<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
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 North Michigan Avenue, Suite 3000 60611
Chicago, Illinois (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (312) 255-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, par value $.001 per share
Indicate by check mark whether the Registrant (i) 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
As of May 31, 2000 there were 21,369,423 shares of Class A Common Stock and
2,917,569 shares of Class B Common Stock of the Registrant outstanding. The
aggregate market value of the voting stock of the Registrant held by non-
affiliates was an estimated $1.4 billion based upon the closing price of $63.00
per share on May 31, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
The undersigned Registrant ("Diamond" or the "Company") hereby amends its Annual
Report on Form 10-K for the fiscal year ended March 31, 2000 ("fiscal 2000") as
follows:
1. The cover page to the Form 10-K is amended by:
1.1 Deleting the information supplied under the heading "Documents Incorporated
by Reference" and substituting the word "None," and
1.2 Deleting the "X" in the box following "Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K."
2. Items 10, 11, 12, and 13 of Part III of the Form 10-K are amended by
deleting such items in their entirety and substituting in lieu thereof
Items 10, 11, 12 and 13 as set forth below.
3. Deleting in its entirety from Part IV, Item 14, Financial Statement
Schedules the "Consolidated Statements of Cash Flows Fiscal Years ended
March 31, 1998, 1999 and 2000" and substituting in lieu thereof the
"Consolidated Statements of Cash Flows Fiscal Years ended March 31, 1998,
1999 and 2000" set forth below to reflect the correction of the "Common
stock issued" for the fiscal year ended 1999 from $20,933 to $20,600.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the executive officers of the Company is included as Item
4A of Part I of the Form 10-K as permitted by Instruction 3 to Item 401(b) of
Regulation S-K.
The incumbent directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Melvyn E. Bergstein 58 Chairman of the Board of Directors and Chief Executive Officer
Michael E. Mikolajczyk 48 Vice-Chairman, Secretary and Director
John J. Sviokla 42 Vice-Chairman and Director
Adam J. Gutstein 37 President and Director
Edward R. Anderson/1/ 53 Director
Donald R. Caldwell/1,2/ 53 Director
Mark L. Gordon/2/ 49 Director
Alan C. Kay 59 Director
John D. Loewenberg/2/ 59 Director
</TABLE>
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<TABLE>
<S> <C> <C>
Christopher J. Moffitt 45 Director
Arnold R. Weber/1/ 70 Director
</TABLE>
/1/ Member of the Compensation Committee
/2/ Member of the Audit Committee
Melvyn E. Bergstein co-founded Diamond in January 1994, and served as Chairman,
Chief Executive Officer and President until July 1, 1998 when Mr. Bergstein
resigned as President in favor of Mr. Mikolajczyk. Mr. Bergstein has been a
member of the board of directors since January 1994. Prior to co-founding
Diamond, Mr. Bergstein held several senior executive positions with Technology
Solutions Company from 1991 to 1993. Prior to that time, Mr. Bergstein held
several senior positions with other consulting firms, including twenty-one years
in various positions with Arthur Andersen & Co.'s consulting division, now
Andersen Consulting. Mr. Bergstein also serves as a member of the board of
directors of New Era of Networks, Inc., an enterprise application integration
software company.
Michael E. Mikolajczyk co-founded Diamond and joined the Company in April 1994
and has served as a member of the board of directors since then. From April 1994
until July 1998, Mr. Mikolajczyk also served as Senior Vice President, Chief
Financial and Administrative Officer. From July 1998 until April 2000, Mr.
Mikolajczyk served as President. In July 1999, Mr. Mikolajczyk became
Secretary, and since April 1, 2000 he has also been Vice Chairman. Prior to
joining Diamond, Mr. Mikolajczyk served as senior vice president of finance and
administration and chief financial officer for Technology Solutions Company from
1993 to 1994. Prior to that time, Mr. Mikolajczyk held several senior financial
and corporate development positions at MCI Telecommunications Corporation.
Adam J. Gutstein co-founded Diamond in January 1994, has served as a partner and
Vice President since inception and as a member of the board of directors since
August 1999. From July 1998 until April 2000, Mr. Gutstein served as Chief
Operating Officer. Since April 1, 2000, Mr. Gutstein has served as President of
the Company. Prior to joining Diamond, Mr. Gutstein was a vice president at
Technology Solutions Company and a manager with Andersen Consulting.
John J. Sviokla joined Diamond in September 1998 as a partner and Vice President
and became a member of the board of directors in August 1999. Since April 1,
2000, Dr. Sviokla has been Vice Chairman. Prior to joining Diamond, Dr. Sviokla
was a professor at the Harvard Business School from October 1986 to August 1998.
His pioneering work on Marketspace established Harvard's first course on
electronic commerce. He co-authored the seminal articles Managing in the
Marketspace and Exploiting the Virtual Value Chain, both appearing in the
Harvard Business Review, and has authored over 90 articles and cases, has edited
books and has been a consultant to large and small companies around the world.
He has been a guest professor at many universities including Kellogg,
Massachusetts Institute of Technology, The London Business School, the Melbourne
Business School and the Hong Kong Institute of Science and Technology. His
current research and consulting focuses on how to help large companies unlock
value in the new economy.
Edward R. Anderson has been a member of the board of directors since June 1994.
In July 1999 Mr. Anderson became the chairman and chief executive officer of E-
Certify Corp. From January 1994 to July 1999, he was president, chief executive
officer and director of CompuCom Systems, Inc. having joined CompuCom as chief
operating officer in August 1993. From 1988 to 1993 Mr. Anderson served as
president and chief operating officer of ComputerLand USA. Prior to that time,
Mr. Anderson held
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executive and management positions with The Computer Factory, W.R. Grace &
Company and the American Express Company.
Donald R. Caldwell has been a member of the board of directors since June 1994
and has been the chief executive officer of Cross Atlantic Technology Fund, L.P.
since March 1999. From February 1996 to March 1999, Mr. Caldwell was president
and chief operating officer and a director of Safeguard Scientifics, Inc. From
April 1991 to December 1993, Mr. Caldwell was the president of Valley Forge
Capital Group, Ltd. Prior to that time, Mr. Caldwell held various executive and
management positions with a predecessor company of Cambridge Technology Partners
(Massachusetts), Inc. and Arthur Young & Co., a predecessor to Ernst & Young,
LLP. Mr. Caldwell currently is a member of the boards of directors of First
Consulting Group, Quaker Chemical Company and numerous privately held companies
and other civic organizations.
Mark L. Gordon has been a member of the board of directors since August 1999.
Mr. Gordon is an attorney with the law firm Gordon & Glickson LLC and has been a
partner of that firm since August 1979, currently serving as its managing
partner. Mr. Gordon founded Gordon & Glickson's technology practice and advises
a wide range of emerging technology companies, including Diamond, on business
and legal matters. Mr. Gordon also serves as a member of the board of directors
of New Era of Networks, Inc., an enterprise application integration software
company.
Alan C. Kay has been a member of the board of directors since June 1996 and is
currently vice president of research and development for Walt Disney
Imagineering, Inc. and a Disney fellow. From 1984 to 1996, Dr. Kay was an Apple
fellow at Apple Computer, Inc. Prior to that time, Dr. Kay held scientific
positions at Atari Corporation and Xerox Palo Alto Research Center. He was a
research associate and lecturer in computer science at Stanford University from
1969 until 1971.
John D. Loewenberg has been a member of the board of directors since October
1996. Mr. Loewenberg is currently managing partner and a consultant with JDL
Enterprises, a consulting firm. From May 1995 through 1996, Mr. Loewenberg was
an executive vice president and chief operating officer of Connecticut Mutual, a
life insurance company. Prior to joining Connecticut Mutual, Mr. Loewenberg held
several senior management positions with Aetna Life and Casualty and its
affiliates. Mr. Loewenberg is a director of CompuCom Systems, Inc., Sanchez
Computer Associates, Inc. and DocuCorp International, Inc.
Christopher J. Moffitt co-founded Diamond in January 1994 and served as senior
vice president and secretary until July 1, 1999. He has been a member of the
board of directors since January 1994. From 1988 to 1993 he served as senior
vice president of Technology Solutions Company. Prior to that time, Mr. Moffitt
held several consulting positions and senior technology positions with Arthur
Young & Co., a predecessor to Ernst & Young, LLP, Neiman Marcus and Electronic
Data Systems.
Arnold R. Weber has been a member of the board of directors since November 1999.
Mr. Weber has been President Emeritus of Northwestern University since July 1998
and was its 14th president from 1985 to 1994. From 1995 to 1999, he served as
president of the Civic Committee of The Commercial Club of Chicago, a leading
business and civic organization in Chicago. Mr. Weber has been a member of the
faculty at the Graduate School of Business at the University of Chicago,
Stanford University and the Massachusetts Institute of Technology. Mr. Weber is
a trustee of the Museum of Science and Industry, the Committee for Economic
Development, the Aspen Institute and the University of Notre Dame. He has
received honorary degrees from various universities including Notre Dame, the
University of Colorado, Loyola University of Chicago, Northwestern University
and the University of Illinois. Mr.
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Weber is a director of Aon Corporation, John Deere & Company, PepsiCo Inc. and
the Tribune Company.
Directors' Meetings and Committees
The Audit Committee of the Board of Directors, which has authority to review and
recommend to the Board internal accounting and financial controls and accounting
principles and auditing practices and procedures to be employed in the
preparation and review of the Company's financial statements, met twice during
fiscal 2000. The Compensation Committee of the Board of Directors, which has
authority to review and recommend to the Chief Executive Officer and the Board
policies, practices and procedures relating to the compensation of managerial
employees and the establishment and administration of employee benefit plans
(except for stock option plans) met informally during fiscal 2000. During fiscal
2000 all decisions regarding managerial employee compensation were reviewed with
and made by the Board of Directors as a whole. Effective as of May 2000, the
Compensation Committee consists solely of independent directors. The Board of
Directors has no Nominating Committee.
The Board of Directors met four times during fiscal 2000 and acted by unanimous
written consent five times. All of the directors attended at least 75 percent
of the total meetings held by the Board of Directors and the committees on which
they served during fiscal 2000 other than Dr. Sviokla who attended two of the
three meeting held following his election to the Board.
Item 11. Executive Compensation
Compensation of Executive Officers
The following table sets forth certain information concerning compensation paid
or accrued in fiscal years 2000, 1999 and 1998 with respect to the Company's
Chief Executive Officer and the four other executive officers who were most
highly compensated in fiscal 2000 (collectively the "Named Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Name and Principal Fiscal Salary Bonus Other Annual Long-Term All Other
Position Year Compensation Compensation Compensation/2/
Awards-
Securities
Underlying
Options
<S> <C> <C> <C> <C> <C> <C>
Melvyn E. Bergstein 2000 $525,000 $252,000 - 30,600 $4,902
Chairman & CEO 1999 500,000 225,000 $2,297 - 8,550
1998 506,250 300,000 - 71,406 8,550
Michael E. Mikolajczyk 2000 425,000 204,000 1,659 28,800 1,710
Vice Chairman & 1999 400,000 180,000 - - 3,306
Secretary 1998 400,000 240,000 - 55,444 3,306
John J. Sviokla 2000 375,500 180,000 - 45,400 1,140
Vice Chairman 1999 204,219 136,100 - 114,001 646
Adam J. Gutstein 2000 400,000 192,000 - 42,900 1,026
President 1999 350,000 157,500 - - 1,254
1998 350,000 210,000 - 47,215 1,026
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Karl E. Bupp 2000 275,000 132,000 1,659 18,601 1,026
Vice President & 1999 250,000 112,500 - 35,642 941
Chief Financial Officer 1998 225,000 90,000 - - 1,254
</TABLE>
/1/ The compensation described in this table does not include (i) medical,
group life insurance or other benefits received by the Named Officers which
are available generally to all salaried employees of the Company or (ii)
certain perquisites and other personal benefits, securities or property
received by the Named Officers which do not in the aggregate exceed the
lesser of $50,000 or 10% of the Named Officer's salary during the fiscal
year.
/2/ Represents the excess of the group life insurance premium paid in the
respective year.
Employment Agreement and Certain Other Arrangements
Each of the Named Officers has an employment agreement with the Company that
provides for annual salaries and bonuses determined in accordance with the
Second Amended and Restated Partners Operating Agreement dated April 1, 1996
(the "Partners Operating Agreement"). See "Partners Operating Agreement" under
Item 13 below. The employment agreements are (i) terminable at any time by
either party; (ii) contain non-competition provisions that continue for 18
months following termination of employment; (iii) prohibit the employee from
disclosing any of the Company's confidential information; and (iv) require the
employee to disclose and grant ownership to the Company of all ideas, inventions
and business plans developed during the course of employment to the extent
related to the business of the Company or resulting from work performed for, or
use of any property of, the Company.
Stock Options
The following table provides information on stock options granted by the Company
in fiscal 2000 to the Named Officers. All Company option grants depicted below
were made pursuant to the Company's 1998 Equity Incentive Plan.
Options Granted to Named Officers during Fiscal 2000
<TABLE>
<CAPTION>
Potential Potential
Percent of Realizable Value Realizable Value
Total at Assumed at Assumed
Number of Options Annual Rates of Annual Rates of
Shares Granted to Stock Price Stock Price
Underlying Employees Exercise Appreciation for Appreciation for
Options in Fiscal Price Per Expiration Option Terms* Option Terms*
Name Granted Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Melvyn E. Bergstein 30,600 1% $13.53 4/01/06 $168,547 $ 392,786
Michael E. Mikolajczyk 28,800 1% $13.53 4/01/06 $158,632 $ 369,681
John J. Sviokla 25,000 1% $52.25 11/12/06 $531,775 $1,239,262
20,400 0% $13.53 4/01/06 $112,365 $ 261,857
Adam J. Gutstein 42,900 1% $13.53 4/01/06 $236,296 $ 550,671
Karl E. Bupp 18,601 0% $13.53 4/01/06 $102,456 $ 238,765
</TABLE>
* The amounts shown are calculated assuming that the market value of the Common
Stock issuable upon exercise of the option is equal to the exercise price per
share as of the date of grant. The dollar amounts under these columns assume a
compounded annual market price increase for the underlying shares of Common
Stock from the date of grant to the end of the option term of 5% and 10%,
respectively. This format is prescribed by the Securities and Exchange
Commission and is not intended to forecast future appreciation of shares of the
Common Stock. The actual value, if any, the Named Officer will realize will
depend on the excess of the market price for shares of the Common Stock on the
date the option is
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exercised over the exercise price. Accordingly, there is no assurance that the
value realized by a Named Officer will be at or near the value estimated above.
The following table sets forth information concerning options exercised by the
Named Officers during fiscal 2000 and the number and the hypothetical value of
certain unexercised options of the Company held by the Named Officers as of
March 31, 2000. This table is presented solely for purposes of complying with
the rules of the Securities and Exchange Commission and does not necessarily
reflect the amounts the Named Officers will actually receive upon any sale of
the shares acquired upon exercise of the options.
Options Exercised by Named Officers during Fiscal 2000
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at March 31, 2000 March 31, 2000
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Melvyn E. Bergstein - - 391 101,615 $ 20,117 $5,251,654
Michael A. Mikolajczyk - - 12,671 102,510 816,400 5,541,754
John J. Sviokla 40,230 $2,401,581 - 143,678 - 6,991,543
Adam J. Gutstein 12,622 531,449 - 108,678 - 5,839,536
Karl E. Bupp 941 59,819 - 53,302 - 2,984,002
</TABLE>
Compensation of Directors
Directors receive no cash compensation for their services as directors but are
reimbursed for expenses incurred in connection with attendance at meetings of
the Board and its committees. Directors are granted options to purchase Class A
Common of the Company at the discretion of the Board of Directors. The exercise
price of each option is equal to the fair market value of the shares on the date
of grant. The options vest over periods of three to five years and have terms
ranging from five years to seven years. The following table provides information
on stock options granted to Directors in fiscal 2000.
Options Granted to Directors during Fiscal 2000
<TABLE>
Potential Potential
Realizable Value Realizable Value
Percent of at Assumed Annual at Assumed Annual
Number of Total Rates of Stock Rates of Stock
Shares Options Price Price
Underlying Granted to Exercise Appreciation for Appreciation for
Options Directors in Price Per Expiration Option Terms* Option Terms *
Name Granted Fiscal Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Edward R. Anderson 12,600 0% $17.70 8/01/03 $ 90,792 $211,583
Donald R. Caldwell 30,000 1% $17.70 8/01/04 $216,170 $503,769
Mark L. Gordon 15,000 0% $17.70 8/01/02 $108,085 $251,884
John D. Loewenberg 5,100 0% $17.70 8/01/02 $ 36,749 $ 85,641
Arnold R. Weber 22,500 0% $27.97 10/07/03 $256,198 $597,051
</TABLE>
* The amounts shown are calculated assuming that the market value of the Common
Stock issuable upon exercise of the option is equal to the exercise price per
share as of the date of grant. The dollar amounts under these columns assume a
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compounded annual market price increase for the underlying shares of Common
Stock from the date of grant to the end of the option term of 5% and 10%,
respectively. This format is prescribed by the Securities and Exchange
Commission and is not intended to forecast future appreciation of shares of the
Common Stock. The actual value, if any, a Director will realize will depend on
the excess of the market price for shares of the Common Stock on the date the
option is exercised over the exercise price. Accordingly, there is no assurance
that the value realized by a Director will be at or near the value estimated
above.
Compensation Committee Interlocks and Insider Participation
None.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of May 31, 2000 with respect to
(i) each person who is known to the Company to be the beneficial owner of more
than five percent of the Class A Common Stock, (ii) each person who is known to
the Company to be the beneficial owner of more than five percent of the Class B
Common Stock, and (iii) the beneficial ownership of Class A and Class B Common
Stock by the directors, the Named Officers and all executive officers and
directors as a group. Beneficial ownership of Class A and Class B Common Stock
has been determined for this purpose in accordance with Rules 13d-3 and 13d-5 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Accordingly, the amounts in the table do
not purport to represent beneficial ownership for any purpose other than
compliance with Exchange Act reporting requirements. Further, beneficial
ownership as determined in this manner does not necessarily bear on the economic
incidence of ownership of Class A or Class B Common Stock.
Amount and Nature of Beneficial Ownership
<TABLE>
<CAPTION>
Name and Address Class/1/ Number of Shares Percent of Class/2/
<S> <C> <C> <C>
Melvyn E. Bergstein, individually/3,4/ Class A 187,932 **
Class B 487,722 16.6
Melvyn E. Bergstein, proxy holder Class A - -
Class B 2,443,695 83.8
Pilgrim Baxter & Associates, Ltd.
825 Duportail Road Class A 1,107,550 5.3
Wayne, Pennsylvania 19087 Class B - -
Michael E. Mikolajczyk/3,5,11/ Class A 5,682 **
Class B 459,932 15.6
John J. Sviokla/3,11/ Class A - -
Class B 4,575 **
Adam J. Gutstein/3,6,11/ Class A 16,140 **
Class B 146,022 5.0
Karl E. Bupp/3,11/ Class A 12,947 **
Class B 95,713 3.3
Michael J. Connolly/3,7,11/ Class A - -
Class B 11,434 1 **
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Christopher J. Moffitt/8/ Class A 187,105 **
Class B - -
John D. Loewenberg/9/ Class A 20,850 **
Class B - -
Alan Kay/10/ Class A 92,002 **
Class B - -
Donald R. Caldwell Class A 59,775 **
Class B - -
Edward R. Anderson Class A 10,460 **
Class B - -
Mark L. Gordon Class A 12,000 **
Class B - -
Arnold R. Weber Class A - -
Class B - -
All executive officers and directors Class A 576,819 2.7
as a group (13 persons)/11/ Class B 2,975,819 100.0
</TABLE>
** Less than 1% of the class outstanding
(1) In the event that any share of Class B Common Stock is transferred to any
party other than a "Permitted Holder" (an employee of the Company or the
Company) or if a beneficial or record holder of a share of Class B Common
Stock ceases to be a Permitted Holder, the share is automatically and
immediately converted into a share of Class A Common Stock. Shares of Class
A Common Stock may not be converted into shares of Class B Common Stock.
(2) Solely for the purpose of determining beneficial ownership, the number of
shares of Common Stock deemed outstanding as of May 31, 2000 (i) assumes
21,369,423 shares of Class A Common Stock and 2,917,569 shares of Class B
Common Stock were outstanding as of such date, and (ii) includes additional
shares of Common Stock issuable pursuant to options or warrants held by
such owner which may be exercised within 60 days after May 31, 2000
("presently exercisable options") as set forth below.
(3) The address of each of Messrs. Bergstein, Mikolajczyk, Sviokla, Gutstein,
Bupp and Connolly is 875 North Michigan Avenue, Suite 3000, Chicago,
Illinois 60611.
(4) Excludes 149,970 shares of Class A Common Stock held in trust for certain
members of the Bergstein family. Includes 13,848 shares of Class B Common
Stock issuable pursuant to presently exercisable options.
(5) Includes 36,497 shares of Class B Common Stock issuable pursuant to
presently exercisable options.
(6) Includes 7,905 shares of Class B Common Stock issuable pursuant to
presently exercisable options.
(7) Includes 642 shares of Class B Common Stock issuable pursuant to presently
exercisable options.
(8) Excludes shares of Class A Common Stock held in trust for certain members
of the Moffitt family. Includes 8,117 shares of Class B Common Stock
issuable pursuant to presently exercisable options.
(9) Consists of 20,850 shares of Class A Common Stock issuable pursuant to
presently exercisable options.
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<PAGE>
(10) Consists of 92,002 shares of Class A Common Stock issuable pursuant to
presently exercisable options.
(11) All holders of Class B Common Stock, including Messrs. Mikolajczyk,
Sviokla, Gutstein, Bupp and Connolly, have granted to Mr. Bergstein, as
the current Chief Executive Officer, the right to vote such shares
pursuant to the terms of irrevocable proxies. See "Voting and Stock
Restriction Agreement" under Item 13 below. As of May 31, 2000, includes
2,443,695 shares of Class B Common Stock subject to such proxies. Includes
in the aggregate 120,969 shares of Class A Common Stock and 58,892 shares
of Class B Common Stock issuable pursuant to presently exercisable options
held by all directors and executive officers.
Item 13. Certain Relationships and Related Transactions
Partners' Operating Agreement
Vice Presidents of the Company are also referred to as "Partners." All Partners
of the Company are bound by the Partners' Operating Agreement, which provides
(among other things) procedures for the: (i) nomination of candidates to the
office of Chief Executive Officer (subject to the veto of the Board of
Directors); (ii) removal and retention of the Chief Executive Officer (who may
also be removed by the Board for specified reasons); (iii) admission and removal
of Partners; and (iv) determination of the compensation of management personnel.
Voting and Stock Restriction Agreement
Each employee-stockholder and certain other stockholders of the Company have
agreed to be bound by the Second Amended and Restated Voting and Stock
Restriction Agreement dated as of August 4, 1997 (the "Voting and Stock
Restriction Agreement") in connection with acquisition of shares of Class B
Common Stock of the Company. The Voting and Stock Restriction Agreement provides
(among other things) for: (i) the employee-stockholders' grant of a proxy to the
Chief Executive Officer of the Company conveying the right to vote their shares
of Class B Common Stock, (ii) rights of first offer of the Company to purchase
shares of Class B Common Stock offered by employee-stockholders; (iii) certain
rights of first offer of the Company to purchase shares of Common Stock offered
by certain stockholders including Safeguard and CIP Capital L.P.; and (iv)
restrictions on the transferability of the certain shares of Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers, directors and
persons who own more than ten percent of a registered class of the Company's
equity securities ("10% owners") to file reports of ownership and changes in
ownership of such securities with the SEC and NASDAQ. Officers, directors and
10% owners are required by applicable regulations to furnish the Company with
copies of all Section 16(a) forms they file. During fiscal year 2000 the Form 3
reports filed on behalf of Messrs. Gordon and Weber and one Form 4 report filed
on behalf of each of Messrs. Anderson, Bergstein, Bupp, Gordon, Gutstein, Kay,
Loewenberg, Mikolajczyk, Moffitt and Sviokla were filed late.
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DIAMOND TECHNOLOGY PARTNERS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years ended March 31, 1998, 1999 and 2000
(In thousands)
<TABLE>
<CAPTION>
1998 1999 2000
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 6,008 $ 9,836 $ 16,228
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 871 998 4,026
Tax benefits from employee stock plans 480 1,331 23,730
Deferred income taxes (461) 38 (4,341)
Changes in assets and liabilities, net of effects of
acquisition:
Accounts receivable (567) (5,371) 1,844
Prepaid expenses and other 15 (1,242) (14,417)
Accounts payable 125 (266) 1,963
Deferred compensation - - -
Accrued compensation 6,535 2,300 3,896
Deferred revenue 419 (420) 2,920
Income taxes payable (82) - -
Other assets and liabilities 655 (1,314) (577)
------------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,998 5,890 35,292
------------------------------------------------------------------------------------------------
Cash flows used in investing activities:
Capital expenditures, net (475) (2,773) (7,871)
Payments for purchase of companies - - (5,328)
Other assets (648) (223) (7,190)
------------------------------------------------------------------------------------------------
Cash flows used in investing activities (1,123) (2,996) (20,389)
------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Repayment of notes payable (2,000) - -
Stock issuance costs (649) (1,523) (582)
Common stock issued 3,757 20,600 125,881
Purchase of treasury stock - (5,284) (4,781)
Repurchase of common stock (93) (426) (174)
------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,015 13,367 120,344
------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 13,890 16,261 135,247
Cash and cash equivalents at beginning of year 17,547 31,437 47,698
------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $31,437 $47,698 $182,945
================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 51 $ 24 $ 25
Cash paid during the year for income taxes 4,558 5,875 5,821
Supplemental disclosure for noncash investing and financing
activities:
Issuance of common stock for notes $ 443 $ 60 $ 668
Issuance of acquisition note payable - - 1,000
Incentive compensation applied to payment for common stock 1,041 - -
================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
By____________________________________
Melvyn E. Bergstein
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Chairman and Chief Executive Officer July 31, 2000
----------------------------- (Principal Executive Officer)
Melvyn E. Bergstein
* Chief Financial Officer and Treasurer July 31, 2000
----------------------------- (Principal Financial and Accounting Officer)
Karl E. Bupp
* Vice Chairman, Secretary and Director July 31, 2000
-----------------------------
Michael E. Mikolajczyk
* Vice Chairman and Director July 31, 2000
-----------------------------
John J. Sviokla
* President and Director July 31, 2000
-----------------------------
Adam J. Gutstein
* Director July 31, 2000
-----------------------------
Christopher J. Moffitt
* Director July 31, 2000
-----------------------------
Edward R. Anderson
* Director July 31, 2000
-----------------------------
Donald R. Caldwell
* Director July 31, 2000
-----------------------------
Alan C. Kay
* Director July 31, 2000
-----------------------------
Mark L. Gordon
* Director July 31, 2000
-----------------------------
Arnold R. Weber
* Director July 31, 2000
-----------------------------
John D. Loewenberg
</TABLE>
* By: Melvyn E. Bergstein, Attorney-in-Fact
-12-
