiaries is in the
sole discretion of the trustees. Mr. Clarkson disclaims beneficial ownership
of such Shares.
(7) Gerard Van Kemmel is a Vice President of the Company.
(8) Such person is an officer of Peter Chadwick.
All of the Selling Stockholders acquired his, her or its Shares in
connection with the Acquisition described under "Recent Developments." None of
the Selling Stockholders has had any material relationship with the Company or
any of its affiliates within the past three years except as described under
"Recent Developments" and this Section.
11
<PAGE>
Each Selling Stockholder represented to the Company that such Selling
Stockholder was acquiring his, her or its Shares without any present intention
of effecting a distribution of those Shares. In recognition of the fact,
however, that the Selling Stockholders may want to be able to sell their Shares
when they consider it appropriate, in connection with the Acquisition, the
Company agreed to file the Registration Statement with the Commission to permit
the public sale of the Shares and to use all reasonable efforts to keep the
Registration Statement effective until the earlier of two years from its
effective date or the sale of all of the Shares pursuant to Rule 144 under the
Securities Act or the Registration Statement. The Company will prepare and file
such amendments and supplements to the Registration Statement as may be
necessary to keep it effective during such period.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Stockholders for their own accounts, subject to any contractual agreements by
the Selling Stockholders with respect to sales and the requirements relating to
sales of Shares under the "pooling-of-interests" accounting method. In
connection with the Acquisition, 325,557 Shares are being held in escrow until
November 24, 1998 to cover any reimbursable claims under the Purchase Agreement
and related Acquisition agreements. The number of shares of Common Stock
beneficially owned and offered pursuant to this Prospectus by each Selling
Stockholder as set forth in the table under "Selling Stockholders" above
includes Shares held in such escrow for the account of such Selling Stockholder.
Shares held in escrow for the account of each Selling Stockholder may not be
sold until released from escrow. To the extent Shares held in escrow are
returned to the Company in satisfaction of reimbursable claims, the number of
Shares offered pursuant to this Prospectus will be reduced by the number of
Shares so returned to the Company. The Company will receive none of the
proceeds from this offering. The Selling Stockholders will pay or assume
brokerage commissions or other charges and expenses incurred in the sale of the
Shares.
The sale of the Shares by the Selling Stockholders is not subject to any
underwriting agreement. The Shares covered by this Prospectus may be sold by the
Selling Stockholders or by pledgees, donees, transferees or other successors in
interest. Without limiting the generality of the preceding sentence, the Shares
held by Fens Limited and Fanmore Investments Limited (the "Offshore Companies")
may at any time without consideration be transferred to the shareholder of the
relevant Offshore Company. The Offshore Companies are owned pursuant to the
terms of the respective Baer Trusts. The respective Baer Trusts may, in the
future, transfer without further consideration the Offshore Companies or Shares
held by the Offshore Companies or St. Helier Trust Limited as appropriate to a
trust (or trusts) with the same or similar beneficiaries, including Quentin Baer
(each such trust hereinafter, a "Transferee"). This Prospectus is expressly
intended to cover and allow any Shares transferred to such Transferee to be sold
by such Transferee pursuant to this Prospectus. The Shares offered by the
Selling Stockholders may be sold from time to time at market prices prevailing
at the time of sale, at prices relating to such prevailing market prices or at
negotiated prices. In addition, the Selling Stockholders may sell their Shares
covered by this Prospectus through customary brokerage channels, either through
broker-dealers acting as agents or brokers, or through broker-dealers acting as
principals, who may then resell the Shares, or at private sale or otherwise, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling Shares to or
12
<PAGE>
through broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions, commissions, or fees from the
Selling Stockholders and/or purchasers of the Shares for whom such broker-
dealers may act as agent or to whom they may sell as principal, or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions). Any broker-dealers that participate with the Selling Stockholders
in the sale of Shares may be deemed to be underwriters and any commissions
received by them and any profit on the resale of Shares placed by them might be
deemed to be underwriting discounts and commissions within the meaning of the
Securities Act, in connection with such sales.
Any Shares covered by this Prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The supplemental consolidated balance sheets as of December 31, 1996 and
1995 and the supplemental consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996 of the Company included in this Prospectus have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated financial statements and schedule of the Company
incorporated by reference in this Prospectus have been so incorporated in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
13
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
(a) Supplemental Consolidated Financial Statements
- --------------------------------------------------
Report of Independent Accountants F-2
Supplemental Consolidated Balance Sheets as of December 31, F-3
1996 and 1995
Supplemental Consolidated Statements of Operations for the F-4
Years Ended December 31, 1996, 1995, and 1994
Supplemental Consolidated Statements of Stockholders' Equity F-5
for the Years Ended December 31, 1996, 1995, and 1994
Supplemental Consolidated Statements of Cash Flows for the F-6
Years Ended December 31, 1996, 1995, and 1994
Notes to Supplemental Consolidated Financial Statements F-7
(b) Supplemental Unaudited Interim Consolidated Financial Statements
- --------------------------------------------------------------------
Supplemental Consolidated Balance Sheets as of September 30, S-1
1997 and December 31, 1996
Supplemental Consolidated Statements of Operations for the S-2
Three and Nine Months Ended September 30, 1997 and 1996
Supplemental Consolidated Statements of Cash Flows for the S-3
Nine Months Ended September 30, 1997 and 1996
Notes to Supplemental Interim Consolidated Financial Statements S-4
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Cambridge Technology Partners (Massachusetts), Inc.:
We have audited the accompanying supplemental consolidated balance sheets of
Cambridge Technology Partners (Massachusetts), Inc. as of December 31, 1996 and
1995, and the related supplemental consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The supplemental consolidated financial statements give retroactive effect to
the merger of Cambridge Technology Partners (Massachusetts), Inc. and Peter
Chadwick Holdings Limited completed on November 24, 1997, which has been
accounted for as a pooling of interests as described in Note A to the
supplemental consolidated financial statements. Generally accepted accounting
principles proscribe giving effect to a consummated business combination
accounted for by the pooling of interests method in financial statements that do
not include the date of consummation. These financial statements do not extend
through the date of consummation; however, they will become the historical
consolidated financial statements of Cambridge Technology Partners
(Massachusetts), Inc. after financial statements covering the date of
consummation of the business combination are issued.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cambridge
Technology Partners (Massachusetts), Inc., as of December 31, 1996 and 1995, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles applicable after financial statements are issued
for a period which includes the date of consummation of the business
combination.
Coopers & Lybrand L.L.P.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 15, 1997
F-2
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
-------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,087 $11,081
Investments held to maturity 12,727 8,544
Accounts receivable, less allowance of $1,670 and $1,152
at December 31, 1996 and 1995, respectively 60,186 38,571
Unbilled revenue on contracts 4,087 2,897
Deferred income taxes 161 -
Prepaid expenses and other current assets 17,831 8,639
-------- -------
Total current assets 121,079 69,732
Property and equipment, net 20,591 13,413
Other assets 3,462 1,716
Goodwill, net 2,512 3,311
-------- -------
Total assets $147,644 $88,172
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,938 $ 7,586
Accrued expenses 24,188 16,581
Deferred revenue 5,453 3,108
Deferred income taxes - 786
Borrowings under revolving credit facility - 325
Income taxes payable 6,173 3,932
Obligations under capital leases, current 74 181
-------- -------
Total current liabilities 48,826 32,499
Obligations under capital leases 162 221
Deferred income taxes 471 89
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, authorized 120,000,000 shares;
issued and outstanding 51,687,220 and 48,851,182
at December 31, 1996 and 1995, respectively 517 489
Additional paid-in capital 49,385 27,680
Retained earnings 48,158 26,934
Foreign currency translation adjustment 125 260
-------- -------
Total stockholders' equity 98,185 55,363
-------- -------
Total liabilities and stockholders' equity $147,644 $88,172
======== =======
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
F-3
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995 1994
--------- --------- -------
<S> <C> <C> <C>
Net revenues $272,878 $179,667 $112,590
Costs and expenses:
Project personnel 124,544 83,273 53,469
General and administration 32,019 22,906 14,314
Sales and marketing 23,127 18,647 13,402
Other costs 52,537 29,223 18,760
Business combination costs 1,195 1,333 -
-------- -------- --------
Total operating expenses 233,422 155,382 99,945
-------- -------- --------
Income from operations 39,456 24,285 12,645
Other income (expense):
Interest income 1,009 817 393
Interest expense (71) (373) (166)
Gain on sale of AdValue - 909 -
Foreign exchange (loss) gain (141) 92 28
-------- -------- --------
Income before income taxes 40,253 25,730 12,900
Provision for income taxes 16,228 10,072 4,791
-------- -------- --------
Net income $ 24,025 $ 15,658 $ 8,109
======== ======== ========
Net income per share $ .42 $ .28 $ .16
======== ======== ========
Pro forma data (unaudited) (Note K):
Historical income before income taxes $ 40,253 $ 25,730 $ 12,900
Provision for income taxes:
Historical income taxes 16,228 10,072 4,791
Pro forma increase to historical income taxes - 215 517
-------- -------- --------
Pro forma net income $ 24,025 $ 15,443 $ 7,592
======== ======== ========
Pro forma net income per share $ .42 $ .28 $ .15
======== ======== ========
Weighted average number of common and
common equivalent shares outstanding 57,893 55,118 51,383
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
F-4
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
<TABLE>
<CAPTION>
Additional
Number of Par Paid-In
Shares Value Capital
--------------- --------- -----------
<S> <C> <C> <C>
Balance, December 31, 1993, as reported 14,768,228 $148 $4,482
Pooling of interests with Peter Chadwick Holdings Limited 3,255,731 33 187
------------- --------- -----------
Balance, December 31, 1993, as stated 18,023,959 181 4,669
Issuance of common stock in
public offering, net of issuance cost 500,000 5 6,895
Issuance of common stock for acquisition of
IOS Group AB, net of issuance cost 425,000 4 4,217
Exercise of stock options 98,110 1 304
Income tax benefit related to stock option exercises - - 537
Repayment of notes receivable from employees for stock
purchased under employee stock purchase plan - - 14
Amortization of unearned compensation associated
with stock options - - -
Amortization of note receivable from officer - - -
Foreign currency translation adjustment - - -
Issuance of Axiom stock under restricted stock plan - - 25
Issuance of Axiom stock under stock agreement - - 297
Issuance of Ramos stock under restricted stock plan - - 1
Issuance of Peter Chadwick stock under stock agreement - - 19
Repurchase of Axiom common stock - - (725)
Dividend distribution (Peter Chadwick)
Dividend distribution (SCG) - - -
Net income - - -
------------- --------- -----------
Balance, December 31, 1994 19,047,069 191 16,253
Exercise of stock options 342,051 4 1,788
Income tax benefit related to stock option exercises - - 3,753
Shares issued under employee stock purchase plan 29,650 - 579
Repurchase of Axiom common stock - - (53)
Repayment of note payable related to
repurchase of Axiom common stock - - (284)
Issuance of Axiom stock under stock agreement - - 66
Issuance of Ramos stock under restricted stock plan - - 17
Effect of Peter Chadwick recapitalization, net - - 3,728
Exercise of Peter Chadwick stock options 12
Foreign currency translation adjustment - - -
Payment on note receivable from employees for stock
purchased under employee stock purchase plan - - 36
Amortization of unearned compensation associated
with stock options - - -
Amortization of note receivable from officer - - -
SCG conversion to C Corporation - - 2,079
Dividend distribution (Peter Chadwick) - - -
Dividend distribution (SCG) - - -
Net income - - -
------------- --------- -----------
Balance, December 31, 1995 19,418,770 195 27,974
Exercise of stock options 1,776,193 18 8,297
Income tax benefit related to stock option exercises - - 10,555
Shares issued under employee stock purchase plan 124,123 1 2,070
Issuance of Ramos stock under restricted stock plan - - 5
Shares to effect stock split 30,368,134 303 (303)
Foreign currency translation adjustment - - -
Accretion of Peter Chadwick preferred stock - - 787
Dividend distribution (Peter Chadwick) - - -
Dividend distribution (NatSoft) - - -
Net income - - -
-------------- -------- -----------
Balance, December 31, 1996 51,687,220 $517 $49,385
============== ======== ===========
<CAPTION>
Foreign
Receivable Currency
Unearned from Translation Retained
Compensation Officer Adjustment Earnings
------------ ----------- ------------ ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1993, as reported $ (66) $ (62) $ (32) $ 8,373
Pooling of interests with Peter Chadwick Holdings Limited - - (140) 2,264
------------ --------- --------- ---------
Balance, December 31, 1993, as stated (66) (62) (172) 10,637
Issuance of common stock in
public offering, net of issuance cost - - -
Issuance of common stock for acquisition of
IOS Group AB, net of issuance cost - - - -
Exercise of stock options - - - -
Income tax benefit related to stock option exercises - - - -
Repayment of notes receivable from employees for stock
purchased under employee stock purchase plan - - - -
Amortization of unearned compensation associated
with stock options 57 - - -
Amortization of note receivable from officer - 54 - -
Foreign currency translation adjustment - - (15) -
Issuance of Axiom stock under restricted stock plan - - - -
Issuance of Axiom stock under stock agreement - - - -
Issuance of Ramos stock under restricted stock plan - - - -
Issuance of Peter Chadwick stock under stock agreement - - - -
Repurchase of Axiom common stock - - - -
Dividend distribution (Peter Chadwick) (205)
Dividend distribution (SCG) - - - (80)
Net income - - - 8,109
------------ ---------- ---------- ----------
Balance, December 31, 1994 (9) (8) (187) 18,461
Exercise of stock options - - - -
Income tax benefit related to stock option exercises - - - -
Shares issued under employee stock purchase plan - - - -
Repurchase of Axiom common stock - - - -
Repayment of note payable related to
repurchase of Axiom common stock - - - -
Issuance of Axiom stock under stock agreement - - - -
Issuance of Ramos stock under restricted stock plan - - - -
Effect of Peter Chadwick recapitalization, net - - - (3,763)
Exercise of Peter Chadwick stock options -
Foreign currency translation adjustment - - 447 -
Payment on note receivable from employees for stock
purchased under employee stock purchase plan - - - -
Amortization of unearned compensation associated
with stock options 9 - - -
Amortization of note receivable from officer - 8 - -
SCG conversion to C Corporation - - - (2,079)
Dividend distribution (Peter Chadwick) - - - (744)
Dividend distribution (SCG) - - - (599)
Net income - - - 15,658
------------ --------- ----------- ----------
Balance, December 31, 1995 - - 260 26,934
Exercise of stock options - - - -
Income tax benefit related to stock option exercises - - - -
Shares issued under employee stock purchase plan - - - -
Issuance of Ramos stock under restricted stock plan - - - -
Shares to effect stock split - - - -
Foreign currency translation adjustment - - (135) -
Accretion of Peter Chadwick preferred stock - - - (787)
Dividend distribution (Peter Chadwick) - - - (1,999)
Dividend distribution (NatSoft) - - - (15)
Net income - - - 24,025
------------ --------- ----------- ----------
Balance, December 31, 1996 $ - $ - $ 125 $ 48,158
============ ========= ========== ==========
The accompanying notes are an integral part of the supplemental consolidated financial statements.
</TABLE>
F-5
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 24,025 $ 15,658 $ 8,109
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,582 4,310 2,517
Tax benefit from exercise of stock options 10,555 3,753 537
Provision for deferred income taxes (566) 425 134
Gain on sale of AdValue - (909) -
Changes in assets and liabilities:
Increase in accounts receivable (21,508) (14,315) (7,215)
Increase in unbilled revenue on contracts (1,203) (595) (2,021)
Increase in prepaid expenses and other current assets (9,385) (5,472) (1,875)
Increase in other assets (1,826) (240) (224)
Increase in accounts payable 5,366 3,329 1,371
Increase in accrued expenses 7,807 4,622 4,325
Increase in deferred revenue 2,371 807 1,747
Increase (decrease) in income taxes payable 2,199 2,283 (907)
Other, net 124 (309) 724
-------- -------- --------
Net cash provided by operating activities 24,541 13,347 7,222
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (12,880) (9,213) (4,770)
Purchase of investments held to maturity (18,467) (22,140) (23,136)
Maturity of investments held to maturity 14,284 24,075 13,376
Proceeds from sale of AdValue - 909 -
Cash used in acquisition of business, net of cash acquired - - (251)
-------- -------- --------
Net cash used in investing activities (17,063) (6,369) (14,781)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) under credit arrangements, net (325) (1,256) 181
Issuance of common stock, net of issuance costs 5 17 6,920
Issuance of Peter Chadwick stock under recapitalization - 4,350 -
Acquisition of stock from Peter Chadwick recapitalization - (4,350) -
Proceeds from long-term debt - - 183
Repayment of long-term debt and capital leases (183) (1,160) (137)
Dividend distributions (2,014) (1,343) (285)
Proceeds from employee stock purchase plan 2,071 579 -
Proceeds from exercise of stock options 8,315 1,804 305
Other, net - (235) (50)
-------- -------- --------
Net cash provided by (used in) financing activities 7,869 (1,594) 7,117
-------- -------- --------
Effect of foreign exchange rate changes on cash (341) 21 23
Net increase in cash and cash equivalents 15,006 5,405 (419)
Cash and cash equivalents at beginning of period 11,081 5,676 6,095
-------- -------- --------
Cash and cash equivalents at end of period $ 26,087 $ 11,081 $ 5,676
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
F-6
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
BASIS OF REPORTING
The accompanying supplemental consolidated financial statements of Cambridge
Technology Partners (Massachusetts), Inc. (the "Company") have been prepared to
give retroactive effect to the acquisition of Peter Chadwick Holdings Limited
("Peter Chadwick"), a management consulting firm specializing in the
implementation of operational strategies and performance improvement programs.
Generally accepted accounting principles proscribe giving effect to consummated
business combinations accounted for by the pooling of interests method in
financial statements that do not include the date of consummation. The
supplemental consolidated financial statements presented herein do not extend
through the date of consummation, however, they will become the historical
consolidated financial statements of the Company after financial statements
covering the date of consummation of the business combination are issued.
The accompanying supplemental consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All intercompany
accounts and balances have been eliminated in consolidation. Certain prior
period amounts have also been reclassified to conform with current period
presentation.
STOCK SPLIT
In June 1996, the Company completed a three-for-one stock split in the form of a
200% stock dividend to stockholders of record on May 29, 1996. Accordingly,
stockholders' equity in the supplemental consolidated balance sheets has been
restated to give retroactive effect to the stock split for all periods presented
by reclassifying from paid-in-capital to common stock the par value of the
additional shares arising from the stock split. All references in the
accompanying Notes to Supplemental Consolidated Financial Statements to
applicable share and per share data, stock option data, and market prices per
share of the Company's common stock, for all periods presented, have been
retroactively restated to reflect the stock split (see Note H).
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid investments with
maturities of three months or less from the date of purchase and whose carrying
amount approximates market value due to the short maturity of the investments.
During 1996, in accordance with the terms of a client contract, the Company
received a prepayment for services being performed in the amount of $900,000,
which is included in cash and cash equivalents at December 31, 1996. The use of
this cash is restricted pending completion of the project, which is expected in
the fourth quarter of 1997.
F-7
<PAGE>
INVESTMENTS
The Company accounts for its investments under the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company's investments are classified as
investments held to maturity and mature within one year from the date of
purchase. At December 31, 1996 and 1995, the Company held investment grade
municipal bonds of $12.7 million and $8.5 million, respectively, which are
carried at amortized cost which approximates market value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Repairs and maintenance costs are
charged to operations when incurred, while betterments are capitalized.
Depreciation is computed using the straight-line method based on the estimated
useful lives of the various assets which range from four to fifteen years. Upon
retirement or disposal, the cost of the asset disposed of and the related
accumulated depreciation are removed from the accounts and any gain or loss is
reflected in income.
INTANGIBLE ASSETS
Goodwill, related to the acquisition of IOS Group AB (see Note B) in February
1994, is being amortized over six years on a straight-line basis. The Company
recorded amortization expense of $798,000 for each of the years ended December
31, 1996 and 1995, and $682,000 for the year ended December 31, 1994. As of
December 31, 1996 and 1995, accumulated amortization was $2.3 million and $1.5
million, respectively. The carrying value of goodwill is subject to periodic
review of realizability.
REVENUE RECOGNITION
The Company derives substantially all of its revenues from information
technology and management consulting, software development and implementation,
and package software evaluation and implementation services. The Company
operates in one industry segment, the development and implementation of
information technology solutions. Revenues derived from any maintenance and
support services are immaterial to the supplemental consolidated financial
statements of the Company. Revenues from software development and implementation
contracts are recognized primarily on the percentage of completion method. The
cumulative impact of any revision in estimates of the percent complete is
reflected in the period in which the changes become known. Losses on projects in
progress are recognized when known. Revenues from management consulting and
package software evaluation and implementation services are recognized as the
service is provided, principally on a time and materials basis. Net revenues
exclude reimbursable expenses charged to clients.
Deferred revenue consists of amounts received or billed in advance of services
to be provided. Unbilled revenue represents amounts recognized based on
services performed in excess of billings in accordance with terms of client
contracts.
F-8
<PAGE>
TRANSLATION OF FOREIGN CURRENCIES AND FOREIGN EXCHANGE TRANSACTIONS
For non-U.S. operations, the functional currency is the applicable local
currency. The translation of the functional currencies into U.S. dollars is
performed for balance sheet accounts using current exchange rates in effect at
the balance sheet date and for revenue and expense accounts using average rates
of exchange prevailing during the reporting period. Adjustments resulting from
the translation of foreign currency financial statements are accumulated in a
separate component of stockholders' equity until the entity is sold or
substantially liquidated. Gains or losses resulting from foreign currency
transactions are included in the results of operations.
FOREIGN EXCHANGE CONTRACTS
The Company maintains foreign exchange contracts to mitigate the risk of changes
in foreign exchange rates associated with intercompany balances. The contracts
relate primarily to European currencies and generally have maturities of one
month. The impact of exchange rate movements on contracts are recorded in other
income in the period in which the exchange rates change, generally consistent
with the term of the contract. As of December, 31, 1996, the Company held
foreign exchange forward contracts of approximately $7.9 million and there were
no related deferred gains and losses. The Company does not hold foreign
exchange contracts for trading purposes.
CONCENTRATION OF CREDIT RISK
The Company provides its services primarily to Fortune 1000 companies. The
Company performs ongoing credit evaluations of its major customers and maintains
reserves for potential credit losses. Such losses have been immaterial and are
within management's expectation. No single customer accounted for 5% or more of
total net revenues for the years ended 1996, 1995, and 1994.
The Company is exposed to credit-related losses in the event of nonperformance
by counterparties to hedging instruments. The counterparties to these contracts
are major financial institutions. The Corporation continually monitors its
positions and credit ratings of its counterparties and limits the amount of
contracts it enters into with any one party.
RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to provide estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and would impact future results
of operations and cash flows.
B. ACQUISITIONS
------------
On November 24, 1997, the Company acquired all the outstanding capital stock of
Peter Chadwick. This acquisition was accomplished through an exchange of
3,255,731 shares of the Company's common stock for all outstanding shares of
capital stock and options to purchase
F-9
<PAGE>
ordinary shares of Peter Chadwick. This acquisition has been accounted for using
the pooling of interests method of accounting. Founded in 1987 and based in the
United Kingdom, Peter Chadwick specializes in the implementation of operational
strategies and performance improvement programs. Peter Chadwick currently has
offices in the U.K, Germany, Holland, France and the U.S. and had approximately
325 employees at the time of the acquisition. Costs, which consist primarily of
investment banking fees, accounting fees, legal fees and business integration
costs, related to this acquisition approximated $4.5 million and are not
included in the accompanying supplemental consolidated results of operations as
they will be charged to operating expenses in the fourth quarter of 1997.
On November 18, 1996, the Company acquired all the outstanding capital stock of
Ramos & Associates, Inc. ("Ramos"). This acquisition was accomplished through a
merger of the Company's acquisition subsidiary and Ramos in an exchange of
1,175,119 shares of the Company's common stock for all outstanding shares of
capital stock of Ramos. Ramos, founded in 1991 and based in San Ramon,
California, specializes in the Enterprise Resource Planning service market.
With offices in San Ramon, Dallas, Islin, New Jersey, and Chicago, Ramos had
approximately 215 employees at the time of the acquisition. This acquisition
has been accounted for using the pooling of interests method of accounting.
Ramos was renamed Cambridge Technology Partners - Enterprise Resource Solutions,
Inc. in March 1997.
On October 15, 1996, the Company acquired all the outstanding capital stock of
NatSoft S.A. ("NatSoft"), a Swiss-based information technology consulting and
software implementation firm. This acquisition was accomplished through an
exchange of 271,714 shares of the Company's common stock for all outstanding
shares of capital stock of NatSoft. With approximately 105 employees at the
time of acquisition, NatSoft established the Company's entry into the Swiss
market and provides the Company with a pool of multi-lingual professionals who
can support projects in Southern Europe. This acquisition has been accounted
for using the pooling of interests method of accounting. The Company's services
in Southern Europe are operated through NatSoft and in, March 1997, NatSoft was
renamed Cambridge Switzerland, S.A.
On October 17, 1995, the Company acquired Axiom Management Consulting, Inc.
("Axiom"). This acquisition was accomplished through an exchange of 1,007,898
shares (consisting of 978,360 shares of the Company's common stock and options
to purchase 29,538 shares of the Company's common stock) of the Company's common
stock for all of the outstanding shares of capital stock of Axiom and the
assumption of all outstanding options to acquire shares of capital stock of
Axiom. This transaction has been accounted for using the pooling of interests
method of accounting. Axiom currently operates under the name Cambridge
Management Consulting.
On August 14, 1995, the Company acquired The Systems Consulting Group, Inc.
("SCG"). The acquisition was accomplished through an exchange of 2,273,994
shares (consisting of 2,168,292 shares of the Company's common stock and an
option to purchase 105,702 shares of the Company's common stock) of the
Company's common stock for all of the outstanding capital stock of SCG and the
assumption of all outstanding options to acquire shares of capital stock of SCG.
This transaction has been accounted for using the pooling of interests method of
accounting. In 1996, the Company integrated SCG into its operational structure
and service offerings.
The accompanying supplemental consolidated financial statements of the Company
have been prepared to give retroactive effect to the acquisitions of Peter
Chadwick, Ramos, NatSoft,
F-10
<PAGE>
Axiom, and SCG in accordance with the pooling of interests requirements. All
prior period historical supplemental consolidated financial statements presented
herein have been restated to include the financial position, results of
operations, and cash flows of these acquisitions. Costs related to these
acquisitions (other than Peter Chadwick) have been charged to business
combination costs in the supplemental consolidated statements of operations.
The following information presents certain statement of operations data of the
Company, SCG, Axiom, NatSoft, Ramos and Peter Chadwick for the periods prior to
the acquisitions. SCG and Axiom information is presented through September 30,
1995, which represents the interim period end nearest to the date of the
acquisitions. NatSoft and Ramos information are presented through September 30,
1996, which represents the interim period end nearest to the date of these
acquisitions. In addition, Peter Chadwick information is presented through
December 31, 1996.
F-11
<PAGE>
<TABLE>
<CAPTION>
Cambridge
Technology Combined
Partners SCG Axiom NatSoft Ramos PCH Total
---------- ------- -------- ------- ------- ----------------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues for the:
Year ended
December 31, 1994 $ 59,679 $10,315 $13,483 $ 7,825 $ 2,985 $18,303 $112,590
Nine months ended
September 30, 1995 $ 70,052 $13,484 $10,723 $ 9,211 $ 7,651 $16,531 $127,652
Year ended
December 31, 1995 $132,416 $12,254 $11,596 $23,401 $179,667
Nine months ended
September 30, 1996 $141,862 $ 8,046 $17,497 $26,384 $193,789
Year ended
December 31, 1996 $236,554 $36,324 $272,878
Net income (loss) for the:
Year ended
December 31, 1994 $ 6,611 $ 1,261 $ (315) $ 336 $ 29 $ 187 $ 8,109
Nine months ended
September 30, 1995 $ 7,632 $ 1,381 $ 57 $ 141 $ 203 $ 1,408 $ 10,822
Year ended
December 31, 1995 $ 12,683 $ 205 $ 460 $ 2,310 $ 15,658
Nine months ended
September 30, 1996 $ 14,042 $ 163 $ 853 $ 2,049 $ 17,107
Year ended
December 31, 1996 $ 21,100 $ 2,925 $ 24,025
</TABLE>
In February 1994, the Company acquired all of the outstanding capital stock of
IOS Group AB (now CTP Scandinavia) for 1,275,000 shares of the Company's common
stock, valued on the date of acquisition at $4.2 million and $1,000 in cash.
CTP Scandinavia is a Swedish-based corporation which provides open systems
information technology and software development services in an enterprise-wide,
client/server environment.
The 1,275,000 shares of common stock issued were restricted, as to sale or
transfer, for eighteen months from the date of acquisition. The acquisition has
been accounted for as a purchase and, accordingly, the results of CTP
Scandinavia have been included in the Company's supplemental consolidated
statements of operations from the date of acquisition.
The Company has allocated the purchase price of $4.6 million, which includes
associated costs of $370,000, to the underlying assets and liabilities of CTP
Scandinavia based upon their respective fair values at the time of the
acquisition. The excess (approximately $4.8 million) of the purchase price over
the fair value of net assets acquired is being amortized on a straight-line
basis over six years.
F-12
<PAGE>
C. ACCOUNTS RECEIVABLE
-------------------
Accounts receivable consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------
1996 1995
------- -------
<S> <C> <C>
Contracts in process $48,534 $31,098
Completed contracts 13,322 8,625
------- -------
61,856 39,723
Less: Allowance for doubtful accounts 1,670 1,152
------- -------
$60,186 $38,571
======= =======
</TABLE>
In accordance with state government practices, a governmental client withholds a
percentage of invoiced receivables as retention until final review of completed
projects. At December 31, 1996 and 1995, this retention receivable totaled $1.8
million and $1.4 million, respectively, and was included in other assets. The
Company expects payments to be received in 1998. The Company does not include
client reimbursable expenses or other non-trade receivables as a component of
net revenues. Accordingly, at December 31, 1996 and 1995 the Company
reclassified approximately $5.9 million and $4.4 million of client reimbursable
expenses and other non-trade receivables from accounts receivable to prepaid
expenses and other current assets.
D. INVESTMENT IN AFFILIATES
------------------------
The Company had a 6.3% investment interest in AdValue Media Technologies, Inc.
("AdValue") (formerly AdValue Network ("AVN"), a partnership which was formed in
1991 to develop, test, and market a centralized spot advertising computer
software package). AdValue was incorporated in December 1993 to serve as the
successor entity to AVN. The investment was accounted for using the equity
method. On May 19, 1995, the Company sold its interest in AdValue for $909,000
in cash. The investment balance in AdValue at the time of the sale was zero,
and accordingly, the Company recognized a gain of $909,000 for the period ended
December 31, 1995.
E. PROPERTY AND EQUIPMENT
----------------------
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------
1996 1995
------- -------
<S> <C> <C>
Equipment $23,059 $13,931
Furniture and fixtures 5,892 4,390
Leasehold improvements 3,676 1,724
Motor vehicles 1,238 1,181
------- -------
Total cost 33,865 21,226
Less accumulated depreciation 13,274 7,813
------- -------
$20,591 $13,413
======= =======
</TABLE>
Depreciation expense for 1996, 1995, and 1994 was $5.6 million, $3.5 million,
and $1.7 million, respectively.
F-13
<PAGE>
Equipment under capital leases, included in property and equipment, amounted to
$756,000 and $763,000 at December 31, 1996 and 1995, respectively, and the
related accumulated depreciation was $440,000 and $310,000 at December 31, 1996
and 1995, respectively.
F. ACCRUED EXPENSES
----------------
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------
1996 1995
------- -------
<S> <C> <C>
Accrued payroll and payroll related expenses $10,642 $ 8,849
Other accrued expenses 8,520 4,187
Accrued value added tax 4,571 3,033
Deferred rent 455 512
------- -------
$24,188 $16,581
======= =======
</TABLE>
G. REVOLVING CREDIT FACILITY
-------------------------
The Company maintains an uncollateralized revolving credit facility (the
"Facility") with Fleet National Bank ("Fleet Bank"), which was amended on June
26, 1996, among other things, to increase the amount available under the
Facility from $10.0 million to $20.0 million, to extend the expiration date to
June 30, 1998, from June 30, 1996, and to decrease the facility cost to .15%
from .25%. The Facility was also amended to permit the Company to elect an
interest rate of either Fleet Bank's prime rate in effect from time to time or a
eurodollar rate, as defined, payable monthly in arrears commencing with the
advance of funds. The Facility requires, among other things, the Company to
maintain certain financial ratios including tangible net worth, debt to equity,
and operating profitability. At December 31, 1996 and December 31, 1995, the
Company was in compliance with these financial ratio requirements and no
borrowings have been made under the Facility.
SCG maintained a $1.0 million revolving credit facility with Barnett Bank of
South Florida, N.A. ("Barnett Bank"). This revolving credit facility bore
interest at a rate per annum equal to Barnett Bank's prime rate in effect from
time to time plus 1.50%, payable monthly. On June 13, 1995, the term under this
revolving credit facility was extended to June 30, 1996, with maximum allowable
borrowings increased to $2.5 million. In September 1995, the Company terminated
this revolving credit facility and repaid the outstanding amount of $1.0
million.
Axiom maintained a $1.25 million revolving credit facility with Wells Fargo
Bank, N.A. This revolving credit facility bore interest at a rate per annum
equal to the prime rate in effect from time to time plus .25%, payable monthly.
In December 1995, the Company repaid the outstanding amount of $501,000 and
terminated this revolving credit facility.
Ramos maintained a $600,000 revolving credit facility with Westamerica Bank.
This credit facility bore interest at a rate per annum equal to Westamerica
Bank's index rate plus 2.25% (10.75% at December 31, 1995), payable monthly.
The credit facility was collateralized by Ramos' accounts receivable and
personally guaranteed by two Ramos executives. The credit facility subjected
Ramos to certain restrictions and covenants related to, among other things,
tangible net worth and working capital. At December 31, 1995, amounts
outstanding under this
F-14
<PAGE>
credit facility were $325,000. In December 1996, the Company repaid all
outstanding amounts and terminated this revolving credit facility.
H. STOCKHOLDERS' EQUITY AND OTHER STOCK RELATED INFORMATION
--------------------------------------------------------
STOCK SPLIT
In March 1996, the Board of Directors approved a three-for-one stock split of
the Company's common stock and an amendment to the Company's corporate charter
to increase authorized common stock from 30 million to 120 million shares.
Following stockholder approval in May 1996, the stock split was completed on
June 19, 1996, in the form of a 200% stock dividend to stockholders of record on
May 29, 1996. Accordingly, stockholders' equity in the supplemental
consolidated balance sheets has been restated to give retroactive recognition to
the stock split for all periods presented by reclassifying from paid-in-capital
to common stock the par value of the additional shares arising from the stock
split. All references in the accompanying Notes to Supplemental Consolidated
Financial Statements to applicable share and per share data, stock option data,
and market prices per share of the Company's common stock, for all periods
presented, have been retroactively restated to reflect the stock split.
COMMON STOCK OFFERING
On April 6, 1994, the Company and certain stockholders of the Company completed
a public offering of common stock involving the sale of 1,500,000 shares of the
Company's common stock issued by the Company and six million shares of the
Company's common stock held by the existing stockholders. The net proceeds to
the Company from the sale of the 1,500,000 shares of common stock sold by the
Company was $6.9 million. The Company invested the proceeds from the offering
primarily in investment grade municipal bonds and these funds were used for
general corporate purposes, including working capital to support the planned
expansion of its operations and to fund capital expenditures and future
acquisitions.
STOCK OPTION PLANS
Under the Company's amended 1991 Stock Option Plan (the "Option Plan"), the
Company may grant incentive stock options to employees and nonqualified stock
options to employees, directors, officers, and other key individuals. The
Management Resource Committee of the Board of Directors administers the Option
Plan, subject to approval by the Board of Directors with respect to certain
matters. Options granted prior to 1997 generally vest ratably over a four year
period and expire ten years from the date of grant.
In November 1997, the Board of Directors adopted the 1997 Stock Option Plan (the
"1997 Option Plan") under which the Company may elect to grant nonqualified
stock options to purchase up to 450,000 shares of common stock to employees and
consultants of the Company. Options granted in 1997 under the Option Plan and
the 1997 Option Plan generally vest over a four year period and expire five
years from the date of vesting.
F-15
<PAGE>
Stock option activity, both incentive and nonqualified, under the Option Plan is
presented as follows:
<TABLE>
<CAPTION>
Weighted Average
Option Option Exercise Price
Shares Price Per Share
---------- ------------- ----------------
<S> <C> <C> <C>
Outstanding at December 31, 1993 5,788,848 $ .03-$ 5.92 $ 1.93
Granted 3,301,713 $4.92-$ 6.31 $ 5.94
Exercised 294,330 $ .33-$ 5.17 $ 1.04
Canceled 247,251 $ .33-$ 5.50 $ 3.93
---------- ------------- ------
Outstanding at December 31, 1994 8,548,980 $ .03-$ 6.31 $ 3.45
Granted 3,860,175 $10.00-$17.25 $14.64
Exercised 1,025,820 $ .33-$ 6.31 $ 1.75
Canceled 283,215 $ .33-$17.25 $ 5.98
---------- ------------- ------
Outstanding at December 31, 1995 11,100,120 $ .03-$17.25 $ 7.48
Granted 2,922,675 $15.67-$35.25 $25.71
Exercised 2,603,934 $ .03-$17.25 $ 3.18
Canceled 901,850 $ .33-$34.00 $10.97
---------- ------------- ------
Outstanding at December 31, 1996 10,517,011 $ .33-$35.25 $13.27
========== ============= ======
</TABLE>
At December 31, 1996, 1995, and 1994, 4,014,783, 4,288,638, and 3,116,247
options were exercisable, respectively, under the Option Plan. In December 1994
and 1995, the Company's Board of Directors amended the Option Plan, with
subsequent stockholder approval, to increase the number of shares of common
stock authorized for issuance under the Option Plan from nine million to twelve
million shares in 1994 and twelve million to fifteen million in 1995. In
December 1996, the Company's Board of Directors further amended the Option Plan,
with subsequent stockholder approval, to increase the number of shares of common
stock authorized for issuance under the Option Plan from fifteen million to
nineteen million shares.
F-16
<PAGE>
The following table summarizes information about stock options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ---------------------------------------------------- ----------------------
Weighted-
Average Weighted- Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Price at 12/31/96 Life Price at 12/31/96 Price
- --------------- ----------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$ .33 520,023 5 Years $ .33 520,023 $ .33
$ .67 to $ 1.34 813,881 6 Years $ 1.00 813,881 $ 1.00
$ 1.67 to $ 5.71 1,152,762 7 Years $ 4.44 833,052 $ 4.36
$ 5.59 to $ 6.32 1,960,985 8 Years $ 6.04 960,277 $ 6.00
$10.00 to $17.30 3,180,847 9 Years $14.81 887,550 $14.30
$15.67 to $28.13 2,888,513 10 Years $25.80 - -
---------- ----------
$ .33 to $28.13 10,517,011 4,014,783
========== ==========
</TABLE>
During 1991, the Company granted, under the Option Plan, 750,000 nonqualified
stock options to a key employee at an exercise price of $.03 per share, which
vested over a four year period. Upon grant, unearned compensation equivalent to
the market value of these options at the date of grant was charged to
stockholders' equity and subsequently amortized over the vesting period.
Amortization expense of $9,000 and $57,000 was recorded for the years ended
December 31, 1995 and 1994, respectively. At December 31, 1996, there were no
options outstanding or exercisable under this grant.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations in accounting for its
option plans. Accordingly, no compensation expense has been recognized. Had
compensation expense for the Company's stock option plans and employee stock
purchase plan been determined based on the fair value at the grant date for
awards under these plans consistent with the methodology proscribed under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", the Company's net income and net income per share would have been
reduced by $5.3 million, or $.10 per share in 1996 and $1.1 million, or $.03 per
share in 1995. The fair value of the options granted under the stock option
plans and the shares issued under the employee stock purchase plan in 1996 and
1995 calculated using the Black-Scholes pricing model ranged from $4.90 to
$16.90 and $2.90 and $6.00 per share, respectively. The following assumptions
were used in the Black-Scholes pricing model: risk-free interest rate ranging
from 5.49% to 6.9%, estimated volatility of 45%, assumed forfeiture rate of 16%,
and an expected life ranging from 5 years for stock options and 6 months for
shares purchased under the employee stock purchase plan.
In November 1995, Peter Chadwick established an employee stock option plan as
incentive to all employees. As of December 31, 1996, Peter Chadwick had options
to purchase 69,000 shares outstanding and none were exercisable. As part of the
acquisition of Peter Chadwick, these options were exchanged for common stock of
the Company (see Note B).
F-17
<PAGE>
In connection with the Company's acquisition of SCG, the Company assumed all
outstanding options to purchase shares of capital stock of SCG and such options
were converted into options to purchase 105,702 shares of the Company's common
stock at an exercise price of $.02 per share. As of December 31, 1996, options
to purchase 52,802 shares of the Company's common stock were outstanding and
exercisable.
In connection with the Company's acquisition of Axiom, the Company assumed all
outstanding options to purchase shares of capital stock of Axiom and converted
them into options to purchase 29,538 shares of the Company's common stock, as of
October 17, 1995, at an exercise price of $.16 per share. As of December 31,
1996 and 1995, options to purchase 22,503 and 24,684 shares of the Company's
common stock were exercisable, respectively.
During 1995, the Company established the 1995 Non-employee Director Stock Option
Plan ("Non-employee Director Option Plan"). The Non-employee Director Option
Plan authorizes the grant of options for up to 150,000 shares of the Company's
common stock. Each member of the Company's Board of Directors who is neither
(I) an employee nor an officer of the Company or Safeguard Scientific, Inc.
("Safeguard"), nor (II) an affiliate of Technology Leaders II L.P. or any
related entity serving on the Board of Directors on March 21, 1995, was granted
an option to purchase 30,000 shares of the Company's common stock. Each person
who is neither (I) an employee nor an officer of the Company or Safeguard nor
(II) an affiliate of Technology Leaders II L.P. or any related entity who is
first elected to the Board of Director after March 21, 1995, shall be
automatically granted, on the date of such election without further action by
the Board of Directors, an option to purchase 30,000 shares of the Company's
common stock. The options were granted with an exercise price equal to the fair
value on the date of grant, ranging from $10.00 to $17.25. Options generally
vest ratably over a four year period and expire ten years from the date of
grant. Options to purchase 120,000 shares of common stock were granted in 1995.
At December 31, 1996, 120,000 options were outstanding and 43,122 shares were
exercisable. Weighted average exercise price for the exercisable shares was
$12.55. At December 31, 1996, the options outstanding had an average remaining
contractual life of 9 years and an average weighted exercise price of $13.29.
EMPLOYEE STOCK PURCHASE PLAN
On December 14, 1994, the Board of Directors adopted the Company's 1994 Employee
Stock Purchase Plan (the "Stock Purchase Plan"), which was subsequently approved
by stockholders at the annual meeting of stockholders in May 1995. The Company
has authorized 1,500,000 shares of the Company's common stock for purchases
under the Stock Purchase Plan. The Stock Purchase Plan permits eligible
employees to purchase up to 1,500 shares of common stock per payment period,
subject to limitations provided by Section 423(b) of the Internal Revenue Code,
through accumulated payroll deductions. The purchases are made twice per year
at a price equal to the lesser of (i) 85% of the average market price of the
Company' common stock on the first business day of the payment period and (ii)
85% of the average market price of the Company's common stock on the last day of
the payment period. Annual payment periods consists of two six-month periods,
January 15 through July 14 and July 15 through January 14.
FINANCIAL ACCOUNTING STANDARD NO. 128, EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"), which is effective
F-18
<PAGE>
for fiscal years ending after December 15, 1997, including interim periods.
SFAS 128 establishes standards for computing and presenting earnings per share
(EPS) and requires a dual presentation of basic and dilutive EPS. The Company
estimates that basic EPS would have been $.48, $.32 and $.17 for the three years
ended December 31, 1996, respectively. Dilutive EPS would not have been
materially different from primary EPS presented in the accompanying supplemental
consolidated financial statements.
PREFERRED STOCK
The certificate of incorporation was amended and restated, in December 1992, to
increase the number of authorized shares of capital stock to include two million
shares of preferred stock, par value $.01 per share, in one or more series.
The Board of Directors is authorized, subject to certain limitations prescribed
by law to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series.
The Company has not issued and, except pursuant to the preferred stock purchase
rights described in Note O, has no present plans to issue any shares of
preferred stock.
WARRANTS
In December 1992, the Company issued warrants to Safeguard for the purchase of
900,000 shares of common stock at a price of $2.00 per share. The warrants are
exercisable for a five year period from the date of issuance. As of December 31,
1996, no warrants were exercised. The warrants were issued in consideration of
Safeguard's commitment to guarantee a credit facility and a term note totaling
$3.5 million for the Company. Under the Company's Facility, Safeguard's
guarantee was subsequently released.
DIVIDENDS
Dividend distributions made by Peter Chadwick were made in accordance with the
shareholder agreements in effect prior to the acquisition, and amounted to $1.9
million, $599,000 and $205,000 for the years ended December 31, 1996, 1995 and
1994.
The Facility with Fleet Bank prohibits the Company from paying any dividends or
making any distributions either in cash or in kind on any class of its capital
stock without Fleet Bank's prior consent. The Company currently intends to
retain future earnings for use in its business and, therefore, does not expect
to pay dividends in the foreseeable future.
Dividend distributions made by SCG, prior to the acquisition, were principally
for reimbursement of income tax liabilities of its former stockholders due to
SCG's S-Corporation tax status.
RECAPITALIZATION
In November of 1995, Peter Chadwick effected a recapitalization which included
the exchange of 14,000,000 outstanding ordinary shares for 10,061,615 of Class B
Preference Shares, 1,044,837 ordinary shares and $4,350,000 in cash. In
addition, Peter Chadwick issued 256,250 Preferred Shares and 2,543,750 Class A
Preference Shares to a new investor for total consideration of $4,350,000.
F-19
<PAGE>
The effect of the recapitalization on the statement of stockholders' equity
includes a reclassification of $3,763,000 from retained earnings to additional
paid-in capital, primarily related to an increase in the par value amounts for
the shares issued to effect the recapitalization. In addition, the issuance of
the Preferred Shares and Class A Preference Shares and corresponding purchase of
ordinary shares have been reflected as a net activity due to the offsetting
effect on additional paid-in capital.
The classes of preferred shares had various redemption and conversion
privileges, and rights to cumulative dividends. All classes of ordinary and
preferred shares were exchanged for common stock of the Company in connection
with the combination (see Note B).
EMPLOYEE TRUST
In November 1995, Peter Chadwick Limited Employee Trust (the "Trust") was formed
for the purpose of providing benefits to Peter Chadwick employees and
facilitating the acquisition of Peter Chadwick shares by, or for the benefit of,
employees. The Trust is controlled by an independent trustee and, accordingly,
the activity of the Trust is not reflected in the supplemental consolidated
financial statements presented.
I. LEASE COMMITMENTS
-----------------
On June 4, 1992, the Company entered into, among other building and equipment
leases, a lease for a building in Cambridge, Massachusetts, that is used as its
corporate headquarters. The building is owned by a trust, the sole beneficiary
of which is the Chairman of the Company. The initial lease expires in August
2007, and is renewable for two additional five year terms. The lease provides
for increases, which began in September 1995, based upon increases in the
Consumer Price Index-Urban Wage Earners and Clerical Workers, U.S. City Average,
All Items ("CPI").
Minimum future lease commitments under noncancelable operating leases for
buildings and equipment in effect at December 31, 1996, are presented as follows
(in thousands):
<TABLE>
<S> <C>
1997 $ 7,520
1998 5,272
1999 4,742
2000 3,694
2001 3,248
Thereafter 8,331
-------
Total minimum lease payments $32,807
=======
</TABLE>
For the years ended December 31, 1996, 1995, and 1994, rental expense under all
leases was approximately $6.3 million, $5.1 million, and $3.4 million,
respectively, of which approximately $785,000, $765,000, and $775,000,
respectively, related to the trust described above.
F-20
<PAGE>
Minimum future lease commitments under noncancelable capital leases for
equipment at December 31, 1996, are presented as follows (in thousands):
<TABLE>
<S> <C>
1997 $ 94
1998 80
1999 77
2000 18
2001 -
-------
Total minimum payments 269
Less amounts representing interest (33)
-------
Present value of minimum lease payments 236
Current portion 74
-------
Long-term obligation $ 162
=======
</TABLE>
J. OTHER COSTS
-----------
Other costs consist of the following (in thousands):
<TABLE>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Facility costs and related expenses $30,318 $14,055 $ 8,091
Non-billable project expenses 10,339 7,239 5,050
Non-billable staff travel 7,473 5,696 3,758
Education and training 4,407 2,233 1,861
------- ------- -------
$52,537 $29,223 $18,760
======= ======= =======
</TABLE>
K. INCOME TAXES
------------
The components of income before income taxes and the related provision for
income taxes for the years ended December 31, 1996, 1995, and 1994, are
presented below (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Income before income taxes:
Domestic $33,164 $19,904 $12,049
Foreign 7,089 5,826 851
------- ------- -------
$40,253 $25,730 $12,900
======= ======= =======
Provision for income taxes:
Current:
Federal $10,351 $ 5,860 $ 3,499
Foreign 3,420 2,192 248
State 3,023 1,595 910
------- ------- -------
16,794 9,647 4,657
Deferred:
Federal (311) 363 57
Foreign (207) 28 70
State (48) 34 7
------- ------- -------
(566) 425 134
------- ------- -------
Total $16,228 $10,072 $ 4,791
======= ======= =======
</TABLE>
F-21
<PAGE>
The Company's deferred tax assets and (liabilities) are comprised of the
following as of December 31, 1996 and 1995, respectively (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Tax basis of software technology $ - $ 50
Bad debt reserves 339 72
Vacation accrual 262 40
Fixed asset depreciation (471) (388)
Cash to accrual adjustments (829) (848)
Other 389 199
----- -----
$(310) $(875)
===== =====
</TABLE>
The table below reconciles the expected U.S. federal income tax provision to the
recorded income tax provision (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected"
tax provision $14,089 35.0% $ 9,006 35.0% $4,386 34.0%
State income taxes, net of
federal income tax benefit 2,214 5.5 1,389 5.4 568 4.4
Goodwill amortization 282 .7 283 1.1 194 1.5
Non-taxable S-Corporation income - - (257) (1.0) (529) (4.1)
Other, net (357) (.9) (349) (1.4) 172 1.3
------- ---- ------- ---- ------ ----
$16,228 40.3% $10,072 39.1% $4,791 37.1%
======= ==== ======= ==== ====== ====
</TABLE>
Prior to the acquisition on August 14, 1995, SCG had elected to be treated as an
S-Corporation for income tax reporting purposes. Under this election, the
individual stockholders are deemed to have received a pro rata distribution of
taxable income of SCG (whether or not an actual distribution was made), which is
included in their taxable income. Accordingly, SCG did not provide for income
taxes. Pro forma net income per share, which reflects the provision for pro
forma income taxes to the net income of SCG, is presented in the pro forma data
section of the accompanying supplemental consolidated statements of operations.
In addition, SCG's S-Corporation tax reporting status was terminated on the date
of the acquisition and therefore, the undistributed earnings of $2.1 million as
of the date of acquisition has been reclassified to additional paid-in-capital.
L. NET INCOME PER SHARE
--------------------
Net income per share data is computed using the weighted average number of
common shares outstanding, the assumed exercise of stock options and warrants
(using the treasury stock method), and the assumed issuance of a stock dividend
at the beginning of each period to effect a stock split (see Note H). Net
income per share data also reflects, when applicable, the assumed issuance, at
the beginning of the period, of common stock of the Company and options to
purchase common stock of the Company relating to the acquisitions of SCG, Axiom,
NatSoft, Ramos, and Peter Chadwick which were accounted for using the pooling of
interests method of accounting (see Note B). Primary and fully diluted income
per share are the same for each period presented.
F-22
<PAGE>
M. EMPLOYEE BENEFIT PLANS
----------------------
In 1992, the Company established a savings and profit-sharing plan (the "401(k)
Plan") covering substantially all of the Company's employees. The 401(k) Plan
is qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended. The Company may elect to make contributions under the 401(k) Plan.
Starting in 1994, the Company elected to make matching contributions based on a
percentage of employees' contributions, subject to limitations as defined in the
401(k) Plan. In 1996, the Company completed the rollover of assets held under
the SCG Profit-sharing Plan and the Axiom Profit-sharing Plan to the 401(k)
Plan. Company matching contributions amounted to $845,000, $499,000, and
$329,000 in 1996, 1995, and 1994, respectively.
NatSoft sponsored a defined contribution retirement plan (the "NatSoft Plan")
for its employees. Under the NatSoft Plan, employees could contribute between
5% to 11% of insured salary depending on age and other factors. All employee
contributions were matched by NatSoft. Employer matching contribution amounted
to $202,000, $181,000, and $99,000 for the years ended December 31, 1996, 1995,
and 1994, respectively. NatSoft also sponsored a defined contribution
retirement plan for three executives who are also stockholders. NatSoft's
contribution to this plan amounted to $150,000, and $296,000 for the years ended
December 31, 1995, and 1994, respectively. In June 1996, the defined
contribution retirement plan was terminated.
In 1992, Ramos established a savings and profit-sharing plan (the "Ramos Profit-
sharing Plan") covering substantially all of Ramos' employees. The Ramos
Profit-sharing Plan is qualified under Section 401 (a) of the Internal Revenue
Code of 1986, as amended. Ramos may elect to make contributions under the Ramos
Profit-sharing Plan. Ramos elected to make matching contributions based on a
percentage of employees' contributions. Ramos' matching contributions amounted
to $455,000, $227,000, and $82,000 for the years ended December 31, 1996, 1995,
and 1994, respectively. The Company expects to rollover assets held under the
Ramos Profit-sharing Plan to the 401(k) Plan during the first quarter of 1998.
N. COMMITMENTS AND CONTINGENCIES
-----------------------------
In July 1996, a suit was filed against the Company in the United States District
Court for the District of Colorado in Denver by Rocky Mountain Healthcare
Corporation ("RMHC"). RMHC was seeking, among other things, a refund of $1.7
million of contract payments and related damages arising from the Company's
alleged breach of an agreement pursuant to which the Company provided software
system design and consulting services to RMHC. The suit included breach of
contract and tort claims. In April 1997, the Company and RMHC agreed to dismiss
with prejudice all claims and counterclaims. The terms of the dismissal
agreement did not have a material adverse effect on the Company's financial
position, results of operations, or liquidity.
In July 1996, Axiom was served a demand for arbitration by a former shareholder
of Axiom. The claims arose from Axiom's alleged failure to inform such
shareholder of the Company's interest in acquiring Axiom at the time he sold his
stock back to Axiom. The demand sought damages in excess of $3.3 million plus
punitive damages, costs and attorneys' fees. The American Arbitration
Association (the "AAA") arbitration was conducted in April and October 1997.
Upon completion of the arbitration, the AAA determined that there was no failure
to inform and no compensable damages resulting from breach of contract. The AAA
also
F-23
<PAGE>
determined that Axiom was the prevailing party in the arbitration and is
entitled to compensation from such shareholder for attorneys' fees and costs.
Axiom and such shareholder have reached an agreement in principle on the
determination and payment to Axiom of such amounts.
O. SUBSEQUENT EVENTS
-----------------
In October 1997, Cambridge Technology Capital Fund I L.P. (the "Fund") was
formed with committed capital of approximately $23.4 million through the first
closing. The committed capital increased to $25.0 million in a subsequent
closing. The Fund is a limited partnership. A wholly owned subsidiary of the
Company acts as the sole general partner of the Fund's general partner. The
Company's capital commitment to the Fund is approximately $6.0 million. No more
than two-thirds of the Fund's committed capital may be called before October
1999 without approval of the Fund's partners. The balance of the Fund's capital
will be primarily provided by institutional investors and directors and
employees of the Company. The Fund intends to invest in expansion stage, private
companies providing products and services within areas of the Company's
strategic expertise.
On June 23, 1997, the Board of Directors of the Company approved and adopted a
Rights Plan pursuant to a Rights Agreement, and in connection therewith,
declared a dividend of one preferred stock purchase right for each outstanding
share of the Company's common stock, which dividend was paid on July 3, 1997 to
holders of record of the Company at the close of business on July 3, 1997. One
preferred stock purchase right will also be attached to each share of the
Company's common stock issued after July 3, 1997. The rights are not presently
transferable separate from the share of common stock with respect to which they
were issued. The rights are subject to adjustment and become exercisable upon
the occurrence of certain events described in the Rights Agreement. In general,
the Company is entitled to redeem the rights at $.01 per right. The rights will
expire on June 23, 2007 unless earlier redeemed or exchanged. As part of the
Rights Plan, the Company designated 100,000 shares of its Preferred Stock as
Series A Junior Participating Preferred Stock and reserved such shares for
issuance upon exercise of the rights.
In April 1997, Peter Chadwick acquired the assets of a training facility located
in the United Kingdom. The purchase price of approximately $1.9 million was
allocated to land and buildings and Peter Chadwick recorded goodwill of $404,000
which is being amortized on a straight line basis over 5 years. As of September
30, 1997, accumulated amortization was $39,000. In addition, Peter Chadwick
entered into a Loan Agreement with National Westminister Bank (the "Loan
Agreement") to finance this acquisition. As of September 30, 1997, amounts due
under the Loan Agreement were $808,000 with interest payments at a rate of 2%
above the Bank of England base rate payable in monthly installments. The entire
outstanding balance is due in 2005. The Company expects to repay all outstanding
amounts and terminate the Loan Agreement in the first quarter of 1998.
F-24
<PAGE>
P. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
Supplemental disclosures of cash flow information are presented as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 46 $ 343 $ 189
Income taxes 4,428 3,671 4,897
</TABLE>
During 1995, capital lease obligations of $357,000 were incurred by SCG, Axiom,
and Ramos for the acquisition of certain equipment. During 1994, capital lease
obligations of $50,000 were incurred by Ramos for the acquisition of certain
equipment. In addition, the Company exchanged 1,275,000 shares of its common
stock for 100% of the outstanding shares of CTP Scandinavia. Also in 1994,
Axiom repurchased 200,000 shares of its common stock for $725,000.
Q. GEOGRAPHIC INFORMATION
----------------------
Information about the Company's operations and total assets in North America and
Europe is presented as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net revenues:
North America $181,142 $115,940 $ 74,649
Europe 91,736 63,727 37,941
-------- -------- --------
Consolidated $272,878 $179,667 $112,590
======== ======== ========
Income from operations:
North America $ 29,278 $ 18,539 $ 11,753
Europe 10,178 5,746 892
-------- -------- --------
Consolidated $ 39,456 $ 24,285 $ 12,645
======== ======== ========
Total assets at December 31:
North America $105,766 $ 60,135 $ 38,515
Europe 41,878 28,037 19,883
-------- -------- --------
Consolidated $147,644 $ 88,172 $ 58,398
======== ======== ========
</TABLE>
North American operations consist primarily of information technology consulting
and software development and implementation services in the United States.
European operations consist of information technology consulting, software
development and management consulting services principally in the United
Kingdom, the Netherlands, Switzerland, Sweden, Norway, Ireland, Germany, and
France, which have similar business environments. There are no intraenterprise
sales for the periods presented.
F-25
<PAGE>
R. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
-------------------------------------------
The following table presents the unaudited supplemental quarterly financial
information for the years ended 1996 and 1995 (in thousands, except per share
data):
<TABLE>
<CAPTION>
Quarters Ended
-----------------------------------------------------------------------
March 31, June 30, September 30, December 31,
---------------- ----------------- ---------------- ----------------
1996 1995 1996 1995 1996 1995 1996 1995
------- ------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $55,866 $36,805 $65,341 $44,028 $72,582 $46,819 $79,089 $52,015
Income from operations 8,979 4,771 9,239 6,450 10,100 5,608 11,138 7,456
Income before income taxes 9,138 5,072 9,509 7,419 10,340 5,699 11,266 7,540
Net income 5,424 2,920 5,595 4,454 6,088 3,448 6,918 4,836
Net income per share .10 .05 .10 .08 .10 .06 .12 .09
</TABLE>
F-26
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
-------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 45,301 $ 26,087
Investments held to maturity 15,251 12,727
Accounts receivable, less allowance of $2,179 and $1,670 at
September 30, 1997 and December 31, 1996, respectively 90,238 60,186
Unbilled revenue on contracts 6,303 4,087
Deferred income taxes 161 161
Prepaid expenses and other current assets 24,960 17,831
-------- --------
Total current assets 182,214 121,079
Property and equipment, net 30,793 20,591
Other assets 5,090 3,462
Goodwill, net 2,278 2,512
-------- --------
Total assets $220,375 $147,644
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,301 $ 12,938
Accrued expenses 34,412 24,188
Deferred revenue 9,420 5,453
Income taxes payable 11,023 6,173
Other current liabilities 86 74
-------- --------
Total current liabilities 75,242 48,826
Obligations under capital leases 111 162
Deferred income taxes 471 471
Long term debt 808 -
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, authorized 120,000,000
shares; issued and outstanding 53,509,275 and 51,687,220
at September 30, 1997 and December 31, 1996, respectively 535 517
Additional paid-in capital 72,526 49,385
Retained earnings 72,650 48,158
Foreign currency translation adjustment (1,968) 125
-------- --------
Total stockholders' equity 143,743 98,185
-------- --------
Total liabilities and stockholders' equity $220,375 $147,644
======== ========
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
S-1
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------
1997 1996 1997 1996
----------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Net revenues $108,594 $72,582 $287,342 $193,789
Costs and expenses:
Project personnel 48,704 32,979 128,568 89,382
General and administration 11,832 8,927 32,720 23,433
Sales and marketing 9,999 5,884 26,419 16,001
Other costs 22,049 14,692 55,979 36,655
-------- ------- -------- --------
Total operating expenses 92,584 62,482 243,686 165,471
-------- ------- -------- --------
Income from operations 16,010 10,100 43,656 28,318
Other income (expense):
Interest income 632 296 1,633 757
Interest expense (31) (10) (107) (69)
Foreign exchange (loss) (65) (46) (60) (19)
-------- ------- -------- --------
Income before income taxes 16,546 10,340 45,122 28,987
Provision for income taxes 6,633 4,252 18,134 11,880
-------- ------- -------- --------
Net income $ 9,913 $ 6,088 $ 26,988 $ 17,107
======== ======= ======== ========
Net income per share $ .17 $ .10 $ .46 $ .30
======== ======= ======== ========
Weighted average number of
common and common
equivalent shares outstanding 59,479 58,561 58,647 57,487
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
S-2
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 26,988 $ 17,107
Amounts that reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 6,234 4,483
Tax benefit from exercise of stock options 8,900 5,498
Provision for deferred income taxes - 451
Increase in accounts receivable (31,480) (27,654)
Increase in unbilled revenue on contracts (2,396) (1,521)
Increase in prepaid expenses and other current assets (7,544) (4,598)
Increase in accounts payable 7,735 6,774
Increase in accrued expenses 10,860 7,613
Increase in deferred revenue 4,099 6,399
Increase in income taxes payable 4,634 1,952
Other, net (1,612) (215)
-------- --------
Net cash provided by operating activities 26,418 16,289
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (16,823) (10,793)
Purchase of investments held to maturity (15,107) (15,450)
Maturity of investments held to maturity 12,583 11,746
-------- --------
Net cash used in investing activities (19,347) (14,497)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments under credit arrangements - (325)
Proceeds from long-term debt 808 -
Repayment of long-term debt and capital leases (38) (135)
Proceeds from employee stock purchase plan 4,914 2,071
Dividend distributions (1,939) (1,567)
Proceeds from exercise of stock options 8,787 5,584
Other, net - -
-------- --------
Net cash provided by financing activities 12,532 5,628
-------- --------
Effect of foreign exchange rate changes on cash (389) (412)
Net increase in cash and cash equivalents 19,214 7,008
Cash and cash equivalents at beginning of period 26,087 11,081
-------- --------
Cash and cash equivalents at end of period $ 45,301 $ 18,089
======== ========
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
S-3
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. BASIS OF REPORTING
------------------
The accompanying supplemental consolidated financial statements of Cambridge
Technology Partners (Massachusetts), Inc. (the "Company") have been prepared to
give retroactive effect to the acquisition of Peter Chadwick Holdings Limited
("Peter Chadwick"), a management consulting firm specializing in the
implementation of operational strategies and performance improvement programs.
Generally accepted accounting principles proscribe giving effect to consummated
business combinations accounted for by the pooling of interests method in
financial statements that do not include the date of consummation. The
supplemental consolidated financial statements presented herein do not extend
through the date of consummation, however, they will become the historical
consolidated financial statements of the Company after financial statements
covering the date of consummation of the business combination are issued.
The accompanying supplemental consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All intercompany
accounts and balances have been eliminated in consolidation. Certain prior
period amounts have also been reclassified to conform with current period
presentation. In the opinion of management, the supplemental 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 supplemental consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Consequently, these statements do not include all the disclosures
normally required by generally accepted accounting principles for annual
financial statements nor those normally made in the Company's Annual Report on
Form 10-K. Accordingly, reference should be made to the Company's supplemental
consolidated financial statements for the years ending December 31, 1996 and
1995 included in this Prospectus for additional disclosures, including a summary
of the Company's accounting policies, which have not changed. The supplemental
consolidated results of operations for the three and nine months ended September
30, 1997, are not necessarily indicative of results for the full year.
B. POOLING OF INTERESTS
--------------------
On November 24, 1997, the Company acquired all the outstanding capital stock of
Peter Chadwick. This acquisition was accomplished through an exchange of
3,255,731 shares of the Company's common stock for all outstanding shares of
capital stock and options to purchase ordinary shares of Peter Chadwick. This
acquisition has been accounted for using the pooling of interests method of
accounting. Founded in 1987 and based in the United Kingdom, Peter Chadwick
specializes in the implementation of operational strategies and performance
improvement programs. Peter Chadwick currently has offices in the U.K, Germany,
Holland, France and the U.S. and had approximately 325 employees at the time of
the acquisition. Costs, which consist primarily of accounting fees, legal fees
and business integration costs, related to this acquisition approximated $4.5
million and are not included in the accompanying supplemental consolidated
results of operations as they will be charged to operating expenses in the
fourth quarter of 1997.
S-4
<PAGE>
The Company's previously issued historical consolidated financial statements
have been prepared to give retroactive effect to the Company's 1996 and 1995
acquisitions of Ramos & Associates, Inc. ("Ramos") (now known as Cambridge
Technology Partners-Enterprise Resource Solutions, Inc.) , NatSoft S.A.
("NatSoft") (now known as Cambridge Switzerland, S.A.), The Systems Consulting
Group, Inc. ("SCG") and Axiom Management Consulting, Inc. ("Axiom"), in
accordance with pooling of interests requirements.
C. PETER CHADWICK ACQUISITION
--------------------------
In April 1997, Peter Chadwick acquired the assets of a training facility located
in the United Kingdom. The purchase price of approximately $1.9 million was
allocated to land and buildings and Peter Chadwick recorded goodwill of $404,000
which is being amortized on a straight line basis over 5 years. As of September
30, 1997, accumulated amortization was $39,000. In addition, Peter Chadwick
entered into a Loan Agreement with National Westminister Bank (the "Loan
Agreement") to finance this acquisition. As of September 30, 1997, amounts due
under the Loan Agreement were $808,000 with interest payments at a rate of 2%
above the Bank of England base rate payable in monthly installments. The entire
outstanding balance is due in 2005.
The Company expects to repay all outstanding amounts and terminate this
agreement in the first quarter of 1998.
D. NET INCOME PER SHARE
--------------------
Net income per share data is computed using the weighted average number of
common shares outstanding, the assumed exercise of stock options and warrants
(using the treasury stock method), and the assumed issuance of a stock dividend
at the beginning of each applicable period to effect a stock split. Net income
per share data also reflects, when applicable, the assumed issuance, at the
beginning of the period, of common stock of the Company and options to purchase
common stock of the Company relating to the acquisitions of SCG, Axiom, NatSoft,
Ramos, and Peter Chadwick which were accounted for using the pooling of
interests method of accounting (see Note B). Primary and fully diluted income
per share are the same for each period presented.
E. FOREIGN EXCHANGE CONTRACTS
--------------------------
The Company maintains foreign exchange contracts to mitigate the risk of changes
in foreign exchange rates associated with intercompany balances. The contracts
relate primarily to European currencies and generally have maturities of one
month. The impact of exchange rate movements on contracts are recorded in other
income for the period in which the exchange rates change, generally consistent
with the term of the contract. As of September 30, 1997, the Company held
foreign exchange forward contracts of approximately $4.4 million and there were
no related deferred gains and losses. The Company does not hold foreign
exchange contracts for trading purposes.
S-5
<PAGE>
F. ACCOUNTING PRONOUNCEMENTS
-------------------------
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"), which is effective for fiscal years ending after December 15, 1997,
including interim periods. SFAS 128 establishes standards for computing and
presenting earnings per share (EPS) and requires a dual presentation of basic
and dilutive EPS. The Company estimates that basic EPS would have been $.19 and
$.51 for the three and nine months ended September 30, 1997, respectively.
Dilutive EPS would not have been materially different from primary EPS presented
in the accompanying supplemental consolidated financial statements.
In July 1997, FASB issued Statement of Financial Accounting Standards No. 130 -
"Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes standards
for reporting and displaying comprehensive income and its components in a full
set of general purpose financial statements. SFAS 130 is effective for fiscal
years beginning after December 15, 1997, with earlier application permitted.
The Company is currently assessing the impact of SFAS 130.
G. SUBSEQUENT EVENTS
-----------------
As discussed in Note B, the Company acquired all outstanding shares of capital
stock and options to acquire capital stock of Peter Chadwick on November 24,
1997.
In November 1997, the Board of Directors adopted the 1997 Stock Option Plan (the
"1997 Option Plan") under which the Company may elect to grant nonqualified
stock options to purchase up to 450,000 shares of common stock to employees and
consultants of the Company. Options granted in 1997 under the Company's amended
1991 Stock Option Plan and the 1997 Option Plan generally vest over a four year
period and expire five years from the date of vesting.
In October 1997, Cambridge Technology Capital Fund I L.P. (the "Fund") was
formed with committed capital of approximately $23.4 million through the first
closing. The committed capital increased to $25.0 million in a subsequent
closing. The Fund is a limited partnership. A wholly owned subsidiary of the
Company acts as the sole general partner of the Fund's general partner. The
Company's capital commitment to the Fund is approximately $6.0 million. No more
than two-thirds of the Fund's committed capital may be called before October
1999 without approval of the Fund's partners. The balance of the Fund's capital
will be primarily provided by institutional investors and directors and
employees of the Company. The Fund intends to invest in expansion stage, private
companies providing products and services within areas of the Company's
strategic expertise.
In July 1996, Axiom was served a demand for arbitration by a former shareholder
of Axiom. The claims arose from Axiom's alleged failure to inform such
shareholder of the Company's interest in acquiring Axiom at the time he sold his
stock back to Axiom. The demand sought damages in excess of $3.3 million plus
punitive damages, costs and attorneys' fees. The American Arbitration
Association (the "AAA") arbitration was conducted in April and in October 1997.
Upon completion of the arbitration, the AAA determined that there was no
failure to inform and no compensable damages resulting from breach of contract.
The AAA also determined that Axiom was the prevailing party in the arbitration
and is entitled to compensation from such shareholder for attorneys' fees and
costs. Axiom and such shareholder have reached an agreement in principle on the
determination and payment to Axiom of such amounts.
S-6
<PAGE>
- --------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company, any Selling Stockholder or any other person. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy in any jurisdiction in which such offer or solicitation would be unlawful or
to any person to whom it is unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company or that
information contained herein is correct as of any time subsequent to the date
hereof.
-----------
TABLE OF CONTENTS
Page
----
Available Information 2
Incorporation of Certain Information by Reference 3
The Company 4
Recent Developments 5
Risk Factors 6
Use of Proceeds 8
Selling Stockholders 9
Plan of Distribution 12
Legal Matters 13
Experts 13
Index to Supplemental Consolidated Financial Statements F-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,255,731 SHARES
CAMBRIDGE TECHNOLOGY PARTNERS
(MASSACHUSETTS), INC.
COMMON STOCK
----------
PROSPECTUS
----------
DECEMBER ___, 1997
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:
<TABLE>
<S> <C>
SEC Registration Fee................................ $36,016.52
Nasdaq Filing Fees.................................. 17,500.00
Legal fees and expenses............................. 20,000.00
Accounting fees and expenses........................ 20,000.00
----------
TOTAL............................................... $93,516.52
==========
</TABLE>
The Company will bear all expenses shown above.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law, the Company's Amended and Restated
Certificate of Incorporation, as amended, and Amended and Restated By-laws
provide for indemnification of the Company's directors and officers for
liabilities and expenses that they may incur in such capacities. In general,
directors and officers are indemnified with respect to actions taken in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action or proceeding,
actions that the indemnitee had no reasonable cause to believe were unlawful.
Reference is made to the Company's Amended and Restated Certificate of
Incorporation, as amended, filed as Exhibit 4.1 to this Registration Statement
on Form S-3 and the Company's Amended and Restated By-laws filed as Exhibit 3.2
to the Company's Registration Statement on Form S-1 (No. 33-56338). The Company
maintains directors' and officers' liability insurance to insure the directors
and certain officers of the Company against certain liabilities and certain
expenses in connection therewith which arise out of or in connection with their
capacities as such.
ITEM 16. EXHIBITS.
4.1 Amended and Restated Certificate of Incorporation of the Company, as
amended**
4.2 Rights Agreement, dated as of June 23, 1997, by and between Cambridge
Technology Partners (Massachusetts), Inc. and ChaseMellon Shareholder
Services, LLC, as Rights Agent (incorporated herein by reference to
Exhibit 4.1 to the Company's Report on Form 8-K, dated June 23, 1997,
and filed on July 1, 1997).*
5 Opinion of Testa, Hurwitz & Thibeault, LLP**
II-1
<PAGE>
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants**
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5)**
24 Power of Attorney (included on signature page)**
27 Restated Financial Data Schedules**
- ------------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to the
Securities Act of 1933, as amended, reference is made to the documents
previously filed with the Commission, which are incorporated by reference
herein.
** Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where appropriate, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Cambridge, Massachusetts on December 23, 1997.
CAMBRIDGE TECHNOLOGY PARTNERS
(MASSACHUSETTS), INC.
BY: /S/ ARTHUR M. TOSCANINI
---------------------------------
ARTHUR M. TOSCANINI
EXECUTIVE VICE PRESIDENT, FINANCE
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Cambridge Technology
Partners (Massachusetts), Inc., hereby severally constitute and appoint James K.
Sims, Arthur M. Toscanini and James P. O'Hare, and each of them singly, our true
and lawful attorneys, with full power to them and each of them singly, to sign
for us in our names in the capacities indicated below, all pre-effective and
post-effective amendments to this registration statement, and generally do all
things in our names and on our behalf in such capacities to enable Cambridge
Technology Partners (Massachusetts), Inc. to comply with the provisions of the
Securities Act of 1933 and all requirements of the Securities and Exchange
Commission.
Pursuant to the requirements of the Securities Exchange Act of 1933,
as amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
- --------- -------- ----
<S> <C> <C>
/S/ JAMES K. SIMS PRESIDENT, CHIEF EXECUTIVE OFFICER AND DECEMBER 23, 1997
- ----------------------------- DIRECTOR (PRINCIPAL EXECUTIVE OFFICER)
JAMES K. SIMS
/S/ ARTHUR M. TOSCANINI EXECUTIVE VICE PRESIDENT, FINANCE, CHIEF DECEMBER 23, 1997
- ----------------------------- FINANCIAL OFFICER AND TREASURER
ARTHUR M. TOSCANINI (PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER)
/S/ WARREN V. MUSSER DIRECTOR DECEMBER 23, 1997
- -----------------------------
WARREN V. MUSSER
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
- --------- -------- ----
<S> <C> <C>
/S/ JAMES C. TEMPEL DIRECTOR DECEMBER 23, 1997
- -----------------------------
JAMES C. TEMPEL
/S/ ROBERT E. KEITH, JR. DIRECTOR DECEMBER 23, 1997
- -----------------------------
ROBERT E. KEITH, JR.
/S/ JACK L. MESSMAN DIRECTOR DECEMBER 23, 1997
- -----------------------------
JACK L. MESSMAN
/S/ JOHN W. PODUSKA, SR. DIRECTOR DECEMBER 23, 1997
- -----------------------------
JOHN W. PODUSKA, SR.
/S/ JAMES I. CASH, JR. DIRECTOR DECEMBER 23, 1997
- -----------------------------
JAMES I. CASH, JR.
/S/ JAMES D. ROBINSON III DIRECTOR DECEMBER 23, 1997
- -----------------------------
JAMES D. ROBINSON III
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Amended and Restated Certificate of Incorporation of the
Company, as amended**
4.2 Rights Agreement, dated as of June 23, 1997, by and between
Cambridge Technology Partners (Massachusetts), Inc. and
ChaseMellon Shareholder Services, LLC, as Rights Agent
(incorporated herein by reference to Exhibit 4.1 to the
Company's Report on Form 8-K, dated June 23, 1997, and filed on
July 1, 1997).*
5 Opinion of Testa, Hurwitz & Thibeault, LLP**
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants**
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5)**
24 Power of Attorney (included on signature page)**
27 Restated Financial Data Schedules**
- ------------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to the
Securities Act of 1933, as amended, reference is made to the documents
previously filed with the Commission, which are incorporated by reference
herein.
** Filed herewith.
<PAGE>
EXHIBIT 4.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CTP, INC.
(INCORPORATED MARCH 13, 1991)
* * * * * *
I, James K. Sims, President of CTP, Inc. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, do hereby certify that the Certificate of Incorporation of
CTP, Inc., as amended, has been further amended, and restated as amended, in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware and, as amended and restated, is set
forth in its entirety as follows:
FIRST. The name of the Corporation is CTP, Inc.
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue shall be 32,000,000 shares,
consisting of 30,000,000 shares of common stock with a par value of $.01 per
share (the "Common Stock") and 2,000,000 shares of preferred stock with a par
value of $.01 per share (the "Preferred Stock").
A description of the respective classes of stock and a statement of the
designations, powers, preferences and rights, and the qualifications,
limitations and restrictions of the Preferred Stock and Common Stock are as
follows:
A. COMMON STOCK
------------
1. GENERAL. All shares of Common Stock will be identical and will entitle
-------
the holders thereof to the same rights, powers and privileges. The rights,
powers and privileges of the holders of the Common Stock are subject to and
qualified by the rights of holders of the Preferred Stock.
<PAGE>
2. DIVIDENDS. Dividends may be declared and paid on the Common Stock from
---------
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
3. DISSOLUTION, LIQUIDATION OR WINDING UP. In the event of any
--------------------------------------
dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, each issued and outstanding share of Common
Stock shall entitle the holder thereof to receive an equal portion of the net
assets of the Corporation available for distribution to the holders of Common
Stock, subject to any preferential rights of any then outstanding Preferred
Stock.
4. VOTING RIGHTS. Except as otherwise required by law or this Amended and
-------------
Restated Certificate of Incorporation, each holder of Common Stock shall have
one vote in respect of each share of stock held by him of record on the books of
the Corporation for the election of directors and on all matters submitted to a
vote of stockholders of the Corporation. Except as otherwise required by law or
provided herein, holders of Common Stock will vote together with holders of the
Preferred Stock as a single class, subject to any special or preferential voting
rights of any then outstanding Preferred Stock. There shall be no cumulative
voting.
B. PREFERRED STOCK
---------------
The Preferred Stock may be issued in one or more series at such time or
times and for such consideration or considerations as the Board of Directors of
the Corporation may determine. Each series shall be so designated as to
distinguish the shares thereof from the shares of all other series and classes.
Except as otherwise provided in this Amended and Restated Certificate of
Incorporation, different series of Preferred Stock shall not be construed to
constitute different classes of shares for the purpose of voting by classes.
The Board of Directors is expressly authorized to provide for the issuance
of all or any shares of the undesignated Preferred Stock in one or more series,
each with such designations, preferences, voting powers (or special,
preferential or no voting powers), relative, participating, optional or other
special rights and privileges and such qualifications, limitations or
restrictions thereof as shall be stated in the resolution or resolutions adopted
by the Board of Directors to create such series, and a certificate of said
resolution or resolutions (a "Certificate of Designation") shall be filed in
accordance with the General Corporation Law of the State of Delaware. The
authority of the Board of Directors with respect to each such series shall
include, without limitation of the foregoing, the right to provide that the
shares of each such series may be: (i) subject to redemption at such time or
times and at such price or prices; (ii) entitled to receive dividends (which may
be cumulative or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or any other series; (iii) entitled to
such rights upon the dissolution of, or upon any distribution of the assets of,
the Corporation; (iv) convertible into, or exchangeable for, shares of any other
class or classes of stock, or of any other series of the same or any other class
or classes of stock of the Corporation at such price or prices or at such rates
of exchange and with such adjustments, if any; (v) entitled to the benefit of
such limitations, if any,
-2-
<PAGE>
on the issuance of additional shares of such series or shares of any other
series of Preferred Stock; or (vi) entitled to such other preferences, powers,
qualifications, rights and privileges, all as the Board of Directors may deem
advisable and as are not inconsistent with law and the provisions of this
Amended and Restated Certificate of Incorporation.
FIFTH. The Corporation is to have perpetual existence.
SIXTH.
1. MANAGEMENT. The business and affairs of the Corporation shall be
----------
managed by or under the direction of the Board of Directors of the Corporation.
2. BY-LAWS. The Board of Directors of the Corporation is expressly
-------
authorized to adopt, amend or repeal the By-laws of the Corporation, subject to
any limitation thereof contained in the By-laws. The stockholders shall also
have the power to adopt, amend or repeal the By-laws of the Corporation.
3. BOOKS. The books of the Corporation may be kept at such place within
-----
or without the State of Delaware as the By-laws of the Corporation may provide
or as may be designated from time to time by the Board of Directors of the
Corporation.
SEVENTH.
1. NUMBER OF DIRECTORS. The number of directors which shall constitute
-------------------
the whole Board of Directors shall be determined by resolution of a majority of
the Board of Directors, but in no event shall the number of directors be less
than three. The number of directors may be decreased at any time and from time
to time by a majority of the directors then in office, but only to eliminate
vacancies existing by reason of the death, resignation or removal of one or more
directors. The directors shall be elected at the annual meeting of stockholders
by such stockholders as have the right to vote on such election. Directors need
not be stockholders of the Corporation.
2. ELECTION OF DIRECTORS. Elections of directors need not be by written
---------------------
ballot except as and to the extent provided in the By-laws of the Corporation.
3. TERMS OF OFFICE. Each director shall serve for a term ending on the
---------------
date of the annual meeting following the annual meeting at which such director
was elected.
4. TENURE. Notwithstanding any provisions to the contrary contained
------
herein, each director shall hold office until his successor is elected and
qualified, or until his earlier death, resignation or removal.
5. VACANCIES. Any vacancy in the Board of Directors, however occurring,
---------
including a vacancy resulting from an enlargement of the Board of Directors, may
be filled only by vote of a majority of the directors then in office, even if
less than a quorum, or by a sole remaining
-3-
<PAGE>
director. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, if applicable; and a director
chosen to fill a position resulting from an increase in the number of directors
shall hold office until his successor is elected and qualified, or until his
earlier death, resignation or removal.
6. QUORUM. A majority of the total number of the whole Board of Directors
------
shall constitute a quorum at all meetings of the Board of Directors. In the
event one or more of the directors shall be disqualified to vote at any meeting,
then the required quorum shall be reduced by one for each such director so
disqualified; provided, however, that in no case shall less than one-third (1/3)
of the number so fixed constitute a quorum. In the absence of a quorum at any
such meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice other than announcement at the meeting,
until a quorum shall be present.
7. ACTION AT MEETING. At any meeting of the Board of Directors at which a
-----------------
quorum is present, the vote of a majority of those present shall be sufficient
to take any action, unless a different vote is specified by law or the
Corporation's Amended and Restated Certificate of Incorporation or By-laws.
8. RIGHTS OF PREFERRED STOCK. The provisions of this Article are subject
-------------------------
to the rights of the holders of any series of Preferred Stock from time to time
outstanding.
EIGHTH. No director (including any advisory director) of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director notwithstanding any provision
of law imposing such liability; provided, however, that, to the extent provided
by applicable law, this provision shall not eliminate the liability of a
director: (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
No amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability of any director for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
NINTH.
1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE
-------------------------------------------------------------------
CORPORATION. The Corporation shall indemnify each person who was or is a party
- -----------
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was, or has agreed to become a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees),
-4-
<PAGE>
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with such action, suit or proceeding and
any appeal therefrom, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
----
contendere or its equivalent, shall not, of itself, create a presumption that
- ----------
the person did not act in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful. Notwithstanding anything to the contrary
in this Article, except as set forth in Section 6 below, the Corporation shall
not indemnify an Indemnitee seeking indemnification in connection with a
proceeding (or part thereof) initiated by the Indemnitee unless the initiation
thereof was approved by the Board of Directors of the Corporation.
2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The
------------------------------------------------------
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation, unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses (including attorneys' fees)
which the Court of Chancery of Delaware or such other court shall deem proper.
3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the
------------------------------------------------
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without: (i) the disposition being adverse to the Indemnitee, (ii)
an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea
of guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the
---- ----------
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best
-5-
<PAGE>
interests of the Corporation, and (v) with respect to any criminal proceeding,
an adjudication that the Indemnitee had reasonable cause to believe his conduct
was unlawful, the Indemnitee shall be considered for the purpose hereof to have
been wholly successful with respect thereto.
4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his
---------------------------------
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein, at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless: (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below, in
-------------------
the event that the Corporation does not assume the defense pursuant to Section 4
of this Article of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter; provided,
--------
however, that the payment of such expenses incurred by an Indemnitee in advance
- -------
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such undertaking may be accepted without reference to the financial ability of
such person to make such repayment.
6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or
-----------------------------
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including, in such
request, such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of
-6-
<PAGE>
expenses. Any such indemnification or advancement of expenses shall be made
promptly, and in any event, within 60 days after receipt by the Corporation of
the written request of the Indemnitee, unless with respect to requests under
Section 1, 2 or 5, the Corporation determines, by clear and convincing evidence,
within such 60-day period, that the Indemnitee did not meet the applicable
standard of conduct set forth in Section 1 or 2, as the case may be. Such
determination shall be made in each instance by: (a) a majority vote of a quorum
of the directors of the Corporation consisting of persons who are not, at that
time, parties to the action, suit or proceeding in question ("disinterested
directors"), (b) if no such quorum is obtainable, a majority vote of a committee
of two or more disinterested directors, (c) a majority vote of a quorum of the
outstanding shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of stockholders who are not
at that time parties to the action, suit or proceeding in question, (d)
independent legal counsel (who may be regular legal counsel to the Corporation),
or (e) a court of competent jurisdiction.
7. REMEDIES. The right to indemnification or advances as granted by this
--------
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise provided by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the
Corporation to have made a determination prior to the commencement of such
action, that indemnification is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation pursuant to Section 6, that the Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable standard of
conduct. The Indemnitee's expenses (including attorneys' fees) incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such proceeding shall also be indemnified by the Corporation.
8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this
--------------------
Article or of the relevant provisions of the General Corporation Law of the
State of Delaware or any other applicable laws shall affect or diminish, in any
way, the rights of any Indemnitee to indemnification under the provisions hereof
with respect to any action, suit, proceeding or investigation arising out of or
relating to any actions, transactions or facts occurring prior to the final
adoption of such amendment, termination or repeal.
9. OTHER RIGHTS. The indemnification and advancement of expenses provided
------------
by this Article shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses may be entitled
under any law (common or statutory), agreement, or vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in any other capacity while holding office for the Corporation,
and shall continue as to an Indemnitee who has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitee. Nothing contained in this Article shall be
deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
-7-
<PAGE>
and procedures different from those set forth in this Article. In addition, the
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation, and such rights may be
equivalent to, or greater or less than those set forth in this Article.
10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled, under any
-----------------------
provision of this Article, to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall,
nevertheless, indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. INSURANCE. The Corporation may purchase and maintain insurance, at
---------
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) against any expense,
liability or loss incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware.
12. MERGER OR CONSOLIDATION. If the Corporation is merged into or
-----------------------
consolidated with another corporation, and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.
13. SAVINGS CLAUSE. If this Article or any portion hereof shall be
--------------
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall, nevertheless, indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by an applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
14. DEFINITIONS. Terms used herein and defined in Section 145(h) and
-----------
Section 145(i) of the General Corporation Law of the State of Delaware shall
have the respective meanings assigned to such terms in such Section 145(h) and
Section 145(i).
15. SUBSEQUENT LEGISLATION. If the General Corporation Law of the State
----------------------
of Delaware is amended after adoption of this Article to expand further the
indemnification permitted to Indemnitees, then the Corporation shall indemnify
such persons to the fullest extent permitted by the General Corporation Law of
the State of Delaware, as so amended.
-8-
<PAGE>
TENTH. The Corporation reserves the right to amend or repeal any provision
contained in this Amended and Restated Certificate of Incorporation in the
manner prescribed by the laws of the State of Delaware, and all rights conferred
upon stockholders are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has hereunto signed his name and
affirms that the statements made in this Amended and Restated Certificate of
Incorporation are true under the penalties of perjury this 21st day of December,
1992.
/s/ James K. Sims
------------------------------
James K. Sims, President
Attest:
/s/ Arthur M. Toscanini
- ------------------------------------
Arthur M. Toscanini, Secretary
-9-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CTP, INC.
CTP, Inc. (the "Corporation"), a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows, pursuant to
Section 242 of the General Corporation Law of Delaware:
1. That the Board of Directors of CTP, Inc., at a meeting held on December
17, 1992, duly adopted resolutions in accordance with Section 242 of the General
Corporation Law of the State of Delaware: (i) proposing amendment of the
Certificate of Incorporation of the Corporation subject to the approval of the
shareholders of the Corporation, (ii) declaring such amendment to be advisable
and in the best interests of the Corporation, (iii) directing that such
amendment be submitted to and be considered by written consent action of the
shareholders of the Corporation.
The resolution setting forth the amendment is as follows:
RESOLVED: That the Board of Directors of the Corporation deems it advisable and
in the best interests of the Corporation and its stockholders that
the Certificate of Incorporation of the Corporation, as amended and
restated, be further amended by deleting Article FIRST thereof in
its entirety and inserting the following in substitution therefor:
"FIRST. The name of the Corporation is Cambridge Technology Partners
(Massachusetts), Inc."
2. This Certificate of Amendment of Certificate of Incorporation was duly
adopted by written consent of the shareholders holding a majority of the
outstanding capital stock of the Corporation in accordance with the provisions
of Sections 228 and 242 of the General Corporation Law of the State of Delaware,
and written notice of the adoption of the Certificate of
<PAGE>
-2-
Amendment of Certificate of Incorporation has been given as provided by Section
228(d) of the General Corporation Law of the State of Delaware to every
shareholder entitled to such notice.
IN WITNESS WHEREOF, CTP, Inc. has caused this Certificate of Amendment of
Certificate of Incorporation to be signed by James K. Sims, its President, and
attested by Arthur M. Toscanini, its Assistant Secretary, this 11th day of
February, 1993.
CTP, Inc.
By: /s/ James K. Sims
----------------------
James K. Sims,
President
ATTEST:
By:/s/ Arthur M. Toscanini
-----------------------------
Arthur M. Toscanini,
Secretary
<PAGE>
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED
OFFICE AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Cambridge Technology Partners (Massachusetts), Inc.
2. The registered office of the corporation within the State of Delaware is
hereby changed to 32 Loockerman Square, Suite L-100, City of Dover, County
of Kent .
3. The registered agent of the corporation within the State of Delaware is
hereby changed to The Prentice-Hall Corporation System, Inc., the business
office of which is identical with the registered office of the corporation
as hereby changed.
4. The corporation has authorized the changes hereinbefore set forth by
resolution of its Board of Directors.
Signed on May 26, 1993.
/s/ James K. Sims
----------------------------
President
/s/ Arthur M. Toscanini
- --------------------------
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
Cambridge Technology Partners (Massachusetts), Inc., a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation"), does hereby certify as follows, pursuant
to Section 242 of the General Corporation Law of Delaware:
FIRST: That the Board of Directors of said Corporation, at a meeting held
on December 14, 1995, duly adopted resolutions in accordance with Section 242 of
the General Corporation Law of the Sate of Delaware, (i) proposing amendment to
the Certificate of Incorporation of the Corporation, (ii) declaring such
amendment to be advisable and in the best interests of the Corporation, (iii)
directing that such amendment be submitted to the stockholders of the
Corporation for approval thereby. The resolutions setting forth the amendment
and directing that such amendment be submitted to the stockholders are as
follows:
RESOLVED: That, subject to stockholder approval, the Board of Directors of the
Corporation has determined that it is advisable and in the best
interests of all of the Corporation's stockholders to increase the
authorized capital stock of this Corporation from 30,000,000 shares
of Common Stock, $0.01 par value per share, to 120,000,000 shares;
that such increase be considered at the next annual meeting of the
stockholders, that in order to effect said increase the proper
officers of this Corporation are hereby authorized and directed to
prepare, execute and file with the Secretary of State of the State of
Delaware an appropriate Certificate of Amendment to the Certificate
of Incorporation of this Corporation; and that the Board of Directors
is hereby authorized to issue all or any part of the authorized but
unissued capital stock of this Corporation at such times, to such
persons, upon such terms, and for such consideration as the Board may
in its discretion determine.
RESOLVED: That the increase in the authorized capital stock of this Corporation
be submitted to the stockholders of the Corporation for their
consideration and approval.
<PAGE>
-2-
SECOND: This Certificate of Amendment of Certificate of Incorporation
was duly adopted at the Annual Meeting of Stockholders of the Corporation held
May 15, 1996, in accordance with Section 242 of the General Corporation Law of
the State of Delaware.
THIRD: That in accordance with the aforementioned resolution, the
Amended and Restated Certificate of Incorporation of this Corporation is hereby
amended by deleting the first sentence of Article FOURTH thereof in its entirety
and replacing it with a new sentence so that, as amended, the first sentence of
Article FOURTH shall read as follows:
The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue shall be One Hundred Twenty-
Two Million (122,000,000) shares, consisting of 120,000,000 shares of
Common Stock with a par value of $.01 per share (the "Common Stock")
and 2,000,000 shares of Preferred Stock with a par value of $.01 per
share (the "Preferred Stock").
FOURTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Cambridge Technology Partners (Massachusetts), Inc.,
has caused this certificate to be signed by James K. Sims, its President, and
attested by Arthur M. Toscanini, its Assistant Secretary, as of this 15th day of
May, 1996.
CAMBRIDGE TECHNOLOGY PARTNERS
(MASSACHUSETTS), INC.
By: /s/ James K. Sims
----------------------------
James K. Sims,
President
ATTEST:
By: /s/ Arthur M. Toscanini
-------------------------
Arthur M. Toscanini,
Assistant Secretary
<PAGE>
CERTIFICATE OF DESIGNATIONS
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
____________________
($0.01 Par Value)
of
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
____________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
____________________
Cambridge Technology Partners (Massachusetts), Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the provisions of Section 103
thereof, DOES HEREBY CERTIFY:
FIRST: That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board of
Directors of the Corporation adopted the following resolutions creating a series
of 100,000 shares of Preferred Stock, $0.01 par value per share, designated as
Series A Junior Participating Preferred Stock:
RESOLVED: That pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of Article
FOURTH, Section B, of its Certificate of Incorporation, a series
of Preferred Stock of the Corporation (the "Series A Junior
Participating Preferred Stock") be, and it hereby is, created,
and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and
other special rights of the shares of the Series A Junior
Participating Preferred Stock, and the qualifications,
limitations or restrictions thereof, shall be as set forth in
Appendix A attached hereto.
----------
RESOLVED: That the President, Chief Financial Officer or any Vice
President and the Secretary or any Assistant Secretary of the
Corporation be, and they hereby are, authorized and directed, in
the name and on behalf of the Corporation, to file the
Certificate of Designations in accordance with the provisions of
Delaware General Corporation Law and to take such actions as
they may deem necessary or appropriate to carry out the intent
of the foregoing resolution.
SECOND: That the aforesaid resolutions were duly and validly adopted in
accordance with the applicable provisions of Section 151 of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation
and By-Laws of the Corporation.
THIRD: That the aforesaid designation shall become effective on July 3,
1997.
<PAGE>
IN WITNESS WHEREOF, said Cambridge Technology Partners (Massachusetts),
Inc. has caused this Certificate to be executed, this 23rd day of June, 1997.
CAMBRIDGE TECHNOLOGY PARTNERS
(MASSACHUSETTS), INC.
By: /s/ Arthur M. Toscanini
-----------------------
Name: Arthur M. Toscanini
-------------------
Title: Executive Vice President
------------------------
<PAGE>
-1-
Appendix A
----------
Section 1. Designation and Amount. The shares of such series shall
----------------------
be designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 100,000. Such number of shares may
be increased or decreased by resolution of the Board of Directors; provided,
--------
however, that no decrease shall reduce the number of shares of Series A Junior
- -------
Participating Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Junior Participating Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Junior Participating Preferred Stock, in preference to the holders
of Common Stock, $.01 par value per share (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors, out of funds of the Corporation
legally available for the payment of dividends, quarterly dividends payable in
cash on January 31, April 30, July 31 and October 31 in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision, combination or
consolidation of the outstanding Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock) and the Corporation
shall pay such dividend or distribution on the Series A Junior Participating
Preferred Stock before the dividend or distribution declared on the Common Stock
is paid or set apart; provided, however, that, in the event no dividend or
-------- -------
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
<PAGE>
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
-------------
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock or
effect a subdivision, combination of consolidation of the outstanding Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, by law, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock, the holders of shares of Series A Junior Participating Preferred Stock,
the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) Directors.
<PAGE>
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
---- -----
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, the calling of special meeting of the holders of
Preferred Stock, which meeting shall thereupon be called by the Chairman of the
Board or the President, of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for a
time not earlier than 10 days and not later than 60 days after such order or
request. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class of stock
shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the certificate of incorporation or
<PAGE>
bylaws). Any vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, or as otherwise provided by law,
holders of Series A Junior Participating Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on or make any other distributions on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock ranking on
a parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
-----------------
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of
<PAGE>
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
--------------------------------------
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $1,000.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"). Following the payment
of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series A Junior Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(D) Neither the consolidation, merger or other business combination of
the Corporation with or into any other corporation nor the sale, lease, exchange
or conveyance of all or any part of the property, assets or business of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
--------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly
<PAGE>
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
--------------
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
-------
Stock shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets, unless the terms
of any such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least seventy-five percent of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
together as a single class.
Section 11. Fractional Shares. Series A Junior Participating
-----------------
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holders fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT 5
December 23, 1997
Cambridge Technology Partners
(Massachusetts), Inc.
304 Vassar Street
Cambridge, Massachusetts 02139
Re: S-3 Registration Statement
--------------------------
Ladies and Gentlemen:
We are counsel to Cambridge Technology Partners (Massachusetts), Inc.,
a Delaware corporation (the "Company"), and have represented the Company in
connection with the preparation and filing of the Company's Form S-3
Registration Statement (the "Registration Statement"), covering the sale to the
public of up to 3,255,731 shares of the Company's Common Stock, $.01 par value
per share (the "Shares"), being sold by certain stockholders of the Company.
We have reviewed the corporate proceedings taken by the Board of
Directors of the Company with respect to the authorization and issuance of the
Shares. We have also examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of all corporate records,
documents, agreements or other instruments of the Company and have made all
investigations of law and have discussed with the Company's officers all
questions of fact that we have deemed necessary or appropriate.
Based upon and subject to the foregoing, we are of the opinion that
the Shares are legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to our firm in the Prospectus
contained in the Registration Statement under the caption "Legal Matters."
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
our reports dated February 3, 1997, on our audits of the consolidated financial
statements and financial statement schedule of Cambridge Technology Partners
(Massachusetts), Inc. as of December 31, 1996 and 1995, and for each of the
three years in the period ended December 31, 1996, which reports are included in
the Company's 1996 Annual Report on Form 10-K.
We consent to the inclusion in this registration statement of our report dated
December 15, 1997, on our audits of the supplemental consolidated financial
statements of Cambridge Technology Partners (Massachusetts), Inc. as of December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996.
We also consent to the references to our Firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 22, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
1996 AND 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 26,087 11,081
<SECURITIES> 12,727 8,544
<RECEIVABLES> 61,856 39,723
<ALLOWANCES> 1,670 1,152
<INVENTORY> 0 0
<CURRENT-ASSETS> 121,079 69,732
<PP&E> 33,865 21,226
<DEPRECIATION> 13,274 7,813
<TOTAL-ASSETS> 147,644 88,172
<CURRENT-LIABILITIES> 48,826 32,499
<BONDS> 0 0
0 0
0 0
<COMMON> 517 489
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 147,644 88,172
<SALES> 0 0
<TOTAL-REVENUES> 272,878 179,667
<CGS> 0 0
<TOTAL-COSTS> 233,422 155,382
<OTHER-EXPENSES> (868) (1,818)
<LOSS-PROVISION> 518 600
<INTEREST-EXPENSE> 71 373
<INCOME-PRETAX> 40,253 25,730
<INCOME-TAX> 16,228 10,072
<INCOME-CONTINUING> 24,025 15,658
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 24,025 15,658
<EPS-PRIMARY> 0.42 0.28
<EPS-DILUTED> 0.42 0.28
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 45,301
<SECURITIES> 15,251
<RECEIVABLES> 92,417
<ALLOWANCES> 2,179
<INVENTORY> 0
<CURRENT-ASSETS> 182,214
<PP&E> 48,737
<DEPRECIATION> 17,944
<TOTAL-ASSETS> 220,375
<CURRENT-LIABILITIES> 75,242
<BONDS> 0
0
0
<COMMON> 535
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 220,375
<SALES> 0
<TOTAL-REVENUES> 287,342
<CGS> 0
<TOTAL-COSTS> 243,686
<OTHER-EXPENSES> (1,573)
<LOSS-PROVISION> 509
<INTEREST-EXPENSE> 60
<INCOME-PRETAX> 45,122
<INCOME-TAX> 18,134
<INCOME-CONTINUING> 26,988
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,988
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
