Exhibit 99.1
FOR IMMEDIATE RELEASE
NASDAQ: AMSY
Investor Relations Contact:
Ronald Schillereff
703-267-5140
ronald.schillereff@ams.com
Media Relations Contact:
Charlene Wheeless
703-267-7075
charlene.wheeless@ams.com
AMS REPORTS Q2 2003 RESULTS
Revenues Meet Expectations; Earnings Impacted by Significant Charges
FAIRFAX, Va., July 17, 2003 – American Management Systems, Incorporated (NASDAQ: AMSY), a global business and IT consulting firm, today announced a second quarter 2003 loss of $46.6 million (($1.10) per diluted share) compared to earnings of $1.1 million ($0.03 per diluted share) in the second quarter of 2002. Second quarter 2003 results were adversely impacted by a pre-tax charge of $45.5 million associated with the settlement of litigation with the Federal Retirement Thrift Investment Board, a $24.8 million pre-tax Restructuring Charge and a $9.6 million pre-tax charge related to software asset impairments.
Revenues for the second quarter of 2003, in line with the previous management forecast, were $232.0 million, compared with $251.7 million for the second quarter of 2002 and $227.0 million for the first quarter of 2003.
“Second quarter results were clearly disappointing, however, we took a series of significant actions to improve profitability and growth for the balance of 2003 and beyond,” said AMS Chairman and Chief Executive Officer Alfred T. Mockett. He continued, “During the quarter, we removed a major uncertainty from AMS’s future by concluding a settlement agreement with the Federal Retirement Thrift Investment Board, we continued our focus on securing larger deals which resulted in AMS recently winning one of the largest contracts in our history, and this week entered into a definitive agreement to acquire R.M. Vredenburg & Co., a leading provider of professional and technical services to the Department of Defense and U.S. Intelligence communities.”
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AMS Q2 2003 Results – July 17, 2003—2
The $24.8 million Restructuring Charge represents severance and facility charges for the U.S. and Europe. The severance costs primarily relate to a reduction in senior level staff and management positions. In total, approximately 250 employees are being separated to achieve cost reductions and align the Company’s workforce to current market conditions and revenue outlook. The $9.6 million Asset Impairment Charge is for the write-off of certain non-performing software assets.
Excluding the impact of the pre-tax charges totaling $79.8 million noted above, earnings for the second quarter 2003 would have been $3.0 million or $0.07 per diluted share1. Adjusted earnings in the second quarter of 2003 reflect lower gross profit margins due to higher project and other related costs incurred during the quarter.
Conference Call
AMS will hold a conference call to review second quarter results at 5:00 p.m. Eastern Time on July 17, 2003 that will be accessible by dialing 913-981-5507. An audio replay of the call will be available from 8:00 p.m., July 17, 2003 through 12:00 midnight, July 24, 2003 by dialing 719-457-0820 and entering pass code 495393. The call may also be accessed via a live Webcast on the AMS Website at www.ams.com. The Webcast will be available for replay through July 17, 2004.
About AMS
AMS is a premier business and IT consulting firm to the government, financial services, and communications industries around the globe. AMS combines IT ingenuity and industry IQ to drive high-performance results. Known for its delivery and service excellence for more than 30 years, AMS specializes in enterprise resource planning, credit risk management, customer relationship management, and enterprise security. AMS applies both proprietary and partner technologies, and provides solutions through business consulting, systems integration, and outsourcing. Founded in 1970, AMS is headquartered in Fairfax,Va., and has offices worldwide. The company is traded on the Nasdaq National Market under the symbol AMSY. For detailed information about AMS, visit www.ams.com
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This release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “intends” and similar expressions are generally intended to identify forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: risks in project delivery and staffing, risk of revenues not being realized when expected, risk of increased competition in the markets, and the effects of economic uncertainty on client expenditures as well as other factors described in AMS’s Annual Report onForm 10-K for the year ended December 31, 2002. The Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s (estimates or) views as of any subsequent date.
1 | See attached GAAP Reconciliation |
AMS Q2 2003 Results – July 17, 2003—3
American Management Systems, Incorporated
CONSOLIDATED CONDENSED INCOME STATEMENTS
Unaudited
(In thousands, except per share data)
For the Quarter | For the Six Months | ||||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||||||
REVENUES | $ | 232,011 | $ | 251,697 | $ | 458,983 | $ | 503,127 | |||||||||
EXPENSES2: | |||||||||||||||||
Cost of Revenues | 145,838 | 146,911 | 280,885 | 294,498 | |||||||||||||
Selling, General and Administrative | 77,146 | 78,053 | 154,728 | 157,217 | |||||||||||||
Research and Development | 3,685 | 7,870 | 7,015 | 13,828 | |||||||||||||
Restructuring Charge | 24,785 | 16,087 | 24,785 | 16,087 | |||||||||||||
Software Asset Impairments | 9,555 | — | 9,555 | — | |||||||||||||
Contract Litigation Settlement Expense | 45,489 | — | 45,489 | — | |||||||||||||
(LOSS) INCOME FROM OPERATIONS | (74,487 | ) | 2,776 | (63,474 | ) | 21,497 | |||||||||||
OTHER (INCOME) EXPENSE, NET: | |||||||||||||||||
Interest Expense | 5 | 296 | 514 | 1,093 | |||||||||||||
Other (Income) Expense | (193 | ) | 558 | (296 | ) | 309 | |||||||||||
(188 | ) | 854 | 218 | 1,402 | |||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (74,299 | ) | 1,922 | (63,692 | ) | 20,095 | |||||||||||
INCOME TAXES | (27,660 | ) | 788 | (23,311 | ) | 8,239 | |||||||||||
NET (LOSS) INCOME | $ | (46,639 | ) | $ | 1,134 | $ | (40,381 | ) | $ | 11,856 | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||||||||||
Basic | 42,217 | 41,906 | 42,290 | 41,843 | |||||||||||||
Diluted | 42,217 | 42,593 | 42,290 | 42,483 | |||||||||||||
(LOSS) EARNINGS PER SHARE | |||||||||||||||||
Basic | $ | (1.10 | ) | $ | 0.03 | $ | (0.95 | ) | $ | 0.28 | |||||||
Diluted | $ | (1.10 | ) | $ | 0.03 | $ | (0.95 | ) | $ | 0.28 |
2 Certain amounts from prior year have been reclassified for comparative purposes.
AMS Q2 2003 Results – July 17, 2003—4
American Management Systems, Incorporated
CONSOLIDATED REVENUES BY MARKET
(In thousands)
For the Quarter | For the Quarter | For the Six Months | ||||||||||||||||||||||
Ended March 31, | Ended June 30, | Ended June 30, | ||||||||||||||||||||||
2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||
Federal Government Agencies | $ | 85,923 | $ | 83,675 | $ | 84,503 | $ | 84,511 | $ | 170,426 | $ | 168,186 | ||||||||||||
State and Local Governments and Education | 61,382 | 71,525 | 65,518 | 70,040 | 126,900 | 141,565 | ||||||||||||||||||
Communications, Media and Entertainment | 42,597 | 53,202 | 43,159 | 52,975 | 85,756 | 106,177 | ||||||||||||||||||
Financial Services Institutions | 30,268 | 30,780 | 31,662 | 28,803 | 61,930 | 59,583 | ||||||||||||||||||
Other Corporate Clients | 6,802 | 12,248 | 7,169 | 15,368 | 13,971 | 27,616 | ||||||||||||||||||
Total Revenues | $ | 226,972 | $ | 251,430 | $ | 232,011 | $ | 251,697 | $ | 458,983 | $ | 503,127 | ||||||||||||
AMS Q2 2003 Results – July 17, 2003—5
American Management Systems, Incorporated
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
6/30/2003 | ||||||||||||
ASSETS | (Unaudited) | 12/31/2002 | ||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and Cash Equivalents | $ | 101,759 | $ | 136,191 | ||||||||
Accounts Receivable, Net | 231,163 | 212,098 | ||||||||||
Prepaid Expenses and Other Current Assets | 43,428 | 35,126 | ||||||||||
Total Current Assets | 376,350 | 383,415 | ||||||||||
NONCURRENT ASSETS: | ||||||||||||
Property and Equipment (Net of Accumulated Depreciation and Amortization of $47,786 and $44,751) | 22,596 | 24,518 | ||||||||||
Purchased and Developed Computer Software (Net of Accumulated Amortization of $148,021 and $136,591) | 107,539 | 90,797 | ||||||||||
Goodwill, Net | 24,331 | 24,331 | ||||||||||
Cash Value of Life Insurance | 25,139 | 29,830 | ||||||||||
Other Assets | 11,765 | 69,605 | ||||||||||
Total Noncurrent Assets | 191,370 | 239,081 | ||||||||||
TOTAL ASSETS | $ | 567,720 | $ | 622,496 | ||||||||
AMS Q2 2003 Results – July 17, 2003—6
American Management Systems, Incorporated
CONSOLIDATED CONDENSED BALANCE SHEETS — continued
(In thousands, except share data)
6/30/2003 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | (Unaudited) | 12/31/2002 | |||||||||
CURRENT LIABILITIES: | |||||||||||
Accounts Payable | $ | 16,427 | $ | 17,118 | |||||||
Accrued Compensation and Related Items | 37,893 | 52,674 | |||||||||
Deferred Revenues | 22,954 | 26,115 | |||||||||
Accrued Liabilities | 29,541 | 14,592 | |||||||||
Accrued Restructuring Charge | 23,950 | 7,988 | |||||||||
Income Taxes Payable | 388 | 1,061 | |||||||||
Deferred Income Taxes | 1,872 | 17,159 | |||||||||
Total Current Liabilities | 133,025 | 136,707 | |||||||||
NONCURRENT LIABILITIES: | |||||||||||
Deferred Compensation and Other | 28,631 | 36,364 | |||||||||
Deferred Income Taxes | 10,257 | 20,044 | |||||||||
Accrued Restructuring Charge | 8,337 | 9,356 | |||||||||
Total Noncurrent Liabilities | 47,225 | 65,764 | |||||||||
TOTAL LIABILITIES | 180,250 | 202,471 | |||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||
Preferred Stock ($0.10 Par Value; 4,000,000 Shares Authorized, None Issued or Outstanding) | — | — | |||||||||
Common Stock ($0.01 Par Value; 200,000,000 Shares Authorized, 51,057,214 and 51,057,214 Issued and 42,258,537 and 42,324,218 Outstanding) | 510 | 510 | |||||||||
Capital in Excess of Par Value | 81,864 | 80,309 | |||||||||
Unearned Compensation | (1,167 | ) | (2,146 | ) | |||||||
Retained Earnings | 344,682 | 385,063 | |||||||||
Accumulated Other Comprehensive Loss | (6,884 | ) | (14,915 | ) | |||||||
Treasury Stock, at Cost (8,798,677 and 8,732,996 Shares) | (31,535 | ) | (28,796 | ) | |||||||
Total Stockholders’ Equity | 387,470 | 420,025 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 567,720 | $ | 622,496 | |||||||
AMS Q2 2003 Results – July 17, 2003—7
American Management Systems, Incorporated
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
For the Six Months | ||||||||||
Ended June 30, | ||||||||||
2003 | 2002 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net (Loss) Income | $ | (40,381 | ) | $ | 11,856 | |||||
Adjustments to Reconcile Net (Loss) Income to Net Cash (Used in) Provided by Operating Activities | ||||||||||
Depreciation | 3,432 | 3,801 | ||||||||
Amortization | 16,390 | 17,178 | ||||||||
Stock Compensation Expense | 613 | 1,859 | ||||||||
Deferred Income Taxes | (24,586 | ) | 305 | |||||||
(Increase) Decrease in Cash Surrender Value of Life Insurance | (1,187 | ) | 217 | |||||||
Loss on Disposal of Assets | 237 | 124 | ||||||||
Provision for Doubtful Accounts | 750 | — | ||||||||
Software Asset Impairments | 9,555 | — | ||||||||
Contract Litigation Asset Write-off | 30,489 | — | ||||||||
Changes in Assets and Liabilities: | ||||||||||
(Increase) Decrease in Accounts Receivable | (15,299 | ) | 33,378 | |||||||
Decrease in Prepaid Expenses and Other Assets | 3,530 | 671 | ||||||||
Increase (Decrease) in Accounts Payable and Accrued Liabilities | 11,484 | (6,625 | ) | |||||||
Decrease in Accrued Compensation and Related Items | (21,693 | ) | (12,019 | ) | ||||||
Decrease in Deferred Revenue | (3,283 | ) | (12,360 | ) | ||||||
Increase in Accrued Restructuring Charge | 14,943 | 2,177 | ||||||||
Decrease in Income Taxes Payable | (716 | ) | (13,780 | ) | ||||||
Net Cash (Used in) Provided by Operating Activities | (15,722 | ) | 26,782 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Purchase of Property and Equipment | (1,584 | ) | (302 | ) | ||||||
Purchase and Development of Computer Software | (26,785 | ) | (9,979 | ) | ||||||
Other Assets | 5,474 | (5,299 | ) | |||||||
Net Cash Used in Investing Activities | (22,895 | ) | (15,580 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Proceeds from Employee Stock Purchase Plan and Common Stock Options Exercised | 2,323 | 5,254 | ||||||||
Payments to Acquire Treasury Stock | (3,460 | ) | (1,504 | ) | ||||||
Net Cash (Used in) Provided by Financing Activities | (1,137 | ) | 3,750 | |||||||
Effect of Exchange Rate Changes on Cash | 5,322 | 1,489 | ||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (34,432 | ) | 16,441 | |||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 136,191 | 53,347 | ||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 101,759 | $ | 69,788 | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||
Exchange of Investment for Intangible Assets, Net of Cash | $ | 16,266 | $ | — | ||||||
Issuance of Treasury Stock for Employee Stock Purchase Plan, Stock Options Exercised, and Restricted Stock | $ | 416 | $ | 2,758 |
AMS Q2 2003 Results – July 17, 2003—8
American Management Systems, Incorporated
GAAP Reconciliation
Unaudited
(In thousands)
Earnings before Restructuring, Software Asset Impairments and Contract Litigation Settlement charges is provided in our press release in order to better support an analysis of our results in comparison to prior forecasts.
For the Quarter | ||||||
Ended 6/30/03 | ||||||
Loss Before Income Taxes | $ | (74,299 | ) | |||
Add Back: | ||||||
Restructuring Charge | 24,785 | |||||
Software Asset Impairments | 9,555 | |||||
Contract Litigation Settlement Expense | 45,489 | |||||
Income Before Income Taxes, as adjusted | $ | 5,530 | ||||
Income Taxes, as adjusted | (2,509 | ) | ||||
Net Income, as adjusted | $ | 3,021 | ||||
Weighted Average Shares and Equivalents, as adjusted | 42,576 | |||||
Fully Diluted Earnings Per Share, as adjusted | $ | 0.07 |