<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED DECEMBER 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 000-22125
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 36-4069408
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
875 N. MICHIGAN AVENUE, SUITE 3000
CHICAGO, ILLINOIS 60611
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 255-5000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of January 31, 1998, there were 6,892,093 shares of Class A Common
Stock and 5,123,678 shares of Class B Common Stock of the Registrant
outstanding.
1
<PAGE> 2
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I -- FINANCIAL INFORMATION:
Item 1: Financial Statements
Consolidated Balance Sheets as of December 31, 1997 and
March 31, 1997 3
Consolidated Statements of Operations for the Three and
Nine Months Ended December 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the Nine Months Ended
December 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II -- OTHER INFORMATION:
Item 6: Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1997
------------ ---------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $27,831 $ 8,184
Cash in escrow from subscribed stock -- 9,363
Accounts receivable, net of allowance of $532 and
$566 as of December 31, 1997 and March 31, 1997,
respectively 3,856 4,496
Prepaid expenses 371 564
Deferred income taxes 312 312
------- -------
Total current assets 32,370 22,919
Computers, equipment, and training software, net 1,619 1,989
Other assets 508 476
Deferred organization costs, net 77 110
------- -------
Total assets $34,574 $25,494
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ -- $ 2,000
Accounts payable 1,463 1,609
Accrued compensation 4,490 --
Income taxes payable 218 562
Deferred revenue 923 710
Accrued stock issuance costs -- 609
Other accrued liabilities 2,612 1,704
------- -------
Total current liabilities 9,706 7,194
------- -------
Stockholders' equity:
Preferred Stock, $1.00 par value, 2,000 shares
authorized, no shares issued -- --
Class A common stock, $.001 par value, 40,000 shares
authorized, 6,857 issued as of December 31, 1997 and
4,594 issued as of March 31, 1997 7 5
Class B common stock, $.001 par value, 20,000 shares
authorized, 5,033 issued as of December 31, 1997 and
4,967 issued as of March 31, 1997 5 5
Class A common stock subscribed, 1,755 shares -- 8,476
Additional paid-in capital 20,433 9,329
Notes receivable from sale of common stock (208) (122)
Retained earnings 4,631 607
------- -------
Total stockholders' equity 24,868 18,300
------- -------
Total liabilities and stockholders' equity $34,574 $25,494
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
3
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DIAMOND TECHNOLOGY PARTNERS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER FOR THE NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------ -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $15,390 $10,156 $41,850 $26,245
------- ------- ------- -------
Operating expenses:
Project personnel and related expenses 8,261 5,593 22,859 16,307
Professional development and recruiting 1,728 1,518 4,448 4,478
Marketing and sales 689 296 2,378 1,189
Management and administrative support 2,214 1,514 6,302 4,840
------- ------- ------- -------
Total operating expenses 12,892 8,921 35,987 26,814
------- ------- ------- -------
Income (loss) from operations 2,498 1,235 5,863 (569)
Interest income 327 47 830 121
Interest expense (-) 24 (10) (39)
------- ------- ------- -------
Income (loss) before taxes 2,825 1,306 6,683 (487)
Income taxes (1,101) (587) (2,659) 107
------- ------- ------- -------
Net income (loss) $ 1,724 $ 719 $ 4,024 $ (380)
======= ======= ======= =======
Basic earnings (loss) per share of
common stock $ 0.15 $ 0.08 $ 0.35 $ (0.04)
Diluted earnings (loss) per share of
common stock $ 0.12 $ 0.07 $ 0.29 $ (0.04)
Shares used in computing basic earnings
(loss) per share of common stock 11,801 9,505 11,659 9,391
Shares used in computing diluted earnings
(loss) per share of common stock 14,255 11,062 14,052 10,439
</TABLE>
See accompanying notes to consolidated financial statements
4
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DIAMOND TECHNOLOGY PARTNERS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED DECEMBER 31,
-------------------
1997 1996
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,024 $ (380)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 642 884
Cancellation of note receivable -- 226
Changes in assets and liabilities:
Accounts receivable 640 144
Prepaid expenses and other 193 371
Accounts payable (146) 25
Deferred compensation -- (709)
Accrued compensation 4,490 (1,089)
Deferred revenue 213 --
Income taxes payable (134) (406)
Other accrued liabilities 1,024 98
-------- -------
Net cash provided by (used in) operating activities 10,946 (836)
-------- -------
Cash flows from investing activities:
Capital expenditures, net (238) (1,151)
Other assets (273) --
-------- -------
Net cash used in investing activities (511) (1,151)
-------- -------
Cash flows from financing activities:
Proceeds from notes payable -- 2,250
Repayment of notes payable (2,000) (198)
Stock issuance costs (649) --
Common stock issued and subscribed 2,591 2,432
Repurchase of common stock (93) --
-------- -------
Net cash provided by (used in) financing activities (151) 4,484
-------- -------
Net increase in cash and cash equivalents 10,284 2,497
Cash and cash equivalents at beginning of period 17,547 4,635
-------- -------
Cash and cash equivalents at end of period $ 27,831 $ 7,132
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 10 $ 43
Cash paid during the period for income taxes 2,793 298
Supplemental disclosure of noncash investing and
financing activities:
Issuance of common stock for notes $ 235 $ 201
Deferred and incentive compensation applied to
payment for common stock -- 130
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF REPORTING
The accompanying consolidated financial statements of Diamond Technology
Partners Incorporated (the "Company") include the accounts of the Company and
its wholly owned subsidiary. All significant intercompany transactions and
balances have been eliminated in consolidation. Certain prior period amounts
have been reclassified to conform with current period presentation. In the
opinion of management, the 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 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 Annual Report on Form 10-K for additional disclosures, including
a summary of the Company's accounting policies, which have not changed. The
consolidated results of operations for the quarter and nine months ended
December 31, 1997, are not necessarily indicative of results for the full year.
B. EARNINGS PER SHARE
The Company calculated earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share", which became
effective during the quarter ended December 31, 1997. SFAS 128 establishes
standards for computing and presenting earnings per share (EPS) and requires a
dual presentation of basic and diluted earnings per share.
Basic earnings per share is computed using the weighted average number of
common shares outstanding. Diluted earnings per share is computed using the
weighted average number of common shares outstanding and the assumed exercise
of stock options and warrants (using the treasury stock method). Both basic
and diluted earnings per share include the assumed issuance of a stock dividend
at the beginning of the nine months ended December 31, 1996 to effect a stock
split.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in connection with the
information contained in the Consolidated Financial Statements and notes
thereto appearing elsewhere in this Quarterly Report on Form 10-Q. This
Quarterly Report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. See "Forward Looking Statements" below.
OVERVIEW
Diamond Technology Partners Incorporated ("Diamond" or the "Company") is a
management consulting firm that devises and implements business strategies
enabled by information technology ("IT") to improve its clients' competitive
positions. Diamond was founded upon, and continues to stress, a business
culture in which strategic consulting and IT expertise are integrated to
provide client solutions.
The Company's revenues are comprised of professional fees for services
rendered to clients which are billed either monthly or semi-monthly in
accordance with the terms of the client engagement. Prior to the commencement
of a client engagement, the Company and its client agree on fees for services
based upon the scope of the project, Diamond staffing requirements and the
level of client involvement. The Company recognizes revenues as services are
performed in accordance with the terms of the client engagement. Out-of-pocket
expenses are reimbursed by clients and offset against expenses incurred and are
not included in recognized revenues. Provisions are made for estimated
uncollectible amounts based on the Company's experience. Although the Company
from time to time has been required to make revisions to its clients' estimated
deliverables, to date none of such revisions has had a material adverse effect
on the Company's operating or financial results.
The largest portion of the Company's costs consist primarily of
employee-related expenses for its client-serving professionals and other direct
costs, such as third-party vendor costs and unbilled travel costs associated
with the delivery of services to clients. The remainder of the Company's costs
are comprised of the expenses associated with the development of the business
and the support of its client-serving professionals, such as professional
development and recruiting, marketing and sales, and management and
administrative support. Professional development and recruiting expenses
consist primarily of recruiting and training costs. Marketing and sales
expenses consist primarily of the costs associated with the Company's
development and maintenance of its marketing materials and programs, in
addition to other marketing programs. Management and administrative support
expenses consist primarily of the costs associated with operations, finance,
information systems, facilities and other administrative support for project
personnel.
The Company regularly reviews its fees for services, professional
compensation and overhead costs to ensure that its services and compensation
are competitive within the industry. In addition, Diamond periodically
monitors the progress of client projects with client senior management. The
Company manages activities of its professionals by closely monitoring
engagement schedules and staffing requirements for new engagements. Because
most of the Company's client engagements are, and may be in the future,
terminable by the client without penalty, an unanticipated termination of a
client project could require the Company to maintain underutilized employees.
While professional staff must be adjusted to reflect active engagements, the
Company must maintain a sufficient number of senior professionals to oversee
existing client engagements and participate in the Company's sales efforts to
secure new client assignments.
7
<PAGE> 8
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, selected
statements of operations data as a percentage of net revenues:
<TABLE>
<CAPTION>
FOR THE QUARTER FOR THE NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------ -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Operating expenses:
Project personnel and related expenses 53.7 55.1 54.6 62.1
Professional development and recruiting 11.2 14.9 10.6 17.1
Marketing and sales 4.5 2.9 5.7 4.5
Management and administrative support 14.4 14.9 15.1 18.4
------ ------ ------ ------
Total operating expenses 83.8 87.8 86.0 102.1
------ ------ ------ ------
Income (loss) from operations 16.2 12.2 14.0 (2.1)
Interest income, net 2.1 0.7 2.0 0.3
------ ------ ------ ------
Income (loss) before taxes 18.3 12.9 16.0 (1.8)
Income taxes (7.1) (5.8) (6.4) 0.4
------ ------ ------ ------
Net income (loss) 11.2% 7.1% 9.6% (1.4)%
====== ====== ====== ======
</TABLE>
QUARTER ENDED DECEMBER 31, 1997 COMPARED TO QUARTER ENDED DECEMBER 31, 1996
The Company's net income of $1.7 million during the quarter ended December
31, 1997 improved from $700,000 during the same period in the prior year as a
result of increased revenues, combined with an improvement in the utilization
of client-serving professionals, partially offset by an increase in expenses
required to support the Company's growth during the period.
The Company's results in the year-earlier period reflect the impact of the
loss of two projects as a result of clients' cancellations of business
initiatives during the last quarter of fiscal 1996 and the first quarter of
fiscal 1997. The Company responded to these project cancellations and the
resulting business circumstances during the quarter ended September 30, 1996,
by reducing spending levels, including the elimination of its bonus programs
for the year ended March 31, 1997, while maintaining the consulting capacity
required to support growth. The Company has reinstated its bonus programs and
will award bonuses to Partners and employees at the end of the fiscal year
ending March 31, 1998 if the Company's overall performance during the nine
months ended December 31, 1997 is sustained for the remainder of the fiscal
year. Accordingly, the Company recognized bonus expense of $2.0 million during
the quarter ended December 31, 1997 as compared to none during the same period
in the prior year.
The Company's net revenues increased 51.5% to $15.4 million during the
quarter ended December 31, 1997 as compared to the same period in the prior
year. The increase in the Company's net revenues reflects the addition of new
clients, as well as the leveraging of the Company's existing client base. For
the quarter ended December 31, 1997, $6.7 million of revenue was derived from
services delivered to new clients and $8.7 million related to the completion of
projects or the undertaking of additional projects from the Company's client
base of the previous fiscal year. The Company served 35 clients during the
quarter ended December 31, 1997 (of which 14 were clients during the prior
fiscal year) as compared to 29 clients served during the same period in the
prior year.
Project personnel and related expenses increased $2.7 million, or 47.7%,
to $8.3 million during the quarter ended December 31, 1997 as compared to the
same period in the prior year. This increase resulted from an increase in the
number of client-serving professionals to respond to anticipated growth,
combined with the reinstatement of the Company's bonus programs during the
current year. The Company increased its client-serving professional staff from
143 at December 31, 1996 to 162 at December 31, 1997. As a percentage of net
revenues, project personnel and related expenses decreased from 55.1% to 53.7%
during fiscal 1997, reflecting the improvement in utilization of its
client-serving professionals.
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<PAGE> 9
Professional development and recruiting expenses increased $210,000 during
the quarter ended December 31, 1997 as compared to the same period in the prior
year. This increase reflects the Company's training of a higher number of
client-serving professionals, combined with the reinstatement of the Company's
bonus programs during the current year. As a percentage of net revenues, these
expenses decreased to 11.2% as compared to 14.9% during the same period in the
prior year as a result of the Company's improved operating leverage resulting
from the net revenue growth.
Marketing and sales expenses increased from $296,000 to $689,000 during
the quarter ended December 31, 1997 as compared to the same period in the prior
year as a result of the Company's investment in its marketing and branding
programs. The Company's marketing activities for the quarter were focused on
(a) the development of its magazine, "Context", which was launched in the
quarter ended December 31, 1997, and (b) the promotion of intellectual capital
through the Diamond Exchange, the Company's executive learning forum for senior
executives. As a percentage of net revenues, these expenses increased from
2.9% to 4.5%.
Management and administrative support expenses increased from $1.5 million
to $2.2 million, or 46.2%, during the quarter ended December 31, 1997 as
compared to the same period in the prior year. This increase resulted from the
cost of additional facilities, equipment and personnel necessary to support the
Company's growth and increased consulting capacity, combined with the impact of
the reinstatement of the bonus programs during the current year. As a
percentage of net revenues, these expenses decreased from 14.9% to 14.4% as a
result of the Company's improved operating leverage resulting from the net
revenue growth.
NINE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO NINE MONTHS ENDED DECEMBER 31,
1996
The Company's net income improved $4.4 million during the nine months
ended December 31, 1997 as compared to the same period in the prior year. The
Company's net income of $4.0 million during the nine months ended December 31,
1997 improved from the net loss of $380,000 during the same period in the prior
year as a result of increased revenues combined with an improvement in the
utilization of client-serving professionals, partially offset by an increase
in expenses required to support the Company's growth during the period.
The Company's net loss in the year-earlier period resulted primarily from
the loss of two projects as a result of clients' cancellations of business
initiatives during the last quarter of fiscal 1996 and the first quarter of
fiscal 1997. The Company responded to these project cancellations and the
resulting business circumstances during the quarter ended September 30, 1996,
by reducing spending levels, including the elimination of its bonus programs
for the year ended March 31, 1997, while maintaining the consulting capacity
required to support growth. The Company has reinstated its bonus programs and
will award bonuses to Partners and employees at the end of the fiscal year
ending March 31, 1998 if the Company's overall performance during the nine
months ended December 31, 1997 is sustained for the remainder of the fiscal
year. Accordingly, the Company has recognized bonus expense of $4.5 million
during the nine months ended December 31, 1997 as compared to the comparable
period in the prior year. The amount of the bonus expense for the full fiscal
year will depend on the Company's results of operations and other measures for
the remainder of the fiscal year.
The Company's net revenues increased 59.5% to $41.9 million during the
nine months ended December 31, 1997 as compared to the same period in the prior
year. The increase in the Company's net revenues reflects an increase in the
volume of services delivered to new clients, as well as the leveraging of the
Company's existing client base. For the nine months ended December 31, 1997,
$12.1 million of revenue was derived from services delivered to new clients and
$29.8 million related to the completion of projects or the undertaking of
additional projects from the Company's client base of the previous fiscal year.
The Company served 54 clients during the nine months ended December 31, 1997
(of which 26 were clients during the prior fiscal year) as compared to 39
clients served during the same period in the prior year.
Project personnel and related expenses increased $6.6 million, or 40.2%,
to $22.9 million during the nine months ended December 31, 1997 as compared to
the same period in the prior year. This increase resulted from an increase in
the number of client-serving professionals to respond to anticipated growth,
combined with the
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<PAGE> 10
impact of the reinstatement of the bonus program during the current year. The
Company increased its client-serving professional staff from 143 at December
31, 1996 to 162 at December 31, 1997. As a percentage of net revenues, project
personnel and related expenses decreased from 62.1% to 54.6% during fiscal
1998, reflecting the improvement in utilization of its client-serving
professionals.
Professional development and recruiting expenses decreased $30,000 during
the nine months ended December 31, 1997 as compared to the same period in the
prior year. This decrease reflects the initial investment in certain
intellectual capital programs during the nine months ended December 31, 1996,
partially offset by the Company's training of a higher number of client-serving
professionals during the nine months ended December 31, 1997. The Company has
continued its recruiting and training programs to support the growth of the
business. As a percentage of net revenues, these expenses decreased to 10.6%
as compared to 17.1% during the same period in the prior year as a result of
the Company's improved operating leverage resulting from the net revenue
growth.
Marketing and sales expenses increased $1.2 million to $2.4 million during
the nine months ended December 31, 1997 as compared to the same period in the
prior year as a result of the Company's investment in its marketing and
branding programs. The Company's marketing activities in the current fiscal
year were focused on (a) the development of its magazine, "Context", which was
launched during the quarter ended December 31, 1997 and (b) the promotion of
Intellectual Capital through the Diamond Exchange, the Company's executive
learning forum for senior executives. As a percentage of net revenues, these
expenses increased from 4.5% to 5.7%.
Management and administrative support expenses increased from $4.8 million
to $6.3 million, or 30.2%, during the nine months ended December 31, 1997 as
compared to the same period in the prior year. This increase resulted from the
cost of additional facilities, equipment and personnel necessary to support the
Company's growth and increased consulting capacity, combined with the impact of
the reinstatement of bonus programs in the current year. As a percentage of
net revenues, these expenses decreased from 18.4% to 15.1% as a result of the
Company's improved operating leverage resulting from the net revenue growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company closed its initial public offering of common stock in April
1997 and received net proceeds totaling approximately $10.1 million. The
Company used $2.0 million of the proceeds from the initial public offering to
repay a loan from Safeguard Scientifics, Inc..
The Company also maintains a revolving line of credit pursuant to the
terms of a secured credit agreement from a commercial bank under which the
Company may borrow up to $3.0 million at an annual interest rate based on the
prime rate or based on the LIBOR rate plus 2.5%, at the Company's discretion.
This line of credit has been reduced to account for letters of credit and other
contingent obligations of the Company that are outstanding. As of December 31,
1997, the Company had approximately $2.3 million available under this line of
credit.
The Company's billings for the quarter ended December 31, 1997 totaled
$17.8 million. These amounts include billings to clients for out-of-pocket
expenses that are reimbursed by clients which are not included in recognized
revenues. The Company's gross accounts receivable of $4.4 million at December
31, 1997, represents 22 days of billings for the quarter.
The Company currently anticipates that the its cash resources, together
with amounts available under its current revolving line of credit and cash
generated from
10
<PAGE> 11
existing operations will be sufficient to satisfy its operating cash needs for
the next twelve months. Should the Company's business expand more rapidly than
expected, the Company believes that additional bank credit would be available
to fund such operating and capital requirements. In addition, the Company
could consider seeking additional public or private debt or equity financing to
fund future growth opportunities.
YEAR 2000 ISSUES
Many existing computer programs were designed and developed without
considering the impact of the upcoming change in the century and consequently
use only two digits to identify a year in the date field. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000 (the "Year 2000 Issue"). The Company has reviewed the potential
impact of the Year 2000 Issue on its operations and has concluded that it will
not be material.
FORWARD-LOOKING STATEMENTS
Statements contained anywhere in this report that are not historical facts
contain forward-looking statements including such statements identified by the
words "anticipate", "believe", "estimate", "expect" or similar terminology used
with respect to the Company and its management. These forward-looking
statements are subject to risks and uncertainties which could cause the
Company's actual results, performance and prospects to differ materially from
those expressed in, or implied by, the forward-looking statements. The
forward-looking statements speak only as of the date hereof and the Company
undertakes no obligation to revise or update them to reflect events or
circumstances that arise in the future. Readers are cautioned not to place
undue reliance on forward-looking statements. Among the risks and
uncertainties affecting the forward looking statements are the Company's
ability to manage its rapid growth and keep pace with evolving technology, and
the variability of the Company's quarterly operating results due to, among
other things, variations in the number of active client projects, and the other
risks described in "Risk Factors" in the registration statement on Form S-1
filed in connection with the initial public offering with the Securities and
Exchange Commission (file No. 333-17785).
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1 - 5
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Statement Regarding Computation of Earnings per Share
27. Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
Date: February 17, 1998 By: MELVYN E. BERGSTEIN
Melvyn E. Bergstein
Chairman, Chief Executive Officer, President
Date: February 17, 1998 By: MICHAEL E. MIKOLAJCZYK
Michael E. Mikolajczyk
Senior Vice President, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer) and Director
13
<PAGE> 14
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<S> <C>
11 Statement Regarding Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
14
<PAGE> 1
EXHIBIT 11
DIAMOND TECHNOLOGY PARTNERS INCORPORATED
STATEMENT REGARDING COMPUTATION OF EARNINGS (LOSS)
PER SHARE OF COMMON STOCK
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE QUARTER FOR THE NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------ ------------------
1997 1996 1997 1996
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $ 1,724 $ 719 $ 4,024 $ (380)
======== ======= ======== =========
Weighted average common shares outstanding 11,801 9,433 11,659 9,063
Additional shares pursuant to SAB83 computation -- 72 -- 328
-------- ------- -------- ---------
Shares used in computing basic earnings (loss)
per share of common stock 11,801 9,505 11,659 9,391
======== ======= ======== =========
Basic earnings (loss) per share of common stock $ 0.15 $ 0.08 $ 0.35 $ (0.04)
Shares used in computing basic earnings (loss)
per share of common stock 11,801 9,505 11,659 9,391
Dilutive effect of common equivalent shares of
stock options and warrants 2,454 623 2,393 --
Additional options and warrants pursuant to
SAB83 computation -- 934 -- 1,048
-------- ------- -------- ---------
Shares used in computing diluted earnings (loss)
per share of common stock 14,255 11,062 14,052 10,439
======== ======= ======== =========
Diluted Earnings (loss) per share of common stock $ 0.12 $ 0.07 $ 0.29 $ (0.04)
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 27,831
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0
0
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</TABLE>
