UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
Commission file number 1-6002
COMPUTER DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-0882982
(State or other jurisdiction (IRS Employer ID No.)
of incorporation or organization)
ONE CURIE COURT
ROCKVILLE, MARYLAND 20850-4389
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 921-7000
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
The number of outstanding shares of the registrant's Common Stock, par
value $0.10 per share, was 6,029,134 on February 11, 1997.
PART I - FINANCIAL INFORMATION
--------------------------------
ITEM 1. FINANCIAL STATEMENTS
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Quarter Ended
December 31
_____________________
1996 1995
____ ____
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,155,300 $ 61,183,200
_____________ _____________
Costs and Expenses:
Salaries, wages and employee benefits . . . . . . . . . . . . . 36,689,900 31,468,200
Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . 28,079,600 21,299,700
Travel, relocation and subsistence . . . . . . . . . . . . . . . 739,900 625,800
Rental of space and equipment . . . . . . . . . . . . . . . . . 359,100 652,400
Depreciation and amortization . . . . . . . . . . . . . . . . . 960,500 841,400
Other operating and administrative costs . . . . . . . . . . . . 4,148,600 3,193,400
____________ _____________
70,977,600 58,080,900
____________ _____________
Income from operations . . . . . . . . . . . . . . . . . . . . . . 4,177,700 3,102,300
Interest and other income, net . . . . . . . . . . . . . . . . . . 34,000 367,500
____________ _____________
Income before income taxes . . . . . . . . . . . . . . . . . . . . 4,211,700 3,469,800
Provision for income taxes . . . . . . . . . . . . . . . . . . . . 1,665,500 1,358,000
____________ _____________
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,546,200 $ 2,111,800
============ =============
Net Income per Common Share . . . . . . . . . . . . . . . . . . . . $ .41 $ .36
============ =============
The unaudited financial statements presented herein reflect all material adjustments which in management's opinion are necessary
for a fair presentation of the interim periods.
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Six Months Ended
December 31
________________________
1996 1995
____ ____
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 145,228,500 $ 121,056,200
______________ ______________
Costs and Expenses:
Salaries, wages and employee benefits . . . . . . . . . . . . . 72,110,600 65,901,700
Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . 52,600,600 37,487,700
Travel, relocation and subsistence . . . . . . . . . . . . . . . 1,378,200 1,443,900
Rental of space and equipment . . . . . . . . . . . . . . . . . 646,500 1,298,000
Depreciation and amortization . . . . . . . . . . . . . . . . . 1,895,200 1,623,300
Other operating and administrative costs . . . . . . . . . . . . 7,801,400 6,480,700
______________ ______________
136,432,500 114,235,300
______________ ______________
Income from operations . . . . . . . . . . . . . . . . . . . . . . 8,796,000 6,820,900
Interest and other income, net . . . . . . . . . . . . . . . . . . 48,100 339,200
______________ ______________
Income before income taxes . . . . . . . . . . . . . . . . . . . . 8,844,100 7,160,100
Provision for income taxes . . . . . . . . . . . . . . . . . . . . 3,512,200 2,797,300
______________ ______________
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,331,900 $ 4,362,800
============== ==============
Net Income per Common Share . . . . . . . . . . . . . . . . . . . . $ .87 $ .74
============== ==============
Dividends per Common Share . . . . . . . . . . . . . . . . . . . . $ .06 $ .05
============== ==============
The unaudited financial statements presented herein reflect all material adjustments which in management's opinion are necessary
for a fair presentation of the interim periods.
COMPUTER DATA SYSTEMS, INC.
Consolidated Balance Sheets
December 31, June 30,
1996 1996
Assets Unaudited Audited
_________ ________
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 1,759,600 $ 3,639,600
Trade accounts receivable . . . . . . . . . . . . . . . . 71,970,900 61,479,200
Deferred income taxes . . . . . . . . . . . . . . . . . . 1,252,300 1,252,300
Income tax refunds receivable . . . . . . . . . . . . . . 1,234,300 151,100
Prepaid expenses and deposits . . . . . . . . . . . . . . 1,882,500 1,255,300
______________ ______________
Total Current Assets . . . . . . . . . . . . . . . . 78,099,600 67,777,500
Long-term investments . . . . . . . . . . . . . . . . . . 1,886,800 1,922,000
Land, building and equipment . . . . . . . . . . . . . . . 29,383,900 32,403,100
Other assets . . . . . . . . . . . . . . . . . . . . . . . 4,252,400 951,300
______________ ______________
Total Assets . . . . . . . . . . . . . . . . . . . . $ 113,622,700 $ 103,053,900
============== ==============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities . . . . . . . . . $ 29,846,600 $ 23,149,400
Accrued wages and related benefits . . . . . . . . . . . . 11,471,700 13,875,000
Income taxes payable . . . . . . . . . . . . . . . . . . . 786,400
-------------- --------------
Total Current Liabilities . . . . . . . . . . . . . 41,318,300 37,810,800
-------------- --------------
Long-Term Liabilities:
Deferred compensation . . . . . . . . . . . . . . . . . . 4,356,800 4,583,500
Deferred income taxes . . . . . . . . . . . . . . . . . . 661,900 409,900
-------------- --------------
Total Long-Term Liabilities . . . . . . . . . . . . 5,018,700 4,993,400
-------------- --------------
Stockholders' Equity:
Common Stock, par value $.10 . . . . . . . . . . . . . . . 600,900 586,700
Capital in excess of par value . . . . . . . . . . . . . . 10,291,000 7,625,900
Retained earnings . . . . . . . . . . . . . . . . . . . . 56,393,800 52,037,100
-------------- --------------
Total Stockholders' Equity . . . . . . . . . . . . . 67,285,700 60,249,700
-------------- --------------
Total Liabilities and Stockholders' Equity . . . . . $ 113,622,700 $ 103,053,900
============== ==============
The unaudited financial statements presented herein reflect all material adjustments which in management's opinion are necessary
for a fair presentation of the interim periods.
COMPUTER DATA SYSTEMS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended
December 31
________________________
1996 1995
____ ____
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,331,900 $ 4,362,800
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 1,895,200 1,623,300
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 252,000 (19,000)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 188,600 160,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,200) (59,900)
Net cash provided by (used in) changes in operating assets and
liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,574,900) (11,281,400)
Prepaid expenses and deposits . . . . . . . . . . . . . . . . . . . . . . (627,200) 236,900
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . 6,697,100 9,422,700
Accrued wages and related benefits . . . . . . . . . . . . . . . . . . . . (2,403,300) (3,961,000)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . (786,400) 127,300
-------------- --------------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . (1,091,200) 611,700
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,179,000) (6,896,400)
Proceeds from sale of equipment. . . . . . . . . . . . . . . . . . . . . . 4,800 56,200
Purchase of long-term investments . . . . . . . . . . . . . . . . . . . . 75,800 (174,400)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39,000) (34,500)
-------------- --------------
Net cash (used in) investing activities . . . . . . . . . . . . . . . . . . . . (2,137,400) (7,049,100)
-------------- --------------
Cash flows from financing activities:
Borrowings on note payable . . . . . . . . . . . . . . . . . . . . . . . . 5,800,000
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (355,700) (286,900)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . 2,059,800 234,500
Payment of deferred compensation . . . . . . . . . . . . . . . . . . . . . (355,500) (304,900)
-------------- --------------
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . 1,348,600 5,442,700
--------------
Net (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . (1,880,000) (994,700)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . 3,639,600 1,237,000
-------------- --------------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . $ 1,759,600 $ 242,300
============== ==============
The unaudited financial statements presented herein reflect all material adjustments which in management's opinion are necessary
for a fair presentation of the interim periods.
COMPUTER DATA SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
[CAPTION]
A. COMPUTATION OF EARNINGS PER SHARE
Net income per share of common stock is based on the weighted average
number of common and common stock equivalent shares outstanding during each
period.
Average Number of Shares Outstanding
____________________________________
December 31, 1996 December 31, 1995
_________________ _________________
6,150,008 5,910,779
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
_____________________
December 31, 1996 vs December 31, 1995 - Six Months
Revenues for the period were $145,228,500 versus $121,056,200 for the
prior year. The 20% increase in revenues was attributable to expansion on the
CDSI BAS Department of Education contract and certain CDSI ITS contracts.
Costs and expenses grew by 19%. Costs and expenses increased in line with
the growth in revenues offset by the absence of costs of the Argentine
proposal, and reduced i.e.FARS development costs and proposal protest costs
incurred in the prior year.
Income from operations rose due to improved contract margins and the lower
costs noted above.
Interest and other income, net decreased due to lower investment gains.
The provision for income taxes increased as a result of a slightly higher
combined federal and state tax rate applied to the higher operating income.
Net income rose due to the higher operating margins on the expanding
contract base.
December 31, 1996 vs December 31, 1995 - Three Months
Revenues for the quarter ended December 31, 1996 were $75,155,300 as
compared to the comparable quarter last year of $61,183,200. The 23% increase
in revenues was attributable primarily to continuing expansion of the CDSI BAS
Department of Education contract and certain CDSI ITS contracts.
Costs and expenses rose at a slightly lower rate compared to the increase
in revenues. Expenses increased by 22% due to the growth on existing contracts.
Income from operations rose due to improved contract margins on the
growing contract base.
Interest and other income, net decreased for the current quarter due to
the absence of realized gain on the sale of investments of approximately
$440,000 in the prior year.
The provision for income taxes increased as a result of a slightly higher
combined federal and state tax rate applied to the higher operating income.
Net income was above last year's comparable quarter due to improved
operating margins on the expanding contract base.
Comparison of Financial Condition
_________________________________
December 31, 1996 Compared to June 30, 1996
Total assets increased to $113,622,700 from $103,053,900 at June 30, 1996.
Working capital increased by approximately $6.8 million since June 30, 1996.
The increase is attributed primarily to the retention of earnings after payment
of dividends.
Capital expenditures for the year are expected to be in the $4,000,000
range.
PART II -- OTHER INFORMATION
______________________________
ITEMS 1-5. Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
_________
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, in Rockville, Maryland on February 13,
1997.
COMPUTER DATA SYSTEMS, INC.
/s/ Wyatt D. Tinsley
By ____________________________
Wyatt D. Tinsley
Executive Vice President
(Principal Financial and
Accounting Officer)